[House Report 110-210]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-210
======================================================================
COLLEGE COST REDUCTION ACT OF 2007
_______
June 25, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. George Miller of California, from the Committee on Education and
Labor, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 2669]
[Including cost estimate of the Congressional Budget Office]
The Committee on Education and Labor, to whom was referred
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 considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited to as the ``College Cost
Reduction Act of 2007''.
(b) Table of Contents.--
Sec. 1. Short title; table of contents.
Sec. 2. References; effective date.
TITLE I--INVESTING IN STUDENT AID
Part A--Increasing the Purchasing Power of Pell Grants
Sec. 101. Mandatory Pell Grant Increases.
Sec. 102. Support for working students.
Sec. 103. Simplified needs test and automatic zero improvements.
Sec. 104. Definitions.
Part B--Making Student Loans More Affordable
Sec. 111. Interest rate reductions.
Sec. 112. Increases in loan limits.
Sec. 113. Reduction of lender special allowance payments.
Sec. 114. Elimination of exceptional performer status for lenders.
Sec. 115. Reduction of lender insurance percentage.
Sec. 116. Guaranty agency collection retention.
Sec. 117. Unit costs for account maintenance fees.
Sec. 118. Increased loan fees from lenders.
Sec. 119. Student loan information.
Sec. 120. Market-based determination of lender returns.
Part C--Rewarding Service in Repayment
Sec. 131. Loan forgiveness for service in areas of national need.
``Sec. 428K. Loan forgiveness for service in areas of national
need.
Sec. 132. Income-contingent repayment for public sector employees.
Sec. 133. Income-based repayment.
``Sec. 493C. Income-based repayment.
Sec. 134. Definition of economic hardship.
Sec. 135. Deferrals.
Sec. 136. Maximum repayment period.
Sec. 137. Deferral of loan repayment following active duty.
``Sec. 484C. Deferral of loan repayment following active duty.
Sec. 138. Sense of the Congress; report.
Part D--Sustaining the Perkins Loan Program
Sec. 141. Federal Perkins Loans.
TITLE II--REDUCING THE COST OF COLLEGE
Sec. 201. State commitment to affordable college education.
``Sec. 132. State commitment to affordable college education.
Sec. 202. Consumer information and public accountability in higher
education.
``Sec. 131. Consumer information and public accountability in
higher education.
Sec. 203. Incentives and rewards for low tuition.
``Sec. 401B. Incentives and rewards for low tuition.
Sec. 204. Cooperative education rewards for institutions that restrain
tuition increases.
``TITLE VIII--COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT
RESTRAIN TUITION INCREASES
``Sec. 801. Definition of cooperative education.
``Sec. 802. Authorization of appropriations; reservations.
``Sec. 803. Grants for cooperative education.
``Sec. 804. Demonstration and innovation projects; training and
resource centers; and research.
TITLE III--ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM
Part A--TEACH Grants
Sec. 301. TEACH Grants.
``Subpart 9--TEACH Grants
``Sec. 420L. Program established.
``Sec. 420M. Eligibility; applications.
``Sec. 420N. Definitions.
``Sec. 420O. Program period and funding.
Part B--Centers of Excellence
Sec. 311. Centers of excellence.
``Part C--Centers of Excellence
``Sec. 231. Definitions.
``Sec. 232. Centers of excellence.
``Sec. 233. Appropriations.
TITLE IV--LEVERAGING FUNDS TO INCREASE COLLEGE ACCESS
Part A--Strengthening Historically Black Colleges and Universities and
Minority-Serving Institutions
Sec. 401. Investment in Historically Black Colleges and Universities
and Minority-Serving Institution.
``Part I--Strengthening Historically Black Colleges and Universities
and Other Minority-Serving Institutions
``Sec. 499A. Investment in Historically Black Colleges and
Universities and Other Minority-Serving
Institution.
Part B--College Access Challenge Grants
Sec. 411. College Access Challenge grants.
Part C--Upward Bound
Sec. 412. Upward Bound.
TITLE V--ADDITIONAL PROVISIONS
Sec. 501. Independent evaluation of distance education programs.
Sec. 502. Encouraging colleges and universities to ``go green''.
SEC. 2. REFERENCES; EFFECTIVE DATE.
(a) 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.).
(b) Effective Date.--Except as otherwise expressly provided therein,
the amendments made by this Act shall be effective on October 1, 2007.
TITLE I--INVESTING IN STUDENT AID
PART A--INCREASING THE PURCHASING POWER OF PELL GRANTS
SEC. 101. 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
2013''.
(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) $840,000,000 for fiscal year 2008;
``(ii) $870,000,000 for fiscal year 2009;
``(iii) $1,340,000,000 for fiscal year 2010;
``(iv) $2,280,000,000 for fiscal year 2011;
``(v) $2,350,000,000 for fiscal year 2012;
``(vi) $2,400,000,000 for fiscal year 2013;
``(vii) $2,450,000,000 for fiscal year 2014;
``(viii) $2,510,000,000 for fiscal year 2015;
``(ix) $2,550,000,000 for fiscal year 2016;
and
``(x) $2,570,000,000 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 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) $200 for each of the award years 2008-
2009 and 2009-2010;
``(ii) $300 for award year 2010-2011; and
``(iii) $500 for award year 2011-2012 and
each subsequent award year.
``(C) 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.''.
(c) Authorized Maximums.--Section 401(b)(2)(A) (20 U.S.C.
1070a(b)(2)(A)) is amended to read as follows:
``(2)(A) The amount of the Federal Pell Grant for a student eligible
under this part shall be--
``(i) $7,600 for academic year 2008-2009;
``(ii) $8,600 for academic year 2009-2010;
``(iii) $9,600 for academic year 2010-2011;
``(iv) $10,600 for academic year 2011-2012; and
``(v) $11,600 for academic year 2012-2013,
less an amount equal to the amount determined to be the
expected family contribution with respect to that student for
that year.''.
(d) Tuition Sensitivity.--
(1) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is
further amended--
(A) by striking paragraph (3); and
(B) by redesignating paragraphs (4) through (9) as
paragraphs (3) through (8), respectively.
(2) Effective date.--The amendments made by paragraph (1) of
this subsection are effective on the date of enactment of this
Act.
(e) Multiple Grants.--
(1) Amendment.--Paragraph (5) of section 401(b) (as
redesignated by subsection (d)(1)(B)) is amended to read as
follows:
``(5) Year-round pell grants.--The Secretary is authorized,
for students enrolled in a baccalaureate degree, associate's
degree, or certificate program of study at an eligible
institution, to award such students not more than two Pell
grants during an award year to permit such students to
accelerate progress toward their degree or certificate
objectives by enrolling in courses for more than 2 semesters,
or 3 quarters, or the equivalent, in a given academic year.''.
(2) Effective date.--The amendment made by paragraph (1)
shall be effective July 1, 2009.
(f) Academic Competitiveness Grants.--Section 401A (as amended by
section 8003 of Public Law 109-171) is amended--
(1) in subsection (c)(3)(A)(ii), by inserting ``, except as
part of a secondary school program of study'' before the
semicolon;
(2) by redesignating subsection (g) as subsection (h); and
(3) by inserting after subsection (f) the following new
subsection:
``(g) Determination of Academic Year.--Notwithstanding section
481(a)(2), for the purpose of determining eligibility for a grant under
this section, a student shall be considered to be enrolled or accepted
for enrollment in the first, second, third, or fourth academic year of
a program of undergraduate education based on the student's class
standing, as determined by the institution of higher education at which
the student is enrolled or accepted for enrollment.''.
(g) Eligibility for Academic Competitiveness Grants.--Section 401A is
further amended--
(1) in subsection (c)--
(A) by striking ``full-time''; and
(B) by amending paragraph (1) to read as follows:
``(1) is an eligible student under section 484, including
being enrolled or accepted for enrollment in a degree,
certificate, or other eligible program leading to a recognized
educational credential at an institution of higher
education;''; and
(2) in subsection (d), by adding at the end the following new
paragraph:
``(3) Adjustment for less than full-time enrollment.--A grant
awarded under this section to an eligible student who attends
an eligible institution on a less than full-time (but at least
half-time or more) basis shall be reduced in the same
proportion as would a Federal Pell Grant pursuant to section
401(b)(2)(B).''.
SEC. 102. 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 the 2009-2010 academic year,
$3,750;
``(ii) for the 2010-2011 academic year,
$4,500;
``(iii) for the 2011-2012 academic year,
$5,250; and
``(iv) for the 2012-2013 academic year,
$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)(iv)) 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 the 2009-2010
academic year, $6,690;
``(bb) for the 2010-2011
academic year, $7,160;
``(cc) for the 2011-2012
academic year, $7,630; and
``(dd) for the 2012-2013
academic year, $8,090; and
``(II) for married students where 1
is enrolled pursuant to subsection
(a)(2)--
``(aa) for the 2009-2010
academic year, $10,720;
``(bb) for the 2010-2011
academic year, $11,470;
``(cc) for the 2011-2012
academic year, $12,220; and
``(dd) for the 2012-2013
academic year, $12,960;''.
(c) Updated Tables and Amounts.--Section 478(b) (20 U.S.C. 1087rr(b))
is amended--
(1) in paragraph (1)--
(A) by striking ``Revised tables.--For each'' and
inserting ``Revised tables.--
``(A) In general.--For each'';
(B) in subparagraph (A) (as designated by
subparagraph (A)), in the third sentence--
(i) by striking ``preceding sentence'' and
inserting ``subparagraph (A)''; and
(ii) by striking ``For the 2007-2008'' and
inserting the following:
``(B) Special rule for 2007-2008 academic year.--For
the 2007-2008''; and
(C) by adding at the end the following:
``(C) Special rule for 2009-2010 through 2012-2013
academic years.--For the 2009-2010 academic year, and
for each of the 3 succeeding academic years, the
Secretary shall revise the tables in accordance with
this paragraph, except that, for the table in section
477(b)(4), the Secretary shall revise such table by
increasing the amounts contained in such table for the
preceding academic year by 10 percent.''; 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--
``(A) for academic year 2008-2009, by increasing each
of the dollar amounts contained in such section as such
section was in effect on the day before the date of
enactment of the College Cost Reduction Act of 2007 by
a percentage equal to the estimated percentage increase
in the Consumer Price Index (as defined in section
478(f)) between December 2006 and the December next
preceding the beginning of such academic year, and
rounding the result to the nearest $10; and
``(B) for each academic year after 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 defined in section 478(f))
between December 2011 and the December next preceding
the beginning of such academic year, and rounding the
result to the nearest $10.''.
(d) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect on October 1, 2008, and the amendment made by
subsection (c) shall take effect on July 1, 2008.
SEC. 103. 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:
``(iii) 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) Discretion of Student Financial Aid Administrators.--Section
479A(a) (20 U.S.C. 1087tt(a)) is amended in the third sentence by
inserting ``a family member who is a dislocated worker (as defined in
section 101 of the Workforce Investment Act of 1998 (29 U.S.C.
2801)),'' after ``recent unemployment of a family member,''.
(c) Effective Date.--The amendments made by this section shall be
effective on July 1, 2009.
SEC. 104. DEFINITIONS.
(a) Total Income.--Section 480(a)(2) (20 U.S.C. 1087vv(a)(2)) is
amended--
(1) by striking ``and no portion'' and inserting ``no
portion''; and
(2) 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,''.
(b) Untaxed Income and Benefits.--Section 480(b) (20 U.S.C.
1087vv(b)) is amended to read as follows:
``(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, railroad
retirement benefits, or Job Training Partnership Act
noneducational 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.''.
(c) Assets.--Section 480(f) (20 U.S.C. 1087vv(f)) is amended--
(1) in paragraph (3), by striking ``shall not be considered
an asset of a student for purposes of section 475'' and
inserting ``shall be considered an asset of the parent for
purposes of section 475'';
(2) by redesignating paragraphs (4) and (5) as paragraphs (5)
and (6), respectively; and
(3) by inserting after paragraph (3) the following:
``(4) A qualified education benefit shall be considered an
asset of the student for purposes of section 476 and 477.''.
(d) Other Financial Assistance.--Section 480(j)(2) (20 U.S.C.
1087vv(j)(2)) is amended 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''.
(e) Effective Date.--The amendments made by this section shall be
effective on July 1, 2009.
PART B--MAKING STUDENT LOANS MORE AFFORDABLE
SEC. 111. 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, 2013, 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,
6.80 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,
6.12 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,
5.44 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,
4.76 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,
4.08 percent on the unpaid principal balance of the
loan.
``(F) For a loan for which the first disbursement is
made on or after July 1, 2012 and before July 1, 2013,
3.40 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. 1086(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, 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,
2013, 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, 6.80 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, 6.12 percent on the
unpaid principal balance of the loan.
``(iii) For a loan for which the first
disbursement is made on or after July 1, 2009,
and before July 1, 2010, 5.44 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, 4.76 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, 4.08 percent on the
unpaid principal balance of the loan.
``(vi) For a loan for which the first
disbursement is made on or after July 1, 2012,
and before July 1, 2013, 3.40 percent on the
unpaid principal balance of the loan.''.
SEC. 112. INCREASES IN LOAN LIMITS.
(a) Increase in Third and Subsequent Year Limits.--
(1) Federal insurance limits.--Section 425(a)(1)(A)(iii) (20
U.S.C. 1075(a)(1)(A)(iii)) is amended by striking ``$5,500''
and inserting ``$7,500''.
(2) Guaranty limits.--Section 428(b)(1)(A)(iii)(I) (20 U.S.C.
1078(b)(1)(A)(iii)(I)) is amended by striking ``$5,500'' and
inserting ``$7,500''.
(b) Increase in Aggregate Limits.--
(1) Federal insurance limits.--Section 425(a)(2)(A) (20
U.S.C. 1075(a)(2)(A)(i)) is amended--
(A) in clause (i), by striking ``$23,000'' and
inserting ``$30,500''; and
(B) in clause (ii), by striking ``$65,500'' and
inserting ``$73,000''.
(2) Guaranty limits.--Section 428(b)(1)(B) (20 U.S.C.
1078(b)(1)(A)(iii)(I)) is amended--
(A) in clause (i), by striking ``$23,000'' and
inserting ``$30,500''; and
(B) in clause (ii), by striking ``$65,500'' and
inserting ``$73,000''.
(c) Effective Date.--The amendments made by this section shall be
effective July 1, 2008.
SEC. 113. 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 new clause:
``(vi) Reduction for loans on or after
october 1, 2007.--With respect to a loan on
which the applicable interest rate is
determined under section 427A(l), the
percentage to be added under clause (i)(III) in
computing the special allowance payment
pursuant to this subparagraph shall be the
following:
``(I) In general and plus loans.--
1.79 percent in the case of a loan
described in clause (i) or (iii) for
which the first disbursement of
principal is made on or after October
1, 2007.
``(II) In school and grace period.--
1.19 percent in the case of a loan
described in clause (ii)(II) for which
the first disbursement of principal is
made on or after October 1, 2007.
``(III) Consolidation loans.--2.09
percent in the case of a loan described
in clause (iv) for which the first
disbursement of principal is made on or
after October 1, 2007.''.
SEC. 114. 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).
SEC. 115. 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 take
effect with respect to loans made on or after October 1, 2007.
SEC. 116. 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 23 percent of such
payments for use in accordance with section
422B, except that beginning October 1, 2007,
this subparagraph shall be applied by
substituting `16 percent' for `23 percent'.''.
SEC. 117. UNIT COSTS FOR ACCOUNT MAINTENANCE FEES.
Section 458(b) (20 U.S.C. 1087h(b)) is amended--
(1) by striking ``Account'' and inserting the following:
``(1) For fiscal years 2006 and 2007.--For fiscal years 2006
and 2007, account''; and
(2) by adding at the end the following new paragraph:
``(2) For fiscal year 2008 and succeeding fiscal years.--
``(A) Unit cost basis.--For fiscal year 2008 and each
succeeding fiscal year, the Secretary shall calculate
the account maintenance fees payable to guaranty
agencies under subsection (a)(3), on a per-loan cost
basis in accordance with subparagraph (B) of this
paragraph.
``(B) Determinations.--To determine the amount that
shall be paid under subsection (a)(3) per outstanding
loan guaranteed by a guaranty agency for fiscal year
2008 and succeeding fiscal years, the Secretary shall--
``(i) establish the per-loan cost basis
amount by--
``(I) dividing the total amount of
account maintenance fees paid under
subsection (a)(3) in fiscal year 2006,
by
``(II) the number of loans under part
B that were outstanding in that fiscal
year; and
``(ii) determine on October 1 of fiscal year
2008 and each subsequent fiscal year, and pay
to each guaranty agency, an amount equal to the
product of the number of loans under part B
that are outstanding on October 1 of that
fiscal year and insured by that guaranty
agency, multiplied by--
``(I) the amount determined under
clause (i); increased by
``(II) a percentage equal to the
percentage increase in the GDP price
index (as determined by the Bureau of
Labor Statistics of the Department of
Labor) between the calendar quarter
ending on June 30, 2006, and the
calendar quarter ending on the June 30
preceding such October 1 of such fiscal
year.''.
SEC. 118. 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.--
``(A) Amount.--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--
``(i) except as provided in clauses (ii) and
(iii), 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;
``(ii) 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, that is held by
any holder other than a holder described in
subclause (I) or (II) of clause (iii); and
``(iii) 0.0 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, that is held by--
``(I) any holder that, together with
its affiliated holders, is designated
by the Secretary as a small lender
under subparagraph (B); or
``(II) any holder that--
``(aa) is a unit of State or
local government or a nonprofit
private entity; and
``(bb) is not owned in whole
or in part by, or controlled or
operated by, or otherwise
affiliated with, a for-profit
entity.
``(B) Designation of small lenders.--In determining
which holders of eligible loans qualify as small
lenders for purposes of subparagraph (A)(iii)(I), the
Secretary shall, using the most recently available data
with respect to the total principal amount of eligible
loans held by holders--
``(i) rank all holders of eligible loans
(combined with their affiliated holders) in
descending order by total principal amount of
eligible loans held;
``(ii) calculate the total principal amount
of eligible loans held by all holders; and
``(iii) identify the subset of consecutively
ranked holders under clause (i), starting with
the lowest ranked holder, that together hold a
total principal amount of such loans equal to
15 percent of the total amount calculated under
clause (ii), but excluding the holder, if any,
whose holdings when added cause the total
holdings of the subset to equal but not exceed
such 15 percent of such total amount
calculated; and
``(iv) designate as small lenders any holder
identified as a member of the subset under
clause (iii).''.
SEC. 119. STUDENT LOAN INFORMATION.
Section 428(k) (20 U.S.C. 1078(k)) is amended by adding at the end
the following new paragraph:
``(4) Student loan information.--
``(A) Notwithstanding any other provision of law or
regulation, a lender, secondary market, holder, or
guaranty agency shall provide, free of charge and in a
timely and effective manner, any student loan
information maintained by that entity that is requested
by an institution of higher education or any third-
party servicer (as defined in section 481(c)) working
on behalf of that institution to prevent student loan
defaults.
``(B) An institution and any third-party servicer
obtaining access to information under subparagraph (A)
shall safeguard that information in order to prevent
potential abuses of that information, including
identity theft.
``(C) Any third party servicer that obtains
information under this paragraph--
``(i) shall only use the information in a
manner directly related to the default
prevention work the servicer is performing on
behalf of the institution of higher education;
and
``(ii) shall be subject to any regulations
established by the Secretary pursuant to
section 432 concerning the misuse of such
information, including any penalties for such
misuse.''.
SEC. 120. MARKET-BASED DETERMINATION OF LENDER RETURNS.
(a) Joint Planning Study to Select Auction Mechanisms for Testing.--
(1) Planning study.--The Secretaries of Education and
Treasury jointly shall conduct a planning study, in
consultation with the Office of Management and Budget, the
Congressional Budget Office, the General Accounting Office, and
other individuals and entities the Secretaries determines
appropriate, to--
(A) examine the matters described in paragraph (2) in
order to determine which market-based mechanisms for
determining lender returns on loans made, insured, or
guaranteed under part B of title IV of the Higher
Education Act of 1965 (20 U.S.C. 1071 et seq.) shall be
tested under the pilot programs described in subsection
(c); and
(B) determine what related administrative and other
changes will be required in order to ensure that high-
quality services are provided under a successful
implementation of market-based determinations of lender
returns for all loans made, insured, or guaranteed
under such part.
(2) Matters examined.--The planning study under this
subsection shall examine--
(A) whether it is most appropriate to auction
existing loans under part B of title IV of such Act, to
auction the rights to originate loans under such part,
or whether the sale of securities backed by federally-
owned student loan assets originated by banks acting as
agents of the Federal Government would provide the most
efficient market-based alternative;
(B) matters related to efficient financial
organization of any auctions or sales of loans under
such part, including how loans and origination rights
are bundled, the capital structure of any
securitization plan, and issues related to servicing;
and
(C) how to ensure that statutory, regulatory, and
administrative requirements do not impede separate
management and ownership of loans or assets backed by
loans under part B of title IV of such Act.
(3) Mechanisms.--In determining which market-based mechanisms
are the most promising models to test the pilot programs under
subsection (b), the planning study shall take into account
whether a particular market-based mechanism will--
(A) ensure loan availability under part B of title IV
of such Act to all eligible students at all
participating institutions;
(B) minimize administrative complexity for borrowers,
institutions, lenders, and the Federal Government; and
(C) reduce Federal costs if used on a program-wide
basis.
(4) Report.--A report on the results of the planning study,
together with a plan for implementation of one or more pilot
programs using promising market-based approaches for
determining lender returns, shall be transmitted to Congress
not later than 6 months after the date of enactment of this
Act.
(b) Pilot Programs to Be Tested.--
(1) Authorization.--
(A) In general.--Notwithstanding any other provision
of law, after the report described in subsection (a)(4)
is transmitted to Congress, the Secretary of Education
shall, in consultation with the Secretary of the
Treasury, begin preparations necessary to carry out
pilot programs meeting the requirements of this
subsection in accordance with the implementation plan
included in such report.
(B) Implementation date.--The Secretary of Education
shall commence implementation of the pilot programs
under this subsection not earlier than July 1, 2008.
(C) Duration and loan volume.--The pilot programs
under this subsection shall be not more than two
academic years in duration, and the Secretary of
Education may use the pilot programs to determining the
lender returns for not more than--
(i) 10 percent of the annual loan volume
under part B of title IV of the Higher
Education Act of 1965 during the first year of
the pilot programs under this subsection; and
(ii) 20 percent of the annual loan volume
under part B of title IV of such Act during the
second year of the pilot programs under this
subsection.
(2) Voluntary participation.--
(A) Participation in any auction-based pilot program
under this subsection shall be voluntary for eligible
institutions and eligible lenders participating under
part B of title IV of such Act prior to July 1, 2006.
(B) All savings to the United States Treasury
generated by such auctions shall be distributed to
institutions participating under this subsection on a
basis proportionate to loan volume under such part for
supplemental, need-based financial aid, except that an
institution that is operating as an eligible lender
under section 435(d)(2) of such Act shall not be
eligible for any such distribution.
(3) Independent evaluation.--The Government Accountability
Office shall conduct an independent evaluation of the pilot
programs under this subsection, which evaluation shall be
completed, and the results of such submitted to the Secretary
of Education, the Secretary of the Treasury, and Congress, not
later than 120 days after the termination of such pilot
programs.
(c) Program-Wide Implementation.--Notwithstanding any other provision
of part B of title IV of the Higher Education Act of 1965, for the
first academic year beginning not less than 120 days after the
independent evaluation described in subsection (b)(3) has been
transmitted to Congress, and succeeding academic years, the Secretary
of Education is authorized to implement for all loans made under such
part, a program-wide, market-based system to determine returns to all
lenders as the Secretary of Education determines appropriate, provided
that--
(1) the Secretary of Education, in consultation with the
Secretary of the Treasury, has certified that the auction-based
system that the Secretary of Education intends to implement on
a program-wide basis would--
(A) ensure loan availability under such part to all
eligible students at all participating institutions;
(B) minimize administrative complexity for borrowers,
institutions, lenders, and the Federal Government,
including the enhancement of the modernization of the
student financial aid system; and
(C) reduce Federal costs when used on a program-wide
basis; and
(2) the Secretary of Education has notified Congress of the
Secretary's intent to implement a program-wide auction based
system, and has provided a description of the structure of such
auction-based system, at least 120 days before implementing
such system.
(d) Consultation.--
(1) In general.--As part of the planning study, pilot
programs, and program-wide implementation phases described in
this section, the Secretary of Education shall consult with
representatives of investment banks, ratings agencies, lenders,
institutions of higher education, and students, as well as
individuals or other entities with pertinent technical
expertise. The Secretary of Education shall engage in such
consultations using such methods as, and to the extent that,
the Secretary determines appropriate to the time constraints
associated with the study, programs, and implementation.
(2) Services of other federal agencies.--In carrying out the
planning study and pilot programs described in this section,
the Secretary of Education may use, on a reimbursable basis,
the services (including procurement authorities and services),
equipment, personnel, and facilities of other agencies and
instrumentalities of the Federal Government.
PART C--REWARDING SERVICE IN REPAYMENT
SEC. 131. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED.
Section 428K (20 U.S.C. 1078-11) is amended to read as follows:
``SEC. 428K. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED.
``(a) Program Authorized.--
``(1) Loan forgiveness authorized.--The Secretary shall
forgive, in accordance with this section, the student loan
obligation of a borrower in the amount specified in subsection
(c), for any new borrower after the date of enactment of the
College Cost Reduction Act of 2007, who--
``(A) is employed full-time in an area of national
need described in subsection (b); and
``(B) is not in default on a loan for which the
borrower seeks forgiveness.
``(2) Method of loan forgiveness.--To provide loan
forgiveness under paragraph (1), the Secretary is authorized to
carry out a program--
``(A) through the holder of the loan, to assume the
obligation to repay a qualified loan amount for a loan
made, insured, or guaranteed under this part; and
``(B) to cancel a qualified loan amount for a loan
made under part D of this title.
``(3) Regulations.--The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of
this section.
``(b) Areas of National Need.--For purposes of this section, an
individual shall be treated as employed in an area of national need if
the individual is employed full-time as any of the following:
``(1) Early childhood educators.--An individual who is
employed as an early childhood educator in an eligible
preschool program or eligible early childhood education program
in a low-income community, and who is involved directly in the
care, development, and education of infants, toddlers, or young
children age 5 and under.
``(2) Nurses.--An individual who is employed--
``(A) as a nurse in a clinical setting; or
``(B) as a member of the nursing faculty at an
accredited school of nursing (as those terms are
defined in section 801 of the Public Health Service Act
(42 U.S.C. 296)).
``(3) Foreign language specialists.--An individual who has
obtained a baccalaureate degree in a critical foreign language
and is employed--
``(A) in an elementary or secondary school as a
teacher of a critical foreign language; or
``(B) in an agency of the United States Government in
a position that regularly requires the use of such
critical foreign language.
``(4) Librarians.--An individual who is employed as a
librarian in--
``(A) a public library that serves a geographic area
within which the public schools have a combined average
of 30 percent or more of their total student
enrollments composed of children counted under section
1113(a)(5) of the Elementary and Secondary Education
Act of 1965; or
``(B) an elementary or secondary school which is in
the school district of a local educational agency which
is eligible in such year for assistance pursuant to
title I of the Elementary and Secondary Education Act
of 1965, and which for the purpose of this paragraph
and for that year has been determined by the Secretary
(pursuant to regulations and after consultation with
the State educational agency of the State in which the
school is located) to be a school in which the
enrollment of children counted under section 1113(a)(5)
of the Elementary and Secondary Education Act of 1965
exceeds 30 percent of the total enrollment of that
school.
``(5) Highly qualified teachers: bilingual education and low-
income communities.--An individual who--
``(A) is highly qualified as such term is defined in
section 9101 of the Elementary and Secondary Education
Act of 1965; and
``(B)(i) is employed as a full-time teacher of
bilingual education; or
``(ii) is employed as a teacher in a public or
nonprofit private elementary or secondary school which
is in the school district of a local educational agency
which is eligible in such year for assistance pursuant
to title I of the Elementary and Secondary Education
Act of 1965, and which for the purpose of this
paragraph and for that year has been determined by the
Secretary (pursuant to regulations and after
consultation with the State educational agency of the
State in which the school is located) to be a school in
which the enrollment of children counted under section
1113(a)(5) of the Elementary and Secondary Education
Act of 1965 exceeds 40 percent of the total enrollment
of that school.
``(6) Child welfare workers.--An individual who--
``(A) has obtained a degree in social work or a
related field with a focus on serving children and
families; and
``(B) is employed in public or private child welfare
services.
``(7) Speech-language pathologists.--An individual who is a
speech-language pathologist, who is employed in an eligible
preschool program or an elementary or secondary school, and who
has, at a minimum, a graduate degree in speech-language
pathology, or communication sciences and disorders.
``(8) National service.--An individual who is engaged as a
participant in a project under the National and Community
Service Act of 1990 (as such terms are defined in section 101
of such Act (42 U.S.C. 12511)).
``(9) Public sector employees.--An individual who is employed
in public safety (including as a first responder, firefighter,
police officer, or other law enforcement or public safety
officer), emergency management (including as an emergency
medical technician), public health, or public interest legal
services (including prosecution or public defense).
``(c) Qualified Loan Amount.--At the end of each school, academic, or
calendar year of full-time employment in an area of national need
described in subsection (b), not to exceed 5 years, the Secretary shall
forgive not more than $1,000 of the student loan obligation of a
borrower that is outstanding after the completion of each such school,
academic, or calendar year of employment, as appropriate, not to exceed
$5,000 in the aggregate for any borrower.
``(d) Construction.--Nothing in this section shall be construed to
authorize the refunding of any repayment of a loan.
``(e) Segal Americorps Education Award and National Service Award
Recipients.--A student borrower who qualifies for the maximum education
award under subtitle D of title I of the National and Community Service
Act of 1990 (42 U.S.C. 12601 et seq.) shall receive under this section
the amount, if any, by which the maximum benefit available under this
section exceeds the maximum education award available under such
subtitle.
``(f) Ineligibility for Double Benefits.--No borrower may receive a
reduction of loan obligations under both this section and section 428J
or 460.
``(g) Definitions.--In this section:
``(1) Critical foreign language.--The term `critical foreign
language' includes the languages of Arabic, Korean, Japanese,
Chinese, Pashto, Persian-Farsi, Serbian-Croatian, Russian,
Portuguese, and any other language identified by the Secretary
of Education, in consultation with the Defense Language
Institute, the Foreign Service Institute, and the National
Security Education Program, as a critical foreign language
need.
``(2) Early childhood educator.--The term `early childhood
educator' means an early childhood educator who works directly
with children in an eligible preschool program or eligible
early childhood education program who has completed a
baccalaureate or advanced degree in early childhood
development, early childhood education, or in a field related
to early childhood education.
``(3) Eligible preschool program.--The term `eligible
preschool program' means a program that provides for the care,
development, and education of infants, toddlers, or young
children age 5 and under, meets any applicable State or local
government licensing, certification, approval, and registration
requirements, and is operated by--
``(A) a public or private school that is supported,
sponsored, supervised, or administered by a local
educational agency;
``(B) a Head Start agency serving as a grantee
designated under the Head Start Act (42 U.S.C. 9831 et
seq.);
``(C) a nonprofit or community based organization; or
``(D) a child care program, including a home.
``(4) Eligible early childhood education program.--The term
`eligible early childhood education program' means--
``(A) a family child care program, center-based child
care program, State prekindergarten program, school
program, or other out-of-home early childhood
development care program, that--
``(i) is licensed or regulated by the State;
and
``(ii) serves 2 or more unrelated children
who are not old enough to attend kindergarten;
``(B) a Head Start Program carried out under the Head
Start Act (42 U.S.C. 9831 et seq.); or
``(C) an Early Head Start Program carried out under
section 645A of the Head Start Act (42 U.S.C. 9840a).
``(5) Low-income community.--In this subsection, the term
`low-income community' means a community in which 70 percent of
households earn less than 85 percent of the State median
household income.
``(6) Nurse.--The term `nurse' means a nurse who meets all of
the following:
``(A) The nurse graduated from--
``(i) an accredited school of nursing (as
those terms are defined in section 801 of the
Public Health Service Act (42 U.S.C. 296));
``(ii) a nursing center; or
``(iii) an academic health center that
provides nurse training.
``(B) The nurse holds a valid and unrestricted
license to practice nursing in the State in which the
nurse practices in a clinical setting.
``(C) The nurse holds one or more of the following:
``(i) A graduate degree in nursing, or an
equivalent degree.
``(ii) A nursing degree from a collegiate
school of nursing (as defined in section 801 of
the Public Health Service Act (42 U.S.C. 296)).
``(iii) A nursing degree from an associate
degree school of nursing (as defined in section
801 of the Public Health Service Act (42 U.S.C.
296)).
``(iv) A nursing degree from a diploma school
of nursing (as defined in section 801 of the
Public Health Service Act (42 U.S.C. 296)).
``(7) Speech-language pathologist.--The term `speech-language
pathologist' means a speech-language pathologist who--
``(A) has received, at a minimum, a graduate degree
in speech-language pathology or communication sciences
and disorders from an institution of higher education
accredited by an agency or association recognized by
the Secretary pursuant to section 496(a) of this Act;
and
``(B) provides speech-language pathology services
under section 1861(ll)(1) of the Social Security Act
(42 U.S.C. 1395x(ll)(1), or meets or exceeds the
qualifications for a qualified speech-language
pathologist under subsection (ll)(3) of such section
(42 U.S.C. 1395x(ll)(3)).
``(h) Program Funding.--There shall be available to the Secretary to
carry out this section, from funds not otherwise appropriated, such
sums as may be necessary to provide loan forgiveness in accordance with
this section to each eligible individual.''.
SEC. 132. INCOME-CONTINGENT REPAYMENT FOR PUBLIC SECTOR EMPLOYEES.
Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at the end
the following:
``(7) Repayment plan for public sector employees.--
``(A) In general.--The Secretary shall forgive the
balance due on any loan made under this part or section
428C(b)(5) for a borrower--
``(i) who has made 120 payments on such loan
pursuant to income-contingent repayment; and
``(ii) who is employed, and was employed for
the 10-year period in which the borrower made
the 120 payments described in clause (i), in a
public sector job.
``(B) Public sector job.--In this paragraph, the term
`public sector job' means a full-time job in emergency
management, government, public safety, law enforcement,
public health, education (including early childhood
education), social work in a public child or family
service agency, or public interest legal services
(including prosecution or public defense).
``(8) Return to standard repayment.--A borrower who is
repaying a loan made under this part pursuant to income-
contingent repayment may choose, at any time, to terminate
repayment pursuant to income-contingent repayment and repay
such loan under the standard repayment plan.''.
SEC. 133. INCOME-BASED REPAYMENT.
(a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.) is
further 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) 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) to a borrower as
calculated under the standard repayment plan under
section 428(b)(9)(A)(i) or 455(d)(1)(A); exceeds
``(B) 15 percent of the result obtained by
calculating 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) who has a
partial financial hardship 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)(2)(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 and then toward the principal of the loan;
``(3) any interest due and not paid under paragraph (2) shall
be capitalized;
``(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) shall not exceed the
monthly amount calculated under section 428(b)(9)(A)(i)
or 455(d)(1)(A) 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) is in deferment due to an economic hardship
described in section 435(o) for a period of time
prescribed by the Secretary, not to exceed 20 years; or
``(B)(i) makes the election to participate in income-
based repayment under paragraph (1); and
``(ii) for a period of time prescribed by the
Secretary, not to exceed 20 years (including any period
during which the borrower is in deferment due to an
economic hardship described in section 435(o)), meets 1
or more of the following requirements:
``(I) has made reduced monthly payments under
paragraph (1);
``(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) when
the borrower first made the election described
in this subsection;
``(III) has made payments under a standard
repayment plan under section 428(b)(9)(A)(i) or
455(d)(1)(A);
``(IV) has made payments under an income-
contingent repayment plan under section
455(d)(1)(D); and
``(8) a borrower who is repaying a loan made under this part
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.''.
(b) Conforming ICR Amendment.--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''.
SEC. 134. DEFINITION OF ECONOMIC HARDSHIP.
Section 435(o) (20 U.S.C. 1085(o)) is amended--
(1) in paragraph (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); and
(2) in paragraph (2), by striking ``(1)(C)'' and inserting
``(1)(B)''.
SEC. 135. DEFERRALS.
(a) FISL.--Section 427(a)(2)(C)(iii) (20 U.S.C. 1077(a)(2)(C)(iii))
is amended by striking ``not in excess of 3 years''.
(b) Interest Subsidies.--Section 428(b)(1)(M)(iv) (20 U.S.C.
1078(b)(1)(M)(iv)) is amended by striking ``not in excess of 3 years''.
(c) Direct Loans.--Section 455(f)(2)(D) (20 U.S.C. 1087e(f)(2)(D)) is
amended by striking ``not in excess of 3 years''.
(d) Perkins.--Section 464(c)(2)(A)(iv) (20 U.S.C.
1087dd(c)(2)(A)(iv)) is amended by striking ``not in excess of 3
years''.
SEC. 136. MAXIMUM REPAYMENT PERIOD.
(a) In General.--Section 455(e) (20 U.S.C. 1087e(e)) is amended by
adding at the end the following:
``(9) 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); or
``(iii) makes payments under a standard repayment
plan described in section 428(b)(9)(A)(i) or subsection
(d)(1)(A).''.
(b) Technical Correction.--Section 455(d)(1)(C) (20 U.S.C.
1087e(d)(1)(C)) is amended by striking ``428(b)(9)(A)(v)'' and
inserting ``428(b)(9)(A)(iv)''.
SEC. 137. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
Part G of title IV is amended by inserting after section 484B (20
U.S.C. 1091b) the following new section:
``SEC. 484C. 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)(ii), 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 currently 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. 138. SENSE OF THE CONGRESS; REPORT.
(a) Sense of Congress.--It is the sense of the Congress that--
(1) in order to provide the borrowers of Federal student
loans with the option of converting their loans to income-
contingent repayment by providing direct loans for the
discharge of such loans (in this section referred to as
``direct IDEA loans''), the Secretary of Education and the
Secretary of the Treasury will work together with the
Government Accountability Office to develop a process by which
the borrower will make payments on such loan using the income
tax withholding system and will make appropriate adjustments to
his or her withholding or estimated tax payments for such
purposes;
(2) the Secretaries shall determine--
(A) whether such a repayment option would be
beneficial to borrowers and taxpayers; and
(B) how such program would be implemented by the
Departments of Education and Treasury; and
(3) this process would--
(A) streamline the repayment process and provide
greater flexibility for borrowers electing to use the
direct IDEA loan;
(B) significantly reduce the number of loan defaults
by borrowers; and
(C) significantly reduce the redundancy in reporting
information pertaining to income-contingent repayment
to the Department of Education, institutions, and
applicants.
(b) Report.--The Secretaries of Education and the Treasury shall,
within one year after the date of enactment of this Act--
(1) provide the Congress with information on the progress in
devising the direct IDEA loan with income-contingent repayment
using the income tax withholding system;
(2) inform the Congress of any necessary statutory changes
for the purpose of establishing a direct IDEA loan with income-
contingent repayment using the income tax withholding system;
and
(3) consider international programs demonstrating
implementation of income-contingent repayment collected through
revenue services, such as programs in England, Australia, and
New Zealand.
PART D--SUSTAINING THE PERKINS LOAN PROGRAM
SEC. 141. FEDERAL PERKINS LOANS.
Section 461(b) (20 U.S.C. 1087aa(b)) is amended by adding at the end
the following new paragraphs:
``(3) In addition to any amounts appropriated pursuant to
paragraph (1) or (2) of this subsection, there shall be
available to the Secretary for contributions to student loan
funds established under part E, from funds not otherwise
appropriated, $100,000,000 for each of the fiscal years 2008
through 2012. The sum of the amount made available under this
subsection for any such fiscal year, plus the amount so
appropriated for such fiscal year, shall, for purposes of
allocations under section 462, be treated as the amount
appropriated pursuant to section 461(b) for such fiscal year.
``(4) The authority to make contributions to student loan
funds under this part shall expire at the end of fiscal year
2012.''.
TITLE II--REDUCING THE COST OF COLLEGE
SEC. 201. STATE COMMITMENT TO AFFORDABLE COLLEGE EDUCATION.
Title I is amended by inserting after section 131 (20 U.S.C. 1015)
the following new section:
``SEC. 132. STATE COMMITMENT TO AFFORDABLE COLLEGE EDUCATION.
``(a) Maintenance of Effort Required.--No State shall reduce the
total amount provided by the State for public institutions of higher
education in such State for any academic year beginning on or after
July 1, 2008, to an amount which is less than the average amount
provided by such State to such institutions of higher education during
the 5 most recent preceeding academic years for which satisfactory data
is available.
``(b) Waiver.--The Secretary may waive the requirements of this
section, if the Secretary determines that such a waiver would be
equitable due to exceptional or uncontrollable circumstances, such as a
natural disaster or a precipitous and unforeseen decline in the
financial resources of the State educational agency.
``(c) Withholding of All LEAP Funds for Violations.--Notwithstanding
any other provision of law, the Secretary of Education shall withhold
from any State that violates subsection (a) (except a State that
receives a waiver under subsection (b)) any amount that would otherwise
be available to the State under the Leveraging Educational Assistance
Partnership Program under subpart 4 of part A of title IV until such
State has corrected such violation.''.
SEC. 202. CONSUMER INFORMATION AND PUBLIC ACCOUNTABILITY IN HIGHER
EDUCATION.
Section 131 of the Higher Education Act of 1965 (20 U.S.C. 1015) is
amended to read as follows:
``SEC. 131. CONSUMER INFORMATION AND PUBLIC ACCOUNTABILITY IN HIGHER
EDUCATION.
``(a) College Opportunity On-Line (COOL) Website Re-Design Process.--
In carrying out this section, the Commissioner of Education
Statistics--
``(1) shall identify the data elements related to college
costs that are of greatest importance to prospective students,
enrolled students, and their families, paying particular
attention to low-income, non-traditional student populations,
and first-generation college students;
``(2) shall convene a group of individuals with expertise in
the collection and reporting of data related to institutions of
higher education, the use of consumer data, and consumer
marketing in general to--
``(A) determine the relevance of particular data
elements to prospective students, enrolled students,
and families;
``(B) assess the cost-effectiveness of various ways
in which institutions of higher education might produce
relevant data;
``(C) determine the general comparability of the data
across institutions of higher education; and
``(D) make recommendations regarding the inclusion of
specific data items and the most effective and least
burdensome methods of collecting and reporting useful
data from institutions of higher education; and
``(3) shall ensure that the redesigned COOL website--
``(A) uses, to the extent practicable, data elements
currently provided by institutions of higher education
to the Secretary;
``(B) includes clear and uniform information
determined to be relevant to prospective students,
enrolled students, and families;
``(C) provides comparable information, by ensuring
that data are based on accepted criteria and common
definitions;
``(D) includes a sorting function that permits users
to customize their search for and comparison of
institutions of higher education based on the
information identified through the process as
prescribed in paragraph (1) as being of greatest
relevance to choosing an institution of higher
education.
``(b) Data Collection.--
``(1) Data system.--The Commissioner of Education Statistics
shall continue to redesign the relevant parts of the Integrated
Postsecondary Education Data System to include additional data
as required by this section and to continue to improve the
usefulness and timeliness of data collected by such System in
order to inform consumers about institutions of higher
education.
``(2) College consumer profile.--The Secretary shall continue
to publish on the COOL website, for each academic year and in
accordance with standard definitions developed by the
Commissioner of Education Statistics (including definitions
developed under section 131(a)(3)(A) as in effect on the day
before the date of enactment of the College Cost Reduction Act
of 2007), from at least all institutions of higher education
participating in programs under title IV the following
information:
``(A) The tuition and fees charged for a first-time,
full-time undergraduate student.
``(B) The room and board charges for a first-time,
full-time undergraduate student.
``(C) The price of attendance for a first-time, full-
time undergraduate student, consistent with the
provisions of section 472.
``(D) The average amount of financial assistance
received by a first-year, full-time undergraduate
student, including--
``(i) each type of assistance or benefits
described in 428(a)(2)(C)(ii);
``(ii) institutional and other assistance;
and
``(iii) Federal loans under parts B, D, and E
of title IV.
``(E) The number of first-time, full-time
undergraduate students receiving financial assistance
described in each clause of subparagraph (D).
``(F) The institutional instructional expenditure per
full-time equivalent student.
``(G) Student enrollment information, including
information on the number and percentage of full-time
and part-time students, and the number and percentage
of resident and non-resident students.
``(H) Faculty-to-student ratios.
``(I) Faculty information, including the total number
of faculty and the percentage of faculty who are full-
time employees of the institution and the percentage
who are part-time.
``(J) Completion and graduation rates of
undergraduate students, identifying whether the
completion or graduation rates are from a 2-year or 4-
year program of instruction and, in the case of a 2-
year program of instruction, the percentage of students
who transfer to 4-year institutions prior or subsequent
to completion or graduation.
``(K) A link to the institution of higher education
with information of interest to students including
mission, accreditation, student services (including
services for students with disabilities), transfer of
credit policies, any articulation agreements entered
into by the institution, and, if appropriate, placement
rates and other measures of success in preparing
students for entry into or advancement in the
workforce.
``(L) The college affordability information elements
specified in subsection (c).
``(M) Any additional information that the Secretary
may require.
``(c) College Affordability Information Elements.--The college
affordability information elements required by subsection (b)(2)(L)
shall include, for each institution submitting data--
``(1) the sticker price of the institution for the 3 most
recent academic years;
``(2) the net tuition price of the institution for the 3 most
recent academic years;
``(3) the percentage change in both the sticker price and the
net tuition price over the 3-year time period that is being
reported;
``(4) the percentage change in the higher education price
index (as defined in section 401B(d)) over the same 3-year time
period; and
``(5) whether the institution has been placed on
affordability alert status as required by subsection (d)(2).
``(d) Outcomes and Actions.--
``(1) Response from institution.--Effective on June 30, 2008,
an institution that increases its sticker price at a percentage
rate for any 3-year interval ending on or after that date that
exceeds two times the rate of change in the higher education
price index (as defined in section 401B(d)) over the same time
period shall provide a report to the Secretary, in such a form,
at such time, and containing such information as the Secretary
may require. Such report shall be published by the Secretary on
the COOL website, and shall include--
``(A) a description of the factors contributing to
the increase in the institution's costs and in the
tuition and fees charged to students; and
``(B) if determinations of tuition and fee increases
are not within the exclusive control of the
institution, a description of the agency or
instrumentality of State government or other entity
that participates in such determinations and the
authority exercised by such agency, instrumentality, or
entity.
``(2) Consequences for 2-year continuation of failure.--If
the Secretary determines that an institution that is subject to
paragraph (1) has failed to reduce the subsequent increase in
sticker price to equal to or below two times the rate of change
in the higher education price index (as defined in section
401B(d)) for 2 consecutive academic years subsequent to the 3-
year interval used under paragraph (1), the Secretary shall
place the institution on affordability alert status.
``(3) Exemptions.--Notwithstanding paragraph (2), an
institution shall not be placed on affordability alert status
if, for any 3-year interval for which sticker prices are
computed under paragraph (1)--
``(A) with respect the the class of institutions
described in paragraph (5) to which the institution
belongs, the sticker price of the institution is in the
lowest quartile of institutions within such class, as
determined by the Secretary, during the last year of
such 3-year interval; or
``(B) the institution has a percentage change in its
sticker price computed under paragraph (1) that exceeds
two times the rate of change in the higher education
price index (as defined in section 401B(d)) over the
same time period, but the dollar amount of the sticker
price increase is less than $500.
``(4) Information to state agencies.--Any institution that
reports under paragraph (1)(B) that an agency or
instrumentality of State government or other entity
participates in the determinations of tuition and fee increases
shall, prior to submitting any information to the Secretary
under this subsection, submit such information to, and request
the comments and input of, such agency, instrumentality, or
entity. With respect to any such institution, the Secretary
shall provide a copy of any communication by the Secretary with
that institution to such agency, instrumentality, or entity.
``(5) Classes of institutions.--For purposes of this
subsection, the classes of institutions shall be those sectors
used by the Integrated Postsecondary Education Data System,
based on whether the institution is public, nonprofit private,
or for-profit private, and whether the institution has a 4-
year, 2-year, or less than 2-year program of instruction.
``(6) Data rejection.--Nothing in this subsection shall be
construed as allowing the Secretary to reject the data
submitted by an individual institution of higher education.
``(e) Information to the Public.--The Secretary shall work with
public and private entities to promote broad public awareness,
particularly among middle and high school students and their families,
of the information made available under this section, including by
distribution to students who participate in or receive benefits from
means-tested federally funded education programs and other Federal
programs determined by the Secretary.
``(f) Fines.--In addition to actions authorized in section 487(c),
the Secretary may impose a fine in an amount not to exceed $25,000 on
an institution of higher education for failing to provide the
information required by this section in a timely and accurate manner,
or for failing to otherwise cooperate with the National Center for
Education Statistics regarding efforts to obtain data under subsection
(c) and pursuant to the program participation agreement entered into
under section 487.
``(g) Regulations.--The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of this
section.
``(h) Definitions.--For the purposes of this section:
``(1) Net tuition price.--The term `net tuition price' means
the sticker price, minus the average grants provided to such
students, for any academic year.
``(2) Sticker price.--The term `sticker price' means the
average tuition and fees charged to a first-time, full-time,
full-year undergraduate student by an institution of higher
education for any academic year.''.
SEC. 203. INCENTIVES AND REWARDS FOR LOW TUITION.
Subpart 1 of part A of title IV is amended by inserting after section
401A (20 U.S.C. 1070a-1) the following new section:
``SEC. 401B. INCENTIVES AND REWARDS FOR LOW TUITION.
``(a) Rewards for Low Tuition.--For an institution of higher
education that, for academic year 2008-2009 or any succeeding academic
year, has an annual net tuition price increase (expressed as a
percentage) for the most recent academic year for which satisfactory
data is available that is equal to or less than the percentage change
in the higher education price index for such academic year, the
Secretary shall provide such institution an amount sufficient to
provide a 25 percent increase under subpart 1 of part A of title IV to
each Pell Grant recipient attending such institution for the next award
year beginning after the date of such determination. Each such
institution shall distribute any amounts received under this subsection
among such Pell Grant recipients by increasing the amount of their Pell
Grant awards by 25 percent.
``(b) Rewards for Guaranteed Tuition.--
``(1) Bonus.--For each institution of higher education that
the Secretary of Education determines complies with the
requirements of paragraph (2) or (3) of this subsection, the
Secretary shall provide to such institution a bonus amount
equal to 25 percent of the aggregate amount of aid received by
students at the institution under section 401(a). Such
institution shall award the bonus amount to the Pell Grant
recipients who were in attendance at the institution during the
award year that such institution satisfied the eligibility
criteria for maintaining low tuition and fees. Each such
student shall receive an amount that equals 25 percent of their
total Pell Grant award for such award year, except that no
student shall recieve an amount under this section that would
cause the amount of total financial aid received by such
student to exceed the cost of attendance of the institution. If
there are additional funds remaining after all eligible
students have been paid from the bonus amount, the institution
shall award all excess funds first to remaining Pell Grant
recipients who were not in attendance at the institution during
such award year, and then to other eligible students under this
title in attendance at such institution in the form of need-
based aid.
``(2) 4-year institutions.--An institution of higher
education that provides a program of instruction for which it
awards a bachelor's degree complies with the requirements of
this paragraph if such institution guarantees that for any
academic year beginning on or after July 1, 2008, and for each
of the 4 succeeding continuous academic years, the net tuition
price charged to an undergraduate student will not exceed--
``(A) the amount that the student was charged for an
academic year at the time he or she first enrolled in
the institution of higher education, plus
``(B) the product of the percentage increase in the
higher education price index for the prior academic
year, or the most recent prior academic year for which
data is available, multiplied by the amount determined
under subparagraph (A).
``(3) Less-than 4-year institutions.--An institution of
higher education that does not provide a program of instruction
for which it awards a bachelor's degree complies with the
requirements of this paragraph if such institution guarantees
that for any academic year (or the equivalent) beginning on or
after July 1, 2008, and for each of the 1.5 succeeding
continuous academic years, the net tuition price charged to an
undergraduate student will not exceed--
``(A) the amount that the student was charged for an
academic year at the time he or she first enrolled in
the institution of higher education, plus
``(B) the product of the percentage increase in the
higher education price index for the prior academic
year, or the most recent prior academic year for which
data is available, multiplied by the amount determined
under subparagraph (A).
``(c) Maintaining Affordable Tuition.--For any institution of higher
education whose increase in the annual net tuition price (expressed as
a percentage), for the most recent academic year for which satisfactory
data is available, is greater than the percentage increase in the
higher education price index for such academic year, the Secretary
shall require such institution to submit to the Secretary the following
information, within 6 months of such determination:
``(1) a detailed report on the exact causes for the net
tuition price increase that outlines revenues and expenditures;
and
``(2) cost containment strategies to lower net tuition
prices.
``(d) Priority.--In awarding incentives and rewards under this
section, the Secretary shall give priority to institutions of higher
education with the lowest annual net tuition price increase (expressed
as a percentage) for the most recent academic year for which
satisfactory data is available, when compared with other institutions
of higher education with annual net tuition price increases that are
equal to or less than the percentage change in the higher education
price index for such academic year.
``(e) Definitions.--
``(1) Net tuition price.--The term `net tuition price' has
the same meaning as provided in section 131(k).
``(2) Higher education price index.--The term `higher
education price index' means a statistical measure of change
over time in the prices of a fixed market basket of goods and
services purchased by colleges and universities through current
fund educational and general expenditures (excluding
expenditures for research), as developed by the Bureau of Labor
Statistics.
``(f) Funding.--There shall be available to the Secretary to carry
out this section, from funds not otherwise appropriated, $15,000,000
for each of the fiscal years 2008 through 2012.
``(g) Sunset.--The authority to carry out this section shall expire
at the end of fiscal year 2012.''.
SEC. 204. COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT RESTRAIN
TUITION INCREASES.
The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended
by adding at the end the following title:
``TITLE VIII--COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT
RESTRAIN TUITION INCREASES
``SEC. 801. DEFINITION OF COOPERATIVE EDUCATION.
``For the purpose of this title the term `cooperative education'
means the provision of alternating or parallel periods of academic
study and public or private employment in order to give students work
experiences related to their academic or occupational objectives and an
opportunity to earn the funds necessary for continuing and completing
their education.
``SEC. 802. AUTHORIZATION OF APPROPRIATIONS; RESERVATIONS.
``(a) Appropriations.--There shall be available to the Secretary to
carry out this title from funds not otherwise appropriated $15,000,000
for each of the fiscal years 2008 through 2012.
``(b) Reservations.--Of the amount appropriated for each such fiscal
year--
``(1) not less than 50 percent shall be available for
carrying out grants to institutions of higher education and
combinations of such institutions described in section
803(a)(1)(A) for cooperative education under section 803;
``(2) not less than 25 percent shall be available for
carrying out grants to institutions of higher education
described in section 803(a)(1)(B) for cooperative education
under section 803;
``(3) not more than 11 percent shall be available for
demonstration projects under paragraph (1) of section 804(a);
``(4) not more than 11 percent shall be available for
training and resource centers under paragraph (2) of section
804(a); and
``(5) not more than 3 percent shall be available for research
under paragraph (3) of section 804(a).
``(c) Availability of Appropriations.--Appropriations under this
title shall not be available for the payment of compensation of
students for employment by employers under arrangements pursuant to
this title.
``(d) Sunset.--The authority to carry out this title shall expire at
the end of fiscal year 2012.
``SEC. 803. GRANTS FOR COOPERATIVE EDUCATION.
``(a) Grants Authorized.--
``(1) In general.--The Secretary is authorized--
``(A) from the amount available under section
802(b)(1) in each fiscal year and in accordance with
the provisions of this title, to make grants to
institutions of higher education or combinations of
such institutions that have not previously received a
grant under this paragraph to pay the Federal share of
the cost of planning, establishing, expanding, or
carrying out programs of cooperative education by such
institutions or combinations of institutions; and
``(B) from the amount available under section
802(b)(2) in each fiscal year and in accordance with
the provisions of this title, to make grants to
institutions of higher education that are operating an
existing cooperative education program (as determined
by the Secretary) to pay the cost of planning,
establishing, expanding, or carrying out programs of
cooperative education by such institutions.
``(2) Program requirement.--Cooperative education programs
assisted under this section shall provide alternating or
parallel periods of academic study and of public or private
employment, giving students work experience related to their
academic or occupational objectives and the opportunity to earn
the funds necessary for continuing and completing their
education.
``(3) Amount of grants.--
``(A) The amount of each grant awarded pursuant to
paragraph (1)(A) to any institution of higher education
or combination of such institutions in any fiscal year
shall not exceed $500,000.
``(B)(i) Except as provided in clauses (ii) and
(iii), the Secretary shall award grants in each fiscal
year to each institution of higher education described
in paragraph (1)(B) that has an application approved
under subsection (b) in an amount which bears the same
ratio to the amount reserved pursuant to section
802(b)(2) for such fiscal year as the number of
unduplicated students placed in cooperative education
jobs during the preceding fiscal year (other than
cooperative education jobs under section 804 and as
determined by the Secretary) by such institution of
higher education bears to the total number of all such
students placed in such jobs during the preceding
fiscal year by all such institutions.
``(ii) No institution of higher education shall
receive a grant pursuant to paragraph (1)(B) in any
fiscal year in an amount which exceeds 25 percent of
such institution's cooperative education program's
personnel and operating budget for the preceding fiscal
year.
``(iii) The minimum annual grant amount which an
institution of higher education is eligible to receive
under paragraph (1)(B) is $1,000 and the maximum annual
grant amount is $75,000.
``(4) Limitation.--The Secretary shall not award grants
pursuant to paragraphs (1)(A) and (1)(B) to the same
institution of higher education or combination of such
institution in any one fiscal year.
``(5) Uses.--Grants under paragraph (1)(B) shall be used
exclusively--
``(A) to expand the quality and participation of a
cooperative education program;
``(B) for outreach in new curricular areas; and
``(C) for outreach to potential participants
including underrepresented and nontraditional
populations.
``(b) Applications.--Each institution of higher education or
combination of such institutions desiring to receive a grant under this
section shall submit an application to the Secretary at such time and
in such manner as the Secretary shall prescribe. Each such application
shall--
``(1) set forth the program or activities for which a grant
is authorized under this section;
``(2) specify each portion of such program or activities
which will be performed by a nonprofit organization or
institution other than the applicant, and the compensation to
be paid for such performance;
``(3) provide that the applicant will expend during such
fiscal year for the purpose of such program or activities not
less than the amount expended for such purpose during the
previous fiscal year;
``(4) describe the plans which the applicant will carry out
to assure, and contain a formal statement of the institution's
commitment which assures, that the applicant will continue the
cooperative education program beyond the 5-year period of
Federal assistance described in subsection (c)(1) at a level
which is not less than the total amount expended for such
program during the first year such program was assisted under
this section;
``(5) provide that, in the case of an institution of higher
education that provides a 2-year program which is acceptable
for full credit toward a bachelor's degree, the cooperative
education program will be available to students who are
certificate or associate degree candidates and who carry at
least one-half the normal full-time academic workload;
``(6) provide that the applicant will--
``(A) for each fiscal year for which the applicant
receives a grant, make such reports with respect to the
impact of the cooperative education program in the
previous fiscal year as may be essential to ensure that
the applicant is complying with the provisions of this
section, including--
``(i) the number of unduplicated student
applicants in the cooperative education
program;
``(ii) the number of unduplicated students
placed in cooperative education jobs;
``(iii) the number of employers who have
hired cooperative education students;
``(iv) the average income for students
derived from working in cooperative education
jobs; and
``(v) the increase or decrease in the number
of unduplicated students placed in cooperative
education jobs in each fiscal year compared to
the previous fiscal year; and
``(B) keep such records as are essential to ensure
that the applicant is complying with the provisions of
this title, including the notation of cooperative
education employment on the student's transcript;
``(7) describe the extent to which programs in the academic
discipline for which the application is made have had a
favorable reception by public and private sector employers;
``(8) describe the extent to which the institution is
committed to extending cooperative education on an institution-
wide basis for all students who can benefit;
``(9) describe the plans that the applicant will carry out to
evaluate the applicant's cooperative education program at the
end of the grant period;
``(10) provide for such fiscal control and fund accounting
procedures as may be necessary to assure proper disbursement
of, and accounting for, Federal funds paid to the applicant
under this title;
``(11) demonstrate a commitment to serving all underserved
populations; and
``(12) include such other information as is essential to
carry out the provisions of this title.
``(c) Duration of Grants; Federal Share.--
``(1) Duration of grants.--No individual institution of
higher education may receive, individually or as a participant
in a combination of such institutions--
``(A) a grant pursuant to subsection (a)(1)(A) for
more than 5 fiscal years; or
``(B) a grant pursuant to subsection (a)(1)(B) for
more than 5 fiscal years.
``(2) Federal share.--The Federal share of a grant under
section 803(a)(1)(A) may not exceed--
``(A) 85 percent of the cost of carrying out the
program or activities described in the application in
the first year the applicant receives a grant under
this section;
``(B) 70 percent of such cost in the second such
year;
``(C) 55 percent of such cost in the third such year;
``(D) 40 percent of such cost in the fourth such
year; and
``(E) 25 percent of such cost in the fifth such year.
``(3) Special rule.--Any provision of law to the contrary
notwithstanding, the Secretary shall not waive the provisions
of this subsection.
``(d) Maintenance of Effort.--If the Secretary determines that a
recipient of funds under this section has failed to maintain the fiscal
effort described in subsection (b)(3), then the Secretary may elect not
to make grant payments under this section to such recipient.
``SEC. 804. DEMONSTRATION AND INNOVATION PROJECTS; TRAINING AND
RESOURCE CENTERS; AND RESEARCH.
``(a) Authorization.--The Secretary is authorized, in accordance with
the provisions of this section, to make grants and enter into
contracts--
``(1) from the amounts available in each fiscal year under
section 802(b)(3), for the conduct of demonstration projects
designed to demonstrate or determine the feasibility or value
of innovative methods of cooperative education ;
``(2) from the amounts available in each fiscal year under
section 802(b)(4), for the conduct of training and resource
centers designed to--
``(A) train personnel in the field of cooperative
education;
``(B) improve materials used in cooperative education
programs if such improvement is conducted in
conjunction with other activities described in this
paragraph;
``(C) furnish technical assistance to institutions of
higher education to increase the potential of the
institution to continue to conduct a cooperative
education program without Federal assistance;
``(D) encourage model cooperative education programs
which furnish education and training in occupations in
which there is a national need;
``(E) support partnerships under which an institution
carrying out a comprehensive cooperative education
program joins with one or more institutions of higher
education in order to--
``(i) assist the institutions other than the
comprehensive cooperative education institution
to develop and expand an existing program of
cooperative education; or
``(ii) establish and improve or expand
comprehensive cooperative education programs;
and
``(F) encourage model cooperative education programs
in the fields of science and mathematics for women and
minorities who are underrepresented in such fields; and
``(3) from the amounts available in each fiscal year under
section 802(b)(5), for the conduct of research relating to
cooperative education.
``(b) Administrative Provision.--
``(1) In general.--To carry out this section, the Secretary
may--
``(A) make grants to or contracts with institutions
of higher education, or combinations of such
institutions; and
``(B) make grants to or contracts with other public
or private nonprofit agencies or organizations,
whenever such grants or contracts will make an
especially significant contribution to attaining the
objectives of this section.
``(2) Limitation.--
``(A) The Secretary may not use more than 3 percent
of the amount appropriated to carry out this section in
each fiscal year to make grants or enter into contracts
described in paragraph (1)(A).
``(B) The Secretary may use not more than 3 percent
of the amount appropriated to carry out this section in
each fiscal year to make grants or enter into contracts
described in paragraph (1)(B).
``(c) Supplement Not Supplant.--A recipient of a grant or contract
under this section may use the funds provided only to supplement and,
to the extent possible, increase the level of funds that would, in the
absence of such funds, be made available from non-Federal sources to
carry out the activities supported by such grant or contract, and in no
case to supplant such funds from non-Federal sources.''.
TITLE III--ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM
PART A--TEACH GRANTS
SEC. 301. TEACH GRANTS.
Part A of title IV (20 U.S.C. 1070a et seq.) is amended by adding at
the end the following new subpart:
``Subpart 9--TEACH Grants
``SEC. 420L. 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 eligible student (defined in accordance with section 484)
who files an application and agreement in accordance with
section 420M, and who qualifies--
``(A) under paragraph (2) of section 420M(a), a TEACH
Grant in the amount of $4,000 for each academic year
during which that student is in attendance at the
institution; and
``(B) under paragraphs (2) and (3) of section
420M(a), a Bonus TEACH Grant in the amount of $500 (in
addition to the amount of the TEACH Grant under
subparagraph (A)) for each academic year during which
that student so qualifies.
``(2) Reference.--Grants made under--
``(A) paragraph (1)(A) shall be known as `Teacher
Education Assistance for College and Higher Education
Grants' or `TEACH Grants'; and
``(B) paragraph (1)(B) shall be known as Bonus TEACH
Grants.
``(b) Payment Methodology.--
``(1) Prepayment.--Not less than 85 percent of any funds
provided to an institution under subsection (a) shall be
advanced to eligible institutions prior to the start of each
payment period and shall be based upon an amount requested by
the institution as needed to pay eligible students 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
students, in advance of the beginning of the academic term, an
amount for which they are eligible, in cases where the eligible
institution elects not to participate in the disbursement
system required by paragraph (1).
``(3) Distribution of grants to students.--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 student's
account shall be limited to tuition and fees and, in the case
of institutionally-owned housing, room and board. The student
may elect to have the institution provide other such goods and
services by crediting the student's account.
``(c) Reductions in Amount.--
``(1) Part-time students.--In any case where a student
attends an institution of higher education on less than a full-
time basis (including a student who attends an institution of
higher education on less than a half-time basis) during any
academic year, the amount of a grant under this subpart for
which that student is eligible shall be reduced in proportion
to the degree to which that student 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 institution at which that
student is in attendance. If, with respect to any student, it
is determined that the amount of a TEACH Grant or a Bonus TEACH
Grant exceeds the cost of attendance for that year, the amount
of the TEACH Grant or Bonus TEACH Grant, respectively, shall be
reduced until such grant does not exceed the cost of attendance
at such institution.
``(d) Period of Eligibility for Grants.--
``(1) Undergraduate students.--The period during which an
undergraduate student may receive grants under this subpart
shall be the period required for the completion of the first
undergraduate baccalaureate course of study being pursued by
that student at the institution at which the student is in
attendance except that--
``(A) any period during which the student is enrolled
in a noncredit or remedial course of study as defined
in paragraph (3) shall not be counted for the purpose
of this paragraph; and
``(B) the total amount that a student may receive
under this subpart for undergraduate study shall not
exceed $16,000 with respect to a student who receives
only TEACH Grants, and $18,000 with respect to a
student who receives TEACH Grants and Bonus TEACH
Grants.
``(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 being pursued by that student at the institution at
which the student is in attendance, except that the total
amount that a student may receive under this subpart for
graduate study shall not exceed $8,000 with respect to a
student who receives only TEACH Grants, and $10,000 with
respect to a student who receives TEACH Grants and Bonus TEACH
Grants.
``(3) Remedial course; study abroad.--Nothing in this section
shall exclude from eligibility courses of study which are
noncredit or remedial in nature (including courses in English
language acquisition) which are determined by the institution
to be necessary to help the student be prepared for the pursuit
of a first undergraduate baccalaureate degree or certificate
or, in the case of courses in English language instruction, to
be necessary to enable the student to utilize already existing
knowledge, training, or skills. Nothing in this section shall
exclude from eligibility programs of study abroad that are
approved for credit by the home institution at which the
student is enrolled.
``SEC. 420M. ELIGIBILITY; APPLICATIONS.
``(a) Applications; Demonstration of Eligibility.--
``(1) Filing required.--The Secretary shall from time to time
set dates by which students shall file applications for grants
under this subpart. Each student desiring a grant under this
subpart for any year shall file an application containing such
information and assurances as the Secretary may deem 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) for a TEACH Grant
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 high 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 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 math, 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.
``(3) Demonstration of bonus teach grant eligibility.--Each
application submitted under paragraph (1) for a Bonus TEACH
Grant shall contain such information as is necessary to
demonstrate that the applicant is--
``(A) eligible for, and has applied for, a TEACH
Grant; and
``(B) a student enrolled in a qualified teacher
preparation program, as defined in section 420N.
``(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) with respect to an applicant for--
``(i) TEACH Grants, teach in any of the
following fields: mathematics, science, a
foreign language, bilingual education, or
special education, or as a reading specialist,
or another field documented as high-need by the
Federal Government, State government, or local
education agency and approved by the Secretary;
or
``(ii) TEACH Grants and Bonus TEACH Grants,
teach mathematics, science, or a science-
related field;
``(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 and Bonus 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 and Bonus TEACH Grants received
by such recipient shall be treated as a Direct Loan under part D of
title IV, and shall be subject to repayment, together with interest
thereon accruing after the period of service, in accordance with terms
and conditions specified by the Secretary in regulations under this
subpart.
``SEC. 420N. 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.
``(2) Qualified teacher preparation program.--The term
`qualified teacher preparation program' means a program for
students and teachers described in subparagraph (A) or (B) of
section 420M(a)(2) (referred to jointly in this paragraph as
`teacher candidates') that--
``(A) recruits and prepares teacher candidates who
major in science, technology fields, special education,
foreign language, engineering, or mathematics
disciplines to become certified as elementary and
secondary teachers in those disciplines, special
education teachers, or teachers of English Language
Learners, with the goals of improving teacher knowledge
and effectiveness and increasing elementary and
secondary student academic achievement;
``(B) is implemented by an institution of higher
education in partnership with high-need local
educational agencies;
``(C) offers a baccalaureate degree with a concurrent
teacher certification to teacher candidates;
``(D) is implemented in coordination with the faculty
of the relevant departments of the institution of
higher education;
``(E) utilizes experienced teachers who have a
demonstrated record of success in teaching underserved
students to instruct teacher candidates in the
disciplines described in subparagraph (A);
``(F) provides teacher candidates with--
``(i) support services, including mentoring
by experienced teachers who have a demonstrated
record of success in teaching underserved
students;
``(ii) exposure to, and field experience in,
the classroom within the first year of entering
the qualified teacher preparation program; and
``(iii) other related support practices while
the teacher candidates are participating in the
program, and after such candidates graduate
from the institution of higher education and
are employed as teachers;
``(G) participates in partnerships which include the
institution of higher education and local educational
agencies and charter districts to provide opportunities
for teacher candidate field work;
``(H) focuses on increasing the number of teachers in
the disciplines described in subparagraph (A); and
``(I) encourages individuals from underrepresented
populations to enter into the teaching profession.
``SEC. 420O. PROGRAM PERIOD AND FUNDING.
``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 and Bonus TEACH Grants in accordance
with this subpart to each eligible applicant.''.
PART B--CENTERS OF EXCELLENCE
SEC. 311. CENTERS OF EXCELLENCE.
Title II (20 U.S.C. 1021 et seq.) is amended by adding at the end the
following:
``PART C--CENTERS OF EXCELLENCE
``SEC. 231. DEFINITIONS.
``As used in this part:
``(1) Eligible institution.--The term `eligible institution'
means--
``(A) an institution of higher education that has a
teacher preparation program that meets the requirements
of section 203(b)(2)and that is--
``(i) a part B institution (as defined in
section 322);
``(ii) a Hispanic-serving institution (as
defined in section 502);
``(iii) a Tribal College or University (as
defined in section 316);
``(iv) an Alaska Native-serving institution
(as defined in section 317(b)); or
``(v) a Native Hawaiian-serving institution
(as defined in section 317(b));
``(B) a consortium of institutions described in
subparagraph (A); or
``(C) an institution described in subparagraph (A),
or a consortium described in subparagraph (B), in
partnership with any other institution of higher
education, but only if the center of excellence
established under section 232 is located at an
institution described in subparagraph (A).
``(2) Highly qualified.--The term `highly qualified' when
used with respect to an individual means that the individual is
highly qualified as determined under section 9101 of the
Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801)
or section 602 of the Individuals with Disabilities Education
Act (20 U.S.C. 1401).
``(3) Scientifically based reading research.--The term
`scientifically based reading research' has the meaning given
such term in section 1208 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 6368).
``(4) Scientifically based research.--The term
`scientifically based research' has the meaning given such term
in section 9101 of the Elementary and Secondary Education Act
of 1965 (20 U.S.C. 7801).
``SEC. 232. CENTERS OF EXCELLENCE.
``(a) Program Authorized.--From the amounts appropriated to carry out
this part, the Secretary is authorized to award competitive grants to
eligible institutions to establish centers of excellence.
``(b) Use of Funds.--Grants provided by the Secretary under this part
shall be used to ensure that current and future teachers are highly
qualified, by carrying out one or more of the following activities:
``(1) Implementing reforms within teacher preparation
programs to ensure that such programs are preparing teachers
who are highly qualified, are able to understand scientifically
based research, and are able to use advanced technology
effectively in the classroom, including use for instructional
techniques to improve student academic achievement, by--
``(A) retraining faculty; and
``(B) designing (or redesigning) teacher preparation
programs that--
``(i) prepare teachers to close student
achievement gaps, are based on rigorous
academic content, scientifically based research
(including scientifically based reading
research), and challenging State student
academic content standards; and
``(ii) promote strong teaching skills.
``(2) Providing sustained and high-quality preservice
clinical experience, including the mentoring of prospective
teachers by exemplary teachers, substantially increasing
interaction between faculty at institutions of higher education
and new and experienced teachers, principals, and other
administrators at elementary schools or secondary schools, and
providing support, including preparation time, for such
interaction.
``(3) Developing and implementing initiatives to promote
retention of highly qualified teachers and principals,
including minority teachers and principals, including programs
that provide--
``(A) teacher or principal mentoring from exemplary
teachers or principals; or
``(B) induction and support for teachers and
principals during their first 3 years of employment as
teachers or principals, respectively.
``(4) Awarding scholarships based on financial need to help
students pay the costs of tuition, room, board, and other
expenses of completing a teacher preparation program.
``(5) Disseminating information on effective practices for
teacher preparation and successful teacher certification and
licensure assessment preparation strategies.
``(6) Activities authorized under sections 202, 203, and 204.
``(c) Application.--Any eligible institution desiring a grant under
this section shall submit an application to the Secretary at such a
time, in such a manner, and accompanied by such information as the
Secretary may require.
``(d) Minimum Grant Amount.--The minimum amount of each grant under
this part shall be $500,000.
``(e) Limitation on Administrative Expenses.--An eligible institution
that receives a grant under this part may not use more than 2 percent
of the grant funds for purposes of administering the grant.
``(f) Regulations.--The Secretary shall prescribe such regulations as
may be necessary to carry out this part.
``SEC. 233. APPROPRIATIONS.
``There shall be available to the Secretary, from funds not otherwise
appropriated, $50,000,000 for the period beginning with fiscal year
2008 and ending with fiscal year 2012, to carry out this part beginning
with academic year 2008-2009, which shall remain available until
expended. The authority to carry out this part shall expire at the end
of fiscal year 2012.''.
TITLE IV--LEVERAGING FUNDS TO INCREASE COLLEGE ACCESS
PART A--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND
MINORITY-SERVING INSTITUTIONS
SEC. 401. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND MINORITY-SERVING INSTITUTION.
Title IV is amended by adding at the end the following new part:
``PART I--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND OTHER MINORITY-SERVING INSTITUTIONS
``SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND OTHER MINORITY-SERVING INSTITUTION.
``(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)); or
``(6) an Asian and Pacific Islander-serving 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, $100,000,000 for each of the fiscal years 2008
through 2012. The authority to carry out this section shall
expire at the end of fiscal year 2012.
``(2) Allocation and allotment.--
``(A) In general.--Of the amounts made available
under paragraph (1) for any fiscal year--
``(i) 40 percent shall be available for
allocation under subparagraph (B);
``(ii) 40 percent shall be available for
allocation under subparagraph (C); and
``(iii) 20 percent 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
and 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) $34,000,000 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
and natural sciences, mathematics,
computer science and information
technology and sciences, engineering,
language instruction in the less-
commonly taught languages and
international affairs, and nursing and
allied health professions; and
``(ii) $6,000,000 shall be available to
eligible institutions described in subsection
(a)(5) and shall be available for a competitive
grant program to award 10 grants of $600,000
annually for programs in the following areas:
science, technology, engineering, or
mathematics (STEM); health education;
internationalization or globalization; teacher
preparation; or 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 (in this subparagraph
referred to as the `allocable amount')--
``(i) 60 percent of the allocable amount 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 60 percent of the allocable
amount 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 60 percent for purposes
described in subsection (c) of such section;
``(ii) 30 percent of the allocable amount 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 30 percent of the allocable
amount 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 60 percent for purposes described in
subsection (a) of such section; and
``(iii) 10 percent of the allocable amount
for such fiscal year shall be available to
eligible institutions described in subsection
(a)(6) for activities described in section
311(c).
``(c) Definitions.--
``(1) Predominantly black institution.--The term
`Predominantly Black institution' means an institution of
higher education that--
``(A) has an enrollment of needy undergraduate
students as required and defined by paragraph (2);
``(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 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 it 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 bachelors
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.
``(2) Enrollment of needy students.--The term `enrollment of
needy students' means the enrollment at an eligible institution
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 benefits program (as defined in
paragraph (4));
``(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 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.
``(3) Low-income individual.--The term `low-income
individual' has the meaning given such term in section 402A(g).
``(4) 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, or both, are determined on the basis of income or
resources of the individual or family seeking the benefit.
``(5) Asian american and pacific islander-serving
institution.--The term `Asian American and 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 Pacific Islander students from
subgroups with low levels of college degree attainment.
``(6) 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).
``(7) Pacific islander.--The term `Pacific Islander' has the
meaning given the term `Native Hawaiian' or `Other Pacific
Islander' in such Standards for Maintaining, Collecting, and
Presenting Federal Data on Race and Ethnicity.
``(8) Low levels of college degree attainment.--The term `low
levels of college degree attainment' mean college degree
attainment that is less than 20 percent for adults ages 25
through 29 as reported by the National Center for Educational
Statistics.
``(d) Termination of Authority.--The authority to carry out this
section expires at the end of fiscal year 2012.''.
PART B--COLLEGE ACCESS CHALLENGE GRANTS
SEC. 411. COLLEGE ACCESS CHALLENGE GRANTS.
(a) Challenge Grant Program Established.--
(1) Program established.--The Secretary shall establish a
program to award matching grants to increase the number of
eligible students from underserved populations who enter and
complete college by providing grants to philanthropic
organizations who are members of eligible consortia to carry
out the activities of the consortia to achieve this purpose,
including--
(A) providing need-based grants to eligible students;
(B) providing support to eligible students through
school- or institution-based mentoring programs; and
(C) conducting outreach programs to encourage
eligible students to pursue higher education.
(2) Grant period; renewability.--Grants under this section
shall be awarded for one 5-year period, and may not be renewed.
(3) Grant amounts.--
(A) In general.--A grant awarded under this part for
a given fiscal year to a philanthropic organization
shall be in an amount equal to the lesser of--
(i) 200 percent of the amount of charitable
gifts received in the preceding fiscal year by
the eligible consortia, including charitable
gifts received by the individual members of the
consortia with which the philanthropic
organization is associated; or
(ii) the maximum grant amount established by
the Secretary by regulation, pursuant to
subsection (f).
(B) Gifts provided in cash or in-kind.--For the
purposes of subparagraph (A), the charitable gifts
received by an eligible consortia and its members may
be provided in cash or in-kind, including physical non-
cash contributions of monetary value such as property,
facilities, and equipment, but excluding services.
(b) Uses of Grant.--
(1) In general.--A philanthropic organization receiving a
grant under this section shall--
(A) provide grants to eligible students; and
(B) distribute grants to members of the consortia
with which the philanthropic organization is
affiliated, in accordance with the plan described in
subsection (c)(2)(A), to fund the activities of such
consortia in accordance with the application under
subsection (c).
(2) Limitation.--Not more than 15 percent of the funds made
available annually through a grant under this section may be
used for administrative purposes.
(c) Applications.--A philanthropic organization desiring a grant
under this section shall submit an application to the Secretary at such
time, in such manner, and containing such information as the Secretary
may require. Such application shall include the following:
(1) A description of an eligible consortia that meets the
requirements of subsection (d), with which the philanthropic
organization is affiliated, in accordance with subsection (g).
(2) A detailed description of--
(A) the philanthropic organization's plans for
distributing the matching grant funds among the members
of the eligible consortia; and
(B) the eligible consortia's plans for using the
matching grant funds, including how the funds will be
used to provide financial aid, mentoring, and outreach
programs to eligible students.
(3) A plan to ensure the viability of the eligible consortia
and the work of the consortia beyond the grant period.
(4) A detailed description of the activities that carry out
this section that are conducted by the eligible consortia at
the time of the application, and how the matching grant funds
will assist the eligible consortia with expanding and enhancing
such activities.
(5) A description of the organizational structure that will
be used to administer the activities carried out under the
plan, including a description of the system used to track the
participation of students who receive grants to degree
completion.
(6) A description of the strategies that will be used to
identify eligible students who are enrolled in secondary school
and who may benefit from the activities of the eligible
consortia.
(d) Eligible Consortia.--An eligible consortia with which a
philanthropic organization is affiliated for the program under this
section shall--
(1) be a partnership of mulitple entities that have agreed to
work together to carry out this section, including--
(A) such philanthropic organization, which shall
serve as the manager of the consortia;
(B) 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
(C) at the discretion of the philanthropic
organization described in subparagraph (A), 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
(2) conduct activites to assist eligible students with
entering and remaining in college, which include--
(A) providing need-based grants to eligible students;
(B) 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
financial aid and other support available from the
eligible consortia;
(C) encouraging increased eligible student
participation in higher education through mentoring or
outreach programs; and
(D) conducting marketing and outreach efforts that
are designed to--
(i) encourage full participation of eligible
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.
(e) Annual Report.--A philanthropic organization receiving a grant
under this section shall prepare and submit an annual report to the
Secretary on the activities carried out with such grant. The report
shall include--
(1) each activity or service that was provided to eligible
students over the course of the year;
(2) the cost of providing each such activity or service;
(3) the number and percentage of eligible students who
received grants, mentoring, and outreach services; and
(4) the total amount of charitable gifts received by the
eligible consortia (including its members) with which the
philanthropic organization is affiliated for the fiscal year.
(f) Regulations.--The Secretary shall promulgate regulations to carry
out this section. Such regulations shall include--
(1) the maximum grant amount that may be awarded to a
philanthropic organization under this section;
(2) the minimum amount of chartable gifts an eligible
consortia (including its members) shall receive in a fiscal
year for the philanthropic organization affiliated with such
consortia to be eligible for a grant under this section.
(g) Definitions.--For the purposes of this section:
(1) Eligible student.--The term ``eligible student'' means an
individual who--
(A) is a member of an underserved population;
(B) is enrolled--
(i) in a secondary school pursuing a high
school diploma; or
(ii) in an institution of higher education or
is planning to attend an institution of higher
education; and
(C) either--
(i) is receiving, or has received, financial
assistance or support services from the
consortium; or
(ii) meets 2 or more of the following
criteria:
(I) Has an expected family
contribution equal to zero (as
described in section 479 of the Higher
Education Act of 1965) or a comparable
alternative based upon the State's
approved criteria in section 415C(b)(4)
of such Act.
(II) Has qualified for a free lunch,
or at the State's discretion a reduced
price lunch, under the school lunch
program established under the Richard
B. Russell National School Lunch Act.
(III) Qualifies for the State's
maximum need-based undergraduate award.
(IV) Is participating in, or has
participated in, a Federal, State,
institutional, or community mentoring
or outreach program, as recognized by
the eligible consortia carrying out
activities under this section.
(2) 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
insitution 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 subsection (d)) 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.
(3) State.--The term ``State'' means each of the several
States of the United States, the District of Columbia, and
Puerto Rico.
(4) Underserved population.--The term ``underserved
population'' means a group of individuals who traditionally
have not been well represented in the general population of
students who pursue and successfully complete a higher
education degree.
(h) Program Funding.--
(1) In general.--There shall be available to the Secretary to
carry out this section, from funds not otherwise appropriated,
$300,000,000 for the period beginning with fiscal year 2008 and
ending with fiscal year 2012.
(2) Use of excess funds.--If, at the end of a fiscal year,
the funds available for awarding grants under this section
exceed the amount necessary to make such grants, then all of
the excess funds shall remain available for the subsequent
fiscal year, and shall be used to award grants under section
401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) for
such subsequent fiscal year.
(i) Sunset.--The authority to carry out this section shall expire at
the end of fiscal year 2012.
PART C--UPWARD BOUND
SEC. 412. UPWARD BOUND.
(a) Absolute Priority Prohibited in Upward Bound Program.--Section
402C (20 U.S.C. 1070a-13) is amended by adding at the end the following
new subsection:
``(f) Absolute Priority Prohibited in Upward Bound Program.--Except
as otherwise expressly provided by amendment to this section, the
Secretary shall not implement or enforce, and shall rescind, the
absolute priority for Upward Bound Program participant selection and
evaluation published by the Department of Education in the Federal
Register on September 22, 2006 (71 Fed. Reg. 55447 et seq.).''.
(b) Additional Funds.--Section 402C is further amended by adding
after subsection (f) (as added by subsection (a)) the following new
subsection:
``(g) Additional Funds.--
``(1) Authorization and appropriation.--There are authorized
to be appropriated, and there are appropriated to the
Secretary, from funds not otherwise appropriated, $30,000,000
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.
``(2) Use of funds.--The amounts made available by paragraph
(1) shall be available to provide assistance to all Upward
Bound projects that received assistance in fiscal year 2006 but
that did not receive assistance in fiscal year 2007 (other than
new applicants) with a grant score above 70. Such assistance
shall be made available in the form of 4-year grants.''.
TITLE V--ADDITIONAL PROVISIONS
SEC. 501. INDEPENDENT EVALUATION OF DISTANCE EDUCATION PROGRAMS.
(a) Independent Evaluation.--The Secretary of Education shall enter
into an agreement with the National Academy of Sciences to conduct a
scientifically correct and statistically valid evaluation of the
quality of distance education programs, as compared to campus-based
education programs, at institutions of higher education. Such
evaluation shall include--
(1) identification of the elements by which the quality of
distance education, as compared to campus-based education, can
be assessed, including elements such as subject matter,
interactivity, and student outcomes;
(2) identification of distance and campus-based education
program success, with respect to student achievement, in
relation to the mission of the institution of higher education;
and
(3) identification of the types of students (including
classification of types of students based on student age) who
most benefit from distance education programs, the types of
students who most benefit from campus-based education programs,
and the types of students who do not benefit from distance
education programs, by assessing elements including access to
higher education, job placement rates, undergraduate graduation
rates, and graduate and professional degree attainment rates.
(b) Scope.--The National Academy of Sciences shall select for
participation in the evaluation under subsection (a) a diverse group of
institutions of higher education with respect to size, mission, and
geographic distribution.
(c) Interim and Final Reports.--The agreement under subsection (a)
shall require that the National Academy of Sciences submit to the
Secretary of Education, the Committee on Health, Education, Labor and
Pensions of the Senate, and the Committee on Education and Labor of the
House of Representatives--
(1) an interim report regarding the evaluation under
subsection (a) not later than December 31, 2007; and
(2) a final report regarding such evaluation not later than
December 31, 2009.
(d) Appropriations.--There shall be available to the Secretary, from
funds not otherwise appropriated, $100,000 to carry out this section.
SEC. 502. ENCOURAGING COLLEGES AND UNIVERSITIES TO ``GO GREEN''.
(a) Findings.--The Committee on Education and Labor of the House of
Representatives makes the following findings:
(1) A commitment to and academic programs for environmental
and economic sustainability are essential for our Nation's
future prosperity.
(2) The more than 4,200 higher education institutions in the
United States have the capacity to innovatively leverage
spending and change consumption patterns by incorporating
concepts of sustainability into their academic programs and by
modeling sustainable economic and environmental practices for
their communities.
(3) Many colleges and universities have interdisciplinary
programs or centers focusing on equipping students with the
academic content knowledge needed to understand concepts of
sustainability and ``going green''.
(4) Many colleges and universities have programs related to
the research of sustainability and sustainable systems.
(5) Academic programs related to sustainability vary in rigor
because no national education content standards for academic
sustainability programs currently exist.
(6) Colleges and universities may partner with businesses to
encourage students and faculty to translate academic learning
and research into practical solutions that promote
sustainability.
(7) Colleges and universities that make an effort to reduce
energy consumption and promote environmental sustainability not
only reduce their own emissions, but also motivate the leaders
of the next generation to action and create technical skills
and resources to develop innovative solutions.
(8) Many colleges and universities have undertaken detailed,
campus-wide assessments of their progress toward ``going
green'' and sustainability or have measured their progress in
specific sectors, such as operations, or specific parameters,
such as recycling, energy, and water consumption.
(9) No system that evaluates and compares college and
university campuses in terms of overall sustainability-related
academic programs and practices currently exists.
(b) Sense of the Committee on Education and Labor.--It is the sense
of the Committee on Education and Labor that in order to encourage
increased public awareness of the need to ``go green'' by using
sustainable economic and environmental practices and rigorous
sustainability academic programs on college and university campuses,
the following should be encouraged:
(1) The development of educational standards by institutions
of higher education to determine the necessary rigor and
effectiveness of academic sustainability programs.
(2) Public awareness of the need for ``going green'' by using
sustainable economic and environmental practices.
(3) Non-governmental efforts to improve economic and
environmental sustainability efforts on college and university
campuses, including holding national summits to share best
practices.
(4) Collaborative partnerships between Federal agencies,
businesses, universities and communities to broaden
sustainability practices.
I. Purpose
The purpose of H.R. 2669, the ``College Cost Reduction Act
of 2007,'' is to provide for reconciliation pursuant to section
601 of the concurrent resolution on the budget for fiscal year
2008.
II. Committee Action
110TH CONGRESS
Introduction of the College Cost Reduction Act
On Tuesday, June 12, 2007, Representatives George Miller
(D-CA) and Ruben Hinojosa (D-TX) introduced H.R. 2669, the
College Cost Reduction Act of 2007, a bill to provide for
reconciliation pursuant to section 601 of the concurrent
resolution on the budget for fiscal year 2008.
Full Committee markup of H.R. 2669
On Wednesday, June 13, 2007, the Committee on Education and
Labor considered H.R. 2669 in legislative session, and reported
the bill favorably, as amended, to the House of
Representatives. The rollcall vote was 30-16. Chairman Miller
offered an amendment in the nature of a substitute.
The amendment in the nature of a substitute contained minor
technical changes and the following additions to H.R. 2669:
Extends a fee elimination provided for small
lenders in H.R. 2669 to non-profit lenders, in support of their
unique mission, by eliminating the current lender-paid
origination fee of 0.5%.
Provides mandatory financial support of $500
million, to Historically Black Colleges and Universities
(HBCUs), and Hispanic-Serving Institutions (HSIs), Tribal
Colleges and Universities (TCUs), Alaska/Hawaiian Native
Institutions and newly defined Predominately Black Institutions
(PBIs) and institutions serving Asian American and Pacific
Islanders.
Clarifies that students attending institutions
that measure academic years by quarters or the equivalent are
able to participate in the Year Round Pell Grant program on the
same basis as students attending institutions that measure
academic years by semesters.
Makes students attending either a non-profit or a
for-profit institution eligible to receive TEACH grants.
Allows the Secretary of Education to issue waivers
to states that experience a fiscal crisis exempting them from
certain requirements with respect to demonstrating their
commitment to higher education funding.
Replaces the Consumer Price Index in Section 202,
with the Higher Education Price Index referenced in Section 203
of the bill.
Strikes the Quality Efficiency Task Forces in
Section 202 of the bill.
Narrows the definition of a ``public sector''
employee in Section 131 by targeting resources to those serving
in areas of national need by deleting ``government'' while
keeping the remainder of the listed categories: public safety
(including first responders, firefighters, police officers, or
other law enforcement or public safety officers), emergency
management (including emergency medical technicians), public
health and public interest legal services (including
prosecutors and public defenders).
The Committee adopted the following amendments:
1. An amendment offered by Mr. Bishop (NY) and Mr. Altmire
(PA), adopted by voice vote. The amendment provides $500
million in Federal capital contributions for the Perkins Loan
Program for fiscal years 2008-2012.
2. An amendment offered by Mr. Yarmuth (KY) and Mr. Tierney
(MA) adopted by voice vote. The amendment changes the $5,000
loan-forgiveness program to provide $1,000 per year of loan
forgiveness for up to 5 years, rather than $5,000 of loan
forgiveness after 5 years of service.
3. Amendments offered en bloc by Mr. Ehlers (MI) adopted by
voice vote. The amendments call for a study by the National
Academy of Sciences of the quality of distance education
programs and encourage institutions to adopt and promote
sustainable economic and environmental practices and rigorous
sustainability academic programs.
4. An amendment by Mrs. Susan Davis (CA) adopted by voice
vote. The amendment allows veterans who were enrolled in 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.
5. Amendments offered en bloc by Mr. Petri (WI) adopted by
voice vote. One amendment proposes a study for the purpose of
designing an income contingent repayment plan using the IRS'
income tax withholding system. The second amendment proposes a
study to identify and select an auction-based mechanism of
setting student loan lender yields under the FFEL program and
to pilot and evaluate the use of such a mechanism.
6. An amendment offered by Mr. Scott (VA) adopted by voice
vote. The amendment restores Upward Bound funding to unfunded
programs from the FY07 competition.
7. An amendment offered by Mr. Loebsack (IA) adopted by
voice vote. The amendment allows part-time students and
students in certificate programs to participate in the Year
Round Pell Grant program.
8. An amendment offered by Mr. Grijalva (AZ) adopted by
voice vote. The amendment expands the definition of an eligible
student for Academic Competitiveness grants to include legal
permanent residents, part-time students, and students in
certificate programs.
9. An amendment offered by Mr. Scott (VA) adopted by voice
vote. The amendment restricts the Secretary's use of funds for
the purpose of evaluating the Upward Bound program and applying
a new ``absolute priority'' for student eligibility to future
competitions.
10. An amendment offered by Mr. Courtney (CT), Ms. Shea-
Porter (NH), and Mr. Danny Davis (IL) adopted by voice vote.
The amendment provides an additional increase of $100 for Pell
Grants to the first year, bringing the total available in the
2008-2009 academic year to $200, and bringing the total
available in the 2011-2012 academic year to $500.
The Committee rejected four amendments by rollcall vote.
III. Summary of the Bill
PURPOSE
The purpose of H.R. 2669, the College Cost Reduction Act of
2007, is to provide for reconciliation pursuant to section 601
of the concurrent resolution on the budget for fiscal year
2008, and to ensure access to and success in higher education
by making college more affordable.
FUNDING
Under the Concurrent Resolution on the Budget for Fiscal
Year 2008, the Committee on Education and Labor was instructed
to report reconciliation provisions sufficient to reduce the
deficit by $750 million for the period of fiscal years 2007
through 2012. The College Cost Reduction Act of 2007achieves
nearly $19 billion in savings by cutting excess subsidies paid
by the federal government to lenders in the student loan
industry. The bill invests approximately $18.25 billion in
students and families to assist them in accessing, attending,
and financing college. Moreover, the bill provides $750 million
in deficit reduction to meet the obligation under the
instructions by the Budget Committee.
INCREASED FUNDING AND SUPPORT FOR PELL GRANT SCHOLARSHIPS
The College Cost Reduction Act of 2007 provides an extra
$500 Pell Grant, using mandatory funds, phased in over four
years that would be added to the appropriated amount. With the
current appropriated amount of $4,700, announced by Chairman
Obey on June 7, 2007, students are guaranteed at least $4,900
and up to $5,200 by 2011.
This legislation also eliminates the tuition sensitivity
provisions that unfairly penalize students attending low-cost
tuition institutions.
H.R. 2669 establishes a year-round Pell Grant program, and
increases the Income Protection Allowance for dependent and
independent students.
In addition to changing the Income Protection Allowance,
the legislation also amends the needs analysis formula to
increase the ``auto-zero'' family contribution from the current
$20,000 level to $30,000.
INTEREST RATE CUTS FOR SUBSIDIZED STUDENT LOANS
The legislation includes the provision from H.R. 5, the
College Student Relief Act, to cut interest rates in half for
undergraduate students with subsidized student loans--those in
most financial need--over the next five years. This provision
alone will save a student with $13,800 in subsidized loan debt
approximately $4,400 over the life of her loan.
INCREASED LOAN LIMITS AND PROGRAMS TO MANAGE STUDENT LOAN DEBT
In addition to cutting interest rates in half, the College
Cost Reduction Act will also increase the borrowing limits for
third and fourth year students to $7,500, and increase the
aggregate borrowing limit for undergraduates to $30,500 and for
graduates to $65,500.
Included in this legislation is an Income-Based Repayment
proposal, which builds on the tenets of the Federal Direct Loan
Program's Income Contingent Repayment program by guaranteeing
that borrowers will not have to pay more than 15% of their
discretionary adjusted gross income in student loan repayments.
PROMOTING PUBLIC SERVICE THROUGH LOAN FORGIVENESS
This bill includes language to provide complete loan
forgiveness for public sector employees after 10 years of
service.
In keeping with alleviating student loan debt, the College
Cost Reduction Act also includes $5,000 in loan forgiveness for
those serving the country in critical areas including first
responders, law enforcement officers, firefighters, nurses,
public defenders, prosecutors, early childhood educators,
nurses, librarians and other public sector employees. For each
year of service, $1,000 of the borrowers' loans will be
forgiven, up to a total of $5,000.
CONTAINING COLLEGE COSTS
With college tuition skyrocketing, the bill includes
several provisions to address college costs. Specifically, the
legislation includes a provision to ensure that states maintain
their commitments to helping students and families pay for
college. States are discouraged from reducing funding for
higher education as family and federal support increases.
This legislation offers incentives, in the form of
additional mandatory Pell Grant funds for schools that keep
their annual net tuition increases at a rate equal to, or
below, the increases in the Higher Education Price Index (HEPI)
for a given academic year.
The bill also includes provisions that will ensure the
redesign of the existing U.S. Department of Education College
Opportunity Online Locator (COOL) website, making it easier to
use for parents and students while not adding burdensome
reporting requirements for colleges and universities.
Additionally, the bill establishes grants called
``Cooperative Education Rewards'' for institutions or consortia
of institutions that provide students with both academic and
work experiences in order to prepare them for their future
careers and to help students support themselves financially
while in school.
ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM
H.R. 2669 makes historic investments to ensure that we
place a highly qualified teacher in every classroom through the
creation of TEACH grants that would 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.
This provision meets one of the goals outlined in the House
Democrats Innovation Agenda introduced in the last Congress to
ensure highly qualified teachers are well trained and prepared
to teach in the fields of math, science, and technology.
The bill also establishes Centers of Excellence to provide
funds to Minority Serving Institutions to help recruit and
prepare teachers and to expand opportunities for Americans of
all educational, ethnic, class, and geographic backgrounds to
become highly qualified teachers.
INVESTING IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES, HISPANIC
SERVING INSTITUTIONS AND MINORITY SERVING INSTITUTIONS
H.R. 2669 makes a deliberate and landmark investment of
$500 million in HBCUs, HSIs, PBIs, TCUs, Alaska Native and
Native Hawaiian institutions, and institutions serving Asian
Americans and Pacific Islanders to ensure that students
attending these institutions will not only enter college, but
remain and graduate.
PROMOTING PUBLIC-PRIVATE PARTNERSHIPS TO PROVIDE SCHOLARSHIPS FOR
COLLEGE
This legislation establishes the College Access Challenge
Grants which will 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.
IDENTIFYING INEFFICIENCIES IN THE STUDENT LOAN SUBSIDIES
The bill is fully paid for with cuts to excess lender
subsidies and builds on the proposals contained in both H.R. 5
and the President's fiscal year 2008 budget.
Four of the six offsets have already been approved
by the House this year, when it overwhelmingly voted to pass
the College Student Relief Act of 2007 (H.R. 5) in January.
Four of the six offsets have been proposed in the
President's fiscal year 2008 budget.
Decrease lender Special Allowance Payment (SAP) rate by
0.55 percentage point: The Special Allowance Payment is the
subsidy paid to lenders over and above their cost of money.
Currently, the SAP is 2.34 percentage points (234 basis
points). The College Cost Reduction Act includes a 0.55
percentage point (or 55 basis point) reduction in the SAP
payment.
In his FY 2008 budget, President Bush proposed decreasing
the SAP rate by 50 basis points.
Lower lender insurance rates from 97% to 95%: When a
student or parent defaults on a loan, the government pays the
lender this share of the owed funds.
The House passed this offset as part of H.R. 5 and it was
also proposed in the President's FY 2008 budget. The Education
Department estimates that approximately 5% of loans default.
Eliminate ``Exceptional Performer'' lender status: Lenders
may be designated on an annual basis as ``exceptional
performers'' by the Secretary of Education if they are in
substantial compliance with loan servicing or ``due diligence''
requirements. This status is nothing more than a reward to
lenders for merely doing their job, rather than for engaging in
any exceptional activity. Lenders designated as ``exceptional
performers'' receive a two-percentage-point higher insurance
rate.
The House passed this offset as part of H.R. 5.
Increase for-profit lender origination fees from 0.5% to 1%
and eliminate fees for small and non-profit lenders: Lenders
are currently charged a fee of 0.5% on all new loans to
partially offset the federal cost of administering the FFEL
program.
The House passed a similar offset in H.R. 5. The President
proposed a similar provision in his FY 2008 budget.
Lower guaranty agency collection fees to 16%: Guaranty
agencies now retain 23% of the funds they collect from
defaulted loans, partly to cover the cost of collection. But
guaranty agencies' collection methods have become more
efficient, thus reducing collection costs. The Education
Department projects that these efficiencies will continue to
increase. The Department pays only 16% of amounts collected by
its private sector contractors in the Direct Loan program.
The President proposed this offset in his FY 2008 budget. A
provision to lower the collection fees to 16% by 2010 was
passed by the House as part of H.R. 5.
Change the guaranty account maintenance fee: Guaranty
agencies are paid a fee based on the original principal amount
of active loans they have guaranteed. This bill shifts this fee
so that it is tied to the number of accounts lenders have--
which more accurately reflects guarantors' costs.
The President proposed this change in his FY 2008 budget
request.
IV. Committee Views
The Congress and the public have long recognized higher
education as key to promoting economic opportunity for all
Americans. In 1944, the GI Bill provided educational benefits
to World War II veterans. In 1965, Congress established the
foundation of the federal student aid system with the passage
of the Higher Education Act. In 1972, the Pell Grant program
was created to provide grants for low-income students to attend
college. The Committee's action on H.R. 2669, the College Cost
Reduction Act, continues this historic trend by investing where
it counts, with our nation's students and their families.
The Committee strongly believes that federal higher
education policy should focus on the holistic picture of
college readiness, access, success, and completion. Therefore,
policies and investments should not only be directed to ensure
that students can afford college tuition, but investments--like
many of those passed in H.R. 2669--should also ensure that all
qualified students, regardless of their background, be prepared
for college, have the appropriate information about and access
to higher education and support services, and graduate to
achieve their goals.
As America moves to a more knowledge-based economy, a
college degree is becoming more essential than ever for basic
entry-level jobs,\1\ as well as for our country to remain
competitive on a global scale. The Committee believes that a
college education is as important today as a high school
diploma was a generation ago. Yet, students and families are
faced with the challenge of paying for college. Over the past
five years, tuition and fees at public colleges and
universities have increased by 35 percent, and those at the
private universities have increased by 11 percent.\2\
---------------------------------------------------------------------------
\1\ Donna Desrochers, Higher Education's Contribution to the
Knowledge Economy, Solutions for Our Future Project. Accessed June 20,
2006 at www.solutionsforourfuture.org/site/DocServer/08.Knowledge-
Economy.pdf?docID=103.
\2\ Trends in Student Aid, The College Board, 2006.
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Furthermore, need-based grant aid and other forms of
federal and state support have been unable to keep pace with
the increase in college tuition prices. Currently grants only
make up 48 percent of all student aid.\3\ Recognizing these
challenges, the goal of helping every qualified student go to
college should remain the focus.
---------------------------------------------------------------------------
\3\ IBID
---------------------------------------------------------------------------
Despite the growing importance of higher education, many
state governments have cut funding for colleges and
universities over the past decade.\4\ The failure of states to
provide adequate support for higher education is compounded by
the significant lack of increases in federal grant aid,
resulting in students taking out larger loans to pay for
college. More than two-thirds of students now borrow to pay for
college, and their average debt more than doubled between 1993
and 2004.\5\
---------------------------------------------------------------------------
\4\ National Conference of State Legislatures, http://www.ncsl.org/
programs/press/2005/pr050428.htm
\5\ National Center for Education Statistics (NCES), National
Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates,
Data Analysis System (DAS); calculations by the Project on Student
Debt.
---------------------------------------------------------------------------
Debt, and the aversion to accumulating debt, is severely
impacting a student's ability to enter, continue, and complete
higher education and to make long-range decisions about jobs
after college. According to the Federal Advisory Committee on
Student Financial Assistance (ACSFA), limited financial aid and
declining affordability is already prohibiting hundreds of
thousands of college-qualified high school graduates from
attending a four-year institution. Further, over 40 percent of
those students will not enter postsecondary education at
all.\6\
---------------------------------------------------------------------------
\6\ Advisory Committee on Student Financial Assistance,
``Mortgaging Our Future: How Financial Barriers to College Undercut
America's Global Competitiveness,'' September 2006.
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INCREASING THE PURCHASING POWER OF THE PELL GRANT SCHOLARSHIP
The Committee believes boosting the nation's investment in
the Pell Grant program is essential to ensuring access and
making college more affordable for students and families.
Research indicates that investment in need-based grant aid is
the best and most important contribution that the federal
government can make to keeping the dream of a college education
a reality for all Americans. However, over the last several
years, the purchasing power of the Pell Grant has declined.
Today, the maximum Pell Grant covers only one third of the
average price of attendance at a public four-year institution
compared to more than two-thirds in 1980.
The Pell Grant has recently received a significant boost of
support since the beginning of the 110th Congress. In February,
the Appropriations Committee, led by Chairman Obey, increased
the maximum Pell Grant by $260, from $4,050 to $4,310. This
increase was the first to be signed into law since 2003, when
it was raised by $50. At the beginning of June, Chairman Obey
proposed an additional increase to the Pell Grant for the FY
2008 appropriations bill, which could bring the maximum Pell
Grant to $4,700.
Following suit with these investments in the Pell Grant
program, the Committee believes a greater and sustainable
commitment should be made to the Pell Grant through mandatory
funding. To that end, H.R. 2669 increases the maximum Pell
Grant scholarship by at least $500 over the next five years,
ultimately reaching a maximum scholarship of at least $5,200.
The Pell Grant increases will be phased in with $200 for 2008
and 2009, $300 for 2010, and $500 for 2011 and beyond. The Pell
Grant increases provided in this bill will be added to the
existing maximum Pell Grant set by the Appropriations
Committee.
The Committee believes it is critical not only to increase
the Pell Grant maximum award but also to expand eligibility for
the grants. H.R. 2669 includes changes to the needs analysis
formula that is used to calculate a student's financial aid
award. Specifically, the bill increases the income threshold
below which families are automatically qualified for maximum
aid. Under current law, this threshold is set at $20,000. H.R.
2669 increases the threshold to $30,000. H.R. 2669 makes other
changes to the needs analysis formula as well, including
reducing the amount of students' earnings that are considered
in awarding financial aid, and excluding certain income from
need determinations, including social security and welfare
benefits.
As a result of the increase in the Pell Grant maximum and
the changes to the needs analysis formula, almost 600,000
additional students will become eligible to receive a Pell
Grant by 2011.
STRENGTHENING THE MIDDLE CLASS BY MAKING COLLEGE MORE AFFORDABLE
Cutting interest rates in half
In 2006, the House Democrats issued their ``Six in 06''
agenda, which included several higher education proposals aimed
at helping the middle class. A central principle of the agenda
included cutting student loan interest rates in half. In
carrying out that agenda, House Democrats, led by members of
this Committee, championed the initiative on the floor of the
House. On January 17, 2007, the House of Representatives
overwhelmingly passed H.R. 5 the College Student Relief Act of
2007 by a roll call vote of 356-71. The legislation calls for
cutting interest rates in half, to 3.4 percent, on all
subsidized student loans over a five year period. This
provision is included in H.R. 2669.
Once fully phased in, these interest rate cuts will save
the typical borrower, with $13,800 in need-based federal
student loan debt, $4,400 over the life of the loan. Half of
the student-loan borrowers who would benefit under this
legislation have family incomes between $26,000 and $68,000,
according to the Congressional Research Service; the median
family income of borrowers was $45,000 in 2003-2004. This is
well below the overall U.S. median family income of
approximately $54,000, according to the Economic Policy
Institute.
Increasing loan limits and protecting student and families from
unscrupulous practices in the student loan industry
While loans are not the preferred method of paying for
college, they are the reality in today's world. To assist
students and families pay for college, the Committee adopted
increases in loan limits. In particular, H.R. 2669 increases
loan limits for third and fourth year students from $5,500 to
$7,500. Additionally, the aggregate limit increases from the
current $23,000 to $30,500 for undergraduates and from $65,500
to $73,000 for graduates.
The Committee believes that these increases will not only
help to finance college costs but will allow students and
families to rely less on costlier private loans. Private loans
have received increased scrutiny over the last six months in
light of reported abuses among lenders and financial aid
officers, including school officials steering students toward
certain lenders in exchange for financial or other favors. The
Committee has strong feelings about this issue and, as an
initial step, passed H.R. 890, the Student Loan Sunshine Act on
the floor of the House on May 9, 2007 by a roll call vote of
414-3.The Committee expects to further address the abuses in
the student loan industry in its consideration of the
reauthorization of the Higher Education Act during this
Congress.
Managing student debt to keep college within reach
The Committee believes that loan limits should only be
raised in tandem with options for students to manage their
debt. With students borrowing at record levels, ensuring
borrower protections and alternative payment options is
important. According to the Project on Student Debt, ``over the
past decade, debt levels for graduating seniors with student
loans more than doubled from $9,250 to $19,200 a 108% increase
(58% after accounting for inflation).'' \7\ H.R. 2669 builds on
the existing Income Contingent Repayment Program offered in the
Direct Loan program and extends this option to individuals
participating in the FFEL loan program. The Income-Based
Repayment proposal guarantees that borrowers will not have to
pay more than 15 percent of their discretionary income in loan
repayments, and allows borrowers to have their loans forgiven
after 20 years of payments. Payment options such as the Income-
Based Repayment proposal serve to expand rather than restrict
educational and economic opportunities for graduates who would
otherwise be unable to afford to work as teachers or social
workers.
---------------------------------------------------------------------------
\7\ Project on Student Debt ``Quick Facts About Student Debt.''
http://projectonstudentdebt.org/files/File/
Debt_Facts_and_Sources_5_4_07.pdf
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HELPING STUDENTS ENTER COLLEGE AND SUCCEED
Through H.R. 2669, the Committee has made a deliberate
decision to invest not only in much needed federal grant aid
and in interest rate reduction, but also in programs and
support services that assist students to persist through in
college to meet their educational goals. With this objective in
mind, H.R. 2669 makes historic investments in HBCUs and MSIs;
includes funding for Upward Bound; and strengthens campus-based
aid programs through mandatory funding of the Perkins loan
program. Additionally, the Committee believes that investments
should also be made in building on the successes of numerous
philanthropic organizations, many of which have a proven track
record in providing support services and financial assistance
to help students get into and remain in college.
Making historic new investments in Historically Black Colleges and
Universities, and Hispanic-Serving Institutions, Tribal
Colleges, Alaska and Hawaiian Native, Predominately Black
Institutions, and Asian American and Pacific Islanders
Historically Black Colleges and Universities, Hispanic-
Serving Institutions, Tribal Colleges, Alaska and Hawaiian
Native, Predominately Black Institutions, and institutions
serving Asian American and Pacific Islanders are critical to
the nation's economic and social well-being. As the growth in
the nation's population increasingly reflects the diversity of
the students at these institutions, the Committee believes that
this mandatory funding is an investment in our future. By
educating the nation's emerging majority populations, these
institutions represent the vanguard of the country's potential
and promise and should be appropriately supported.
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. Additionally, a high
proportion of students attending these institutions are the
first in their family to attend college. In 2003-2004, 43
percent of students attending an HBCU or HSI were first-
generation students, compared to 35 percent of students
enrolled at all institutions.
For far too long, little attention and only nominal
investments have been directed to institutions funded under
Title III and Title V of the Higher Education Act. Given the
years of neglect and lack of support, the Committee believes
that H.R. 2669 offers an opportunity to help these institutions
carry out their missions to assist students to meet their
educational goals.
Promoting persistence through support of Upward Bound
In order to successfully complete college, students need to
be adequately prepared both academically and emotionally. The
Upward Bound program has long provided invaluable academic and
non-academic services to students who would not otherwise
receive them, specifically, low-income, first-generation
students. This program has a broad and significant reach; for
example, in 2006, Upward Bound served nearly 60,000 students
across the country. As one of the longest running programs
authorized by the Higher Education Act, many Upward Bound
programs become the cornerstone of a community and each year
successfully help students graduate from high school and enroll
in institutions of higher education. The Committee strongly
believes in the purposes and intent of the program, including
the longevity and continuation of individual programs. To this
end, H.R. 2669 provides funding to reinstate programs that lost
their funding in the fiscal year 2007 competition so that
students, and the communities in which they live, will continue
to be served.
Helping students pay for college through support of the Perkins Loan
Program
The Perkins Loan Program, created by Congress in 1958,
started as our country's first federally supported student loan
program. Throughout the history of the Perkins Loan Program,
$7.9 billion in federal contributions has been leveraged to
award over $28.8 billion in loans to students through almost 26
million aid awards making it one of the most effective public-
private partnerships in the federal government.
Perkins Loans offer long-term, low-interest rate loans
targeted to students with exceptional need. More than 500,000
students received a Perkins Loan last academic year to help pay
for their education. Given that Perkins loans are designed to
fill in the need gaps of low-and moderate-income students, the
Committee believes that without mandatory funding of this
program, students will be forced to borrow from high-cost
alternative sources, such as private education loans.
Building support for student retention and financing of college through
philanthropic participation
While government-sponsored grants and loans make up a
significant part of the financing for higher education for
students and families, the private sector has demonstrated a
commitment to the goal of ensuring that students have financial
support to attend college. A 2005 Institute for Higher
Education Policy study found that at least $3 billion per year
is awarded through private scholarship programs. Further, the
study found that employer-provided education assistance to
employees and their dependents totals several billion dollars
more.\8\
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\8\ Institute for Higher Education Policy, ``Private Scholarships
Count,'' May 4, 2005. http://www.ihep.org/
organizations.php3?action=printContentItem&orgid=104&typeID=906&itemID=1
0848&templateID=1418
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The Committee believes that the contributions of the
private sector should be better recognized and supported
through efforts such as the College Access Challenge Grants,
established in H.R. 2669. The legislation specifically promotes
partnerships with federal, state and local government entities
and philanthropic organizations by establishing matching
challenge grants aimed at increasing the number of first
generation and low-income students to attend college.
The Committee expects that the program will spur new
interest in the private sector to initiate partnerships, while
rewarding those organizations that have participated in such
efforts for some time. The College Access Challenge Grants are
not intended or designed to supplant the federal government's
role in providing financial support for students to meet their
educational goals. Rather, the grants are meant to supplement
the efforts of the private sector and recognize it as a key
partner in working to support students and families.
CONTAINING THE RISING COST OF COLLEGE TUITION
The Committee believes that the issue of rising college
tuition must be addressed as part of the overall discussion on
college affordability and access. While the proposals in H.R.
2669 are not a comprehensive response to the challenge of
rising college costs, the Committee believes these initiatives
serve as a marker to begin the discussion on this important
issue. As such, the Committee intends to continue this dialogue
among the major stakeholders and together develop a more
comprehensive response to skyrocketing tuition at colleges and
universities during the reauthorization of the Higher Education
Act.
Of particular concern to the Committee is the declining
support that states have provided to higher education, in
particular during the recessions a few years ago.\9\ Over the
last few years, higher education has had to compete for
resources at the state level against other major programs
including Medicaid and No Child Left Behind. With this in mind,
the Committee has included a provision mandating that states
maintain an adequate level of support for higher education to
ensure continued funding of the state-federal partnership
program LEAP (Leveraging Education Assistance Program).
---------------------------------------------------------------------------
\9\ Dennis Jones, ``State Shortfalls Projected to Continue Despite
Economic Gains,'' National Center for Public Policy and Higher
Education. February, 2006.
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Understanding the challenges that some states are facing as
a result of uncontrollable circumstances, such as the closure
of major economic supports in the state or a natural disaster,
H.R. 2669 includes authority to the Secretary to provide an
exemption for those states that find themselves in such
circumstances.
While the Committee believes that states play a significant
role in supporting higher education, particularly for public
institutions, there is a strong belief that initiatives to
curtail college costs should also include incentives to lower
tuition. To this end, H.R. 2669 includes additional mandatory
Pell Grant funds for schools that keep their annual net tuition
increases at a rate equal to, or below, the increase in the
Higher Education Price Index (HEPI) for that academic year.
The Committee is particularly interested in providing
information to the public on how to best inform themselves
about the costs at specific institutions. To reach this goal,
H.R. 2669 ensures the redesign of the existing U.S. Department
of Education College Opportunity Online Locator (COOL) website,
making it easier for parents and students to use in order to
compare schools, while not adding burdensome reporting
requirements for colleges and universities.
ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM
There are not enough qualified teachers in the nation's
classrooms, and an unprecedented number of teachers will retire
over the next five years. Over the next decade, the nation will
need to recruit 2 million new teachers into the public schools.
Unfortunately, the shortage is compounded by the fact that
more than one-third of children in grades 7-12 are taught by a
teacher who lacks both a college major and certification in the
subject being taught. Rates for ``out of field teaching''--
teachers teaching in fields in which they are not certified--
are especially high.
The creation of a ``highly qualified teacher'' definition
in the No Child Left Behind Act started the dialogue on
defining the qualities of a good teacher as well as ways to
ensure that individuals can meet this threshold. The Committee
identifies this issue as a top priority and as such offers a
step in the direction of paving the way for individuals
interested in teaching, to ensure they become highly qualified
and then going a step further, steering them to areas of most
need.
H.R. 2669 creates a new TEACH Grants program (modeled after
the legislation introduced by Chairman Miller, H.R. 2204, the
Teacher Excellence for All Children Act) that would provide up-
front pre-paid tuition assistance of $4,000 per 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. Under this
program, at least 21,500 undergraduate and graduate students
are expected to receive these grants over the next five years.
To further steer teacher candidates into high quality
teacher education programs, the bill includes a bonus grant for
students to receive up to an additional $2,000 to attend
institutions with programs that integrate both content and
teacher education training into their overall program. The
bonus grants are modeled after programs such as those offered
in the Cal State University system, and Cal Teach, a program at
U.C. Berkeley, as well as the UTEACH program at the University
of Texas. All these programs have demonstrated that high
caliber students can be recruited into teaching programs with a
specific content focus in areas of high need.
The Committee strongly believes, while not the silver
bullet solution to teacher quality, that TEACH Grants will help
alleviate the challenges of ensuring a highly qualified teacher
in every classroom. The issue of teacher quality will continue
to be addressed in the reauthorization of the Higher Education
Act when the Committee considers Title II, which covers pre-
service for teacher candidates. The Committee will also
consider this issue during the reauthorization of the No Child
Left Behind Act, which includes inservice support for teachers
already in the classroom.
ENCOURAGING AND REWARDING PUBLIC SERVICE
As noted earlier, the Committee is concerned with the
growing number of individuals who do not choose to enter into
lower paying professions, such as public service, because of
growing debt due to student loans. Building on the Income-Based
proposal mentioned above, H.R. 2669 includes loan forgiveness
for individuals serving the country in professions of national
need. These targeted professions include: first responders, law
enforcement officers, firefighters, nurses, public defenders,
prosecutors, early childhood educators, librarians, and other
public sector employees. The legislation specifically provides
for $1,000 of loan forgiveness each year for five years--a
maximum $5,000, which constitutes just about one-third of the
average graduating debt--to those students in public service
professions.
To further encourage public service, the legislation
includes revisions to the Direct Loan Income Contingent
Repayment program. Individuals who choose public service will
have the option to have their loans forgiven after 10 years if
payments are made during that time period.
The Committee believes that through increased Pell Grants,
programs for better debt management and loan forgiveness,
students are better able to assemble a package of debt relief
to ensure a brighter future with less financial burdens. Debt
burdens are particularly troublesome for public servants who
often earn low salaries for their work. The policies embodied
in H.R. 2669 recognize the contributions and challenges of
public service, and the Committee hopes to encourage
participation in these careers.
CAPTURING EFFICIENCIES IN THE STUDENT LOAN PROGRAMS
In the past few years, student lenders have greatly
increased their efficiencies through market-driven mechanisms;
however, the government operation and subsidization of the
programs have not changed. This imbalance has resulted in
greater profits for lenders rather than decreased costs for the
taxpayers.
The College Cost Reduction Act reduces approximately $19
Billion over the next five years in excess subsidies paid by
the federal government to lenders in order to return billions
of dollars to students and families. This bill fully meets
``pay-go'' rules, and returns $750 million to deficit
reduction. Further, all savings are built on proposals passed
by the U.S. House of Representatives through H.R. 5 and those
outlined by the President in his fiscal year 2008 budget.
Under the College Cost Reduction Act, the Committee
believes lenders will still yield a profit, and all savings
will be returned to students with reduced interest rates on
loans, increased grant aid, and lower college costs. Further,
the Congressional Budget Office (CBO) estimates of the College
Cost Reduction Act assume continued robust participation in
both the FFEL and the Direct Loan (DL) student loan programs.
Current ``borrower benefits'' fail to help all students
Often lenders point to auxiliary benefits offered to
students as a reward for particular repayment behavior. These
``borrower benefits'' vary by lender and institution. The fine
print is often overlooked and for benefits, such as reduced
interest rates, students frequently must make a series of on-
time payments before they can reap these particular benefits.
Even one of the largest lenders has acknowledged that only
a small percentage of borrowers may ever realize repayment
benefits. According to the student loan company, ``The bottom
line is that less than 10 percent of borrowers will earn all
the advertised Repayment Benefits as they will either
consolidate their loans or miss a scheduled payment sometime
during the first several years of repayment.''\10\
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\10\ http://www.salliemae.com/NR/rdonlyres/6030E40E-BE7A-4268-B253-
F417CFB63EB5/0/StraightTalkfromTimFitzpatrickvFINAL022007.pdf
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The College Cost Reduction Act ensures that ALL students
can benefit from efficiencies achieved in the Federal student
loan program.
Further, legislative action has already limited a number of
these benefits offered by lenders. For example, borrower
origination fees are already scheduled to be reduced or
eliminated for students by 2010--currently one of the most
common benefits offered by lenders.
Students will continue to have lender choice
There are over 3,000 lenders that participate in the FFEL
program. If one participating lender leaves, another will take
over. Additionally, the Higher Education Act ensures access for
all students by mandating that the state-designated guaranty
agency will provide a loan to any student who is unable to
receive a loan from a lender (sec. 428j). The bottom line is
that all students will continue to have access to low-cost
federally-backed student loans to pay for college.
Protecting non-profit and ``small'' lenders
Under current law, non-profit and small lenders are treated
the same as for-profit lenders. Recognizing the unique mission
of non-profit lenders, putting all their profits back into
students, and the role of small lenders in communities across
the country, H.R. 2669 provides for a fee reduction for these
two categories of lenders. For FY 2008 alone, this translates
into $85 million in benefits to small and non-profit lenders
and nearly $500 million, or half a billion, over the next five
years. The Committee believes these protections will further
ensure borrower choice and an active marketplace.
H.R. 2669 defines ``small'' lenders as those with
portfolios that collectively comprise the lower 15% of total
FFEL volume, which includes 99 percent of lenders participating
in the program.
CONCLUSION
H.R. 2669 represents a historic step forward in our efforts
not only to help every qualified student go to college, but to
persist through their college careers, and successfully
graduate. No one should be denied the opportunity to go to
college simply because of the price. The Committee believes the
College Cost Reduction Act will pave the way to putting the
American dream back within reach of every family in our
country.
V. Section-by-Section Analysis
Title I--Investing in Student Aid
PART A--INCREASING THE PURCHASING POWER OF THE PELL GRANT
Section 101. Mandatory Pell Grant increases
The College Cost Reduction Act amends the Higher Education
Act to include new mandatory funding for the Pell Grant. This
is additional mandatory funding that is above the appropriated
level.
ADDITIONAL MANDATORY PELL FUNDS
----------------------------------------------------------------------------------------------------------------
2012 &
2008-2009 2009-2010 2010-2011 2011-2012 beyond
----------------------------------------------------------------------------------------------------------------
$200.................................................... $200 $300 $500 $500
----------------------------------------------------------------------------------------------------------------
Coupled with an appropriated maximum, in 2008-2009, the
maximum Pell Grant award will be $4,900. By 2011 the maximum
Pell Grant will be at least $5,200.
This section also includes language removing the tuition
sensitivity provision which will allow low-income students at
low cost institutions to fully benefit from the Pell Grant.
This provision will go into effect immediately upon enactment
of the College Cost Reduction Act.
A year-round Pell Grant program is established in this
section. This will allow students who attend more than two
semesters (or quarters or the equivalent) in a calendar year,
to continue to receive a Pell Grant.
Eligibility criteria are amended to include legal permanent
residents, part-time students, and students in certificate
programs. Further the language in this section clarifies the
definition of an academic year by giving institutions the
flexibility to define academic year in order to accommodate
institutional schedules.
Section 102. Support for working students
This section includes provisions that will increase
students' eligibility for 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 $8,090 by 2012. For dependent students the
protected income will be $6,000 by 2012.
Section 103. Simplified needs test and automatic zero improvements
This section provides increases in the ``auto-zero'' from
the current $20,000 to $30,000. This change will ensure that
students in families with incomes below $30,000 will be
eligible to receive the maximum Pell grant award.
Further, this section amends the untaxed income and
benefits in current law. Specifically, the legislation excludes
TANF (welfare benefits), Earned Income Tax Credits, and Social
Security from the income calculation in the needs analysis.
Clarifications are also made to 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.
Section 104. Definitions
This section outlines definitions for dislocated workers
and means-tested federal benefits.
PART B--MAKING STUDENT LOANS MORE AFFORDABLE
Section 111. Interest rate reductions
The College Cost Reduction Act will cut interest rates in
half for undergraduate students with subsidized student loans--
those in most financial need--over the next five years. The
plan will begin by cutting interest rates to 6.12% on July 1,
2008, and will continue to decrease rates until they reach 3.4%
in 2012.
CUTTING INTEREST RATES IN HALF: PHASE-IN SCHEDULE
------------------------------------------------------------------------
2008 2009 2010 2011 2012
------------------------------------------------------------------------
6.12 5.44 4.76 4.08 3.40
------------------------------------------------------------------------
Note.--All interest rate changes will take place on July 1 of that year
Section 112. Increasing loan limits and eliminating fees
The College Cost Reduction Act will increase the borrowing
limits for third and fourth year students to $7,500 and
increase the aggregate borrowing limits (new levels in bold).
STUDENT LOAN LIMITS
----------------------------------------------------------------------------------------------------------------
Total (subsidized &
Subsidized unsubsidized)
----------------------------------------------------------------------------------------------------------------
ANNUAL LIMITS
DEPENDENT UNDERGRADUATES:
First-Year Students....................................... $3,500 $3,500
Second-Year Students...................................... 4,500 4,500
Third-Year Students....................................... (5,500) 7,500 (5,500) 7,500
Fourth-Year+ Students..................................... (5,500) 7,500 (5,500) 7,500
INDEPENDENT UNDERGRADUATES:
First-Year Students....................................... 3,500 3,500
Second-Year Students...................................... 4,500 4,500
Third-Year Students....................................... (5,500) 7,500 (10,500) 12,500
Fourth-Year+ Students..................................... (5,500) 7,500 (10,500) 12,500
GRADUATE STUDENTS............................................. 8,500 20,500
AGGREGATE LIMITS
DEPENDENT UNDERGRADUATES...................................... (23,000) 30,500 (23,000) 30,500
INDEPENDENT UNDERGRADUATES.................................... (23,000) 30,500 (46,000) 53,500
GRADUATE STUDENTS............................................. (65,500) 73,000 (138,500) 156,000
----------------------------------------------------------------------------------------------------------------
Section 113. Reduction of Special Allowance Payments
This section decreases the lender Special Allowance
Payments (SAP) rate by 0.55 percentage points (or 55 basis
points) and equalizes the SAP rate for Stafford and PLUS loans.
Section 114. Elimination of exceptional performer status for lenders
This section eliminates the ``exceptional performance''
designation the Secretary of Education may give to lenders,
loan servicers, and guaranty agencies if they are in full
compliance with due diligence requirements. There are currently
18 ``Exceptional Performers,'' including four of the five
largest lenders.
Section 115. Reduction of lender insurance percentage
Currently, lenders have an insurance rate of 97% which
insures private lenders from defaulted loans. In the case of
default, the government will pay the private lender this
percentage of the owed funds. This section reduces this
percentage to 95%.
Section 116. Guaranty agency collection retention
Currently, guaranty agencies are allowed to retain 23% of
the funds they collect from defaulted loans, in part to cover
the cost of collection. This section reduces the collection
rate to 16%, which is consistent with the fee paid to those who
serve as collection contractors for the Direct Loan program.
Section 117. Unit costs for account maintenance fees
Currently guarantors are paid a fee for administrative
costs based on the original principal amount of active loans
they have guaranteed. This section shifts this fee so that it
is tied to the number of accounts lenders have, which more
accurately reflects the guarantors' cost.
Section 118. Increased loan fees from lenders
Lenders are currently charged a fee of 0.5% on all new
loans to partially offset the federal cost of administering the
FFEL program. This section increases this origination fee to 1%
for for-profit lenders. The fee is eliminated for non-profit
lenders and small lenders, defined as those in the lower 15% of
volume.
Section 119. Student loan information
This section requires lenders and guaranty agencies to
provide student loan information to institutions of higher
education and third-party servicers for the purposes of
preventing student loan defaults.
Section 120. Market-based determination of lender returns
This section requires a study by the Secretaries of
Education and Treasury with the Congressional Budget Office,
the Office of Management and Budget, and the General Accounting
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% of loan volume under Part B and 20% the second year
of the pilot study.
PART C--REWARDING SERVICE IN REPAYMENT
Section 131. Loan forgiveness for service in areas of national need
The College Cost Reduction Act provides $5,000 in loan
forgiveness for those serving the country in critical areas,
including first responders, law enforcement officers,
firefighters, nurses, public defenders, prosecutors, early
childhood educators, and librarians. This section makes $1,000
available for each year up to $5000.
Section 132. Income-Contingent Repayment for public service employees
This section amends the current Income-Contingent Repayment
program in the Direct Loan program and provides complete loan
forgiveness for public sector employees after 10 years of
service.
Section 133. Income-based repayment
The College Cost Reduction Act builds on the tenants of the
Income Contingent Repayment program (currently not an option in
the FFEL program) by guaranteeing that borrowers will not pay
more than 15% of their adjusted gross income in student loan
repayments. Under this section, unpaid interest and principal
are capitalized.
Section 134. Definition of economic hardship
This section redefines the eligibility for economic
hardship to 150% of the poverty line applicable to the
borrower's family size.
Section 135. Deferrals
This section amends the appropriate parts of the law to
eliminate the 3 year time restriction for deferrals.
Section 136. Maximum repayment period
This section amends the maximum repayment period in the
income-contingent repayment program.
Section 137. Deferral of loan repayment following active duty
This section allows veterans who were enrolled in 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.
Section 138. Sense of the Congress
This section declares the Sense of Congress that the
Secretary of Education and Treasury work together with the
Government Accountability Office to develop a process to pay
for loans using income tax withholdings.
PART D--SUSTAINING THE PERKINS LOAN PROGRAM
Section 141. Federal Perkins Loans
This section provides $500 million for the Perkins Loan
Federal Contribution program for fiscal years 2008-2012.
Title II--Reducing the Cost of College
Section 201. State commitment to affordable college education
This bill mandates that states maintain their own level of
college financing--to ensure that they fulfill their end of the
bargain to make a quality college education affordable to all
students and constrain tuition hikes. Under this section,
states risk losing their LEAP funds (Leveraging Educational
Assistance Partnership), if they fail to meet this state
maintenance of effort.
This section also provides a waiver for states that may
have specified challenges in maintaining support for higher
education.
Section 202. Consumer information and public accountability in higher
education
The College Cost Reduction Act will redesign the existing
U.S. Department of Education College Opportunity Online Locator
(COOL) website (http://nces.ed.gov/ipeds/cool), making it
easier for parents and students to use, while not imposing
burdensome reporting requirements on colleges and universities.
Included on the COOL website will be user-friendly College
Consumer Profiles that will give parents and students access to
more information about colleges and universities than ever
before. The information will include:
``Sticker price'' for a school over a three
year time period;
``Net tuition price'' (average costs minus
average grants) over that same time period;
Percentage change in both over that same
time period; and
Percentage change in the Higher Education
Price Index (HEPI) over that same time period.
Any school that raises its tuition at twice the rate of the
HEPI will be required to provide students and parents a
description of the factors necessitating the increase.
Section 203. Incentives and rewards for low tuition
This bill, through ``Incentives and Rewards for Low
Tuition,'' will allow for additional mandatory need-based grant
aid to schools that keep their annual net tuition increases at
a rate equal to, or below, the increase in the Higher Education
Price Index (HEPI) for that academic year and to institutions
that guarantee their tuition.
Section 204. Cooperative education
This section creates Cooperative Education Rewards for
institutions or consortia of institutions that provide students
with both academic and work experiences to prepare them for
their careers and that help students support themselves
financially while in school. Grant funds will be used to
increase the quality and availability of such programs and to
provide outreach to underserved populations.
Title III--Ensuring a Highly Qualified Teacher in Every Classroom
PART A--TEACH GRANTS
Section 301. TEACH grants
This section 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.
PART B--CENTERS OF EXCELLENCE
Section 311. Centers of Excellence
This section establishes the Centers of Excellence which
will provide funds to minority serving institutions to help
recruit and prepare teachers and to increase opportunities for
Americans of all educational, ethnic, class, and geographic
backgrounds to become highly qualified teachers. Funds will be
used to strengthen teacher preparation programs by implementing
reforms, using advanced technology, and retraining faculty.
Further, the Centers of Excellence will provide programs with
sustained and high-quality clinical experience that prepare
teachers to close student achievement gaps.
Title IV--Leveraging Funds To Increase College Access
PART A--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND
MINORITY SERVING INSTITUTIONS
Section 401. Investment in Historically Black Colleges and Universities
and other minority serving institutions
The College Cost Reduction Act 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, and 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 10 grants of $600,000 annually 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.
This section 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.
PART B--COLLEGE ACCESS CHALLENGE GRANTS
Section 411. College Access Challenge Grants
This section establishes the ``College Access Challenge
Grants,'' which leverages 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.
PART C--UPWARD BOUND
Section 412. Upward Bound
The College Cost Reduction Act restricts the Secretary's
use of funds for the purposes of evaluating and selecting
participants of the Upward Bound program.
This section provides an additional $120 million to restore
Upward Bound funding to unfunded programs from the FY07
competition.
Title V--Additional Provisions
Section 501. Independent evaluation of distance education programs
This section calls for a study by the National Academy of
Sciences to evaluate the quality of distance education programs
as compared to campus-based education programs at institutions
of higher education.
Section 502. Encouraging colleges and universities to ``go green''
This section declares the Sense of the Committee on
Education and Labor that there should be increased awareness of
the need to use sustainable economic and environmental
practices on colleges and universities.
VI. Explanation of Amendments
The Amendment in the Nature of a Substitute, as amended, is
explained in the body of this report.
VII. Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1, the Congressional
Accountability Act, requires a description of the application
of this bill to the legislative branch. H.R. 2669 amends does
not prevent legislative branch employees' coverage under this
legislation.
VIII. Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement of
whether the provisions of the reported bill include unfunded
mandates. H.R. 2669 contains no intergovernmental or private-
sector mandates as defined by the Unfunded Mandates Reform Act
(UMRA).
IX. Earmark Statement
H.R. 2669 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clauses 9(d), 9(e) or 9(f) of rule XXI of the House of
Representatives.
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XI. Statement of Oversight Findings and Recommendations of the
Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee advises that the bill was a result of the
Committee's budget reconciliation instructions.
XII. New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the House of Representatives and section 308(a) of the
Congressional Budget Act of 1974 and with respect to
requirements of 3(c)(3) of rule XIII of the House of
Representatives and section 402 of the Congressional Budget Act
of 1974, the Committee has received the following estimate for
H.R. 2669 from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 25, 2007.
Hon. George Miller,
Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2669, the College
Cost Reduction Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Deborah
Kalcevic and Justin Humphrey.
Sincerely,
Peter R. Orszag,
Director.
Enclosure.
H.R. 2669--College Cost Reduction Act of 2007
Summary: H.R. 2669 would amend the Higher Education Act of
1965 and make a number of changes to the federal financial
assistance programs related to postsecondary education. The
bill would reduce costs for some borrowers, reduce the
government's payments to lenders and guaranty agencies, modify
fees for lenders, and create new grant programs for
postsecondary students and institutions. CBO estimates that net
effects of those changes would reduce direct spending by $1.7
billion over the 2008-2012 period and by $0.9 billion over the
2008-2017 period.
Implementing the bill also would affect discretionary
spending, primarily by increasing Pell grants. Assuming the
appropriation of the necessary funds, those discretionary costs
would total about $158 billion over the 2008-2012 period.
H.R. 2669 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated Costs to the Federal Government: The estimated
budgetary impact of H.R. 2669 is summarized in Table 1. The
budgetary effects of this legislation fall within budget
function 500 (education, training, employment, and social
services).
TABLE 1.--ESTIMATED BUDGETARY IMPACT OF H.R. 2669
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------------------------------------
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008-2012 2008-2017
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
STUDENT LOANS
Provisions Affecting Borrowers:
Estimated Budget Authority.......... 1,075 1,588 2,350 3,125 3,850 2,265 1,000 1,050 1,090 1,105 11,988 18,498
Estimated Outlays................... 795 1,136 1,855 2,545 3,195 2,890 905 950 990 1,010 9,526 16,271
Provisions Affecting Lenders:
Estimated Budget Authority.......... -5,405 -3,165 -3,340 -3,500 -3,665 -3,830 -3,995 -4,160 -4,340 -4,530 -19,075 -39,930
Estimated Outlays................... -4,105 -2,650 -2,815 -2,945 -3,085 -3,220 -3,360 -3,500 -3,655 -3,810 -15,600 -33,145
Provisions Affecting Guaranty Agencies:
Estimated Budget Authority.......... -2,470 -155 -165 -170 -180 -185 -190 -200 -210 -215 -3,140 -4,140
Estimated Outlays................... -2,405 -135 -140 -145 -155 -160 -165 -170 -175 -180 -2,980 -3,830
Net Programmatic Interactions for
Student Loan Changes:
Estimated Budget Authority.......... -65 -103 -65 -30 * -100 -175 -190 -190 -195 -263 -1,113
Estimated Outlays................... -35 -91 -55 -40 * -55 -135 -160 -160 -165 -221 -896 GRANT PROGRAMS
Increases in Grant Aid to Students:
Budget Authority.................... 915 975 1,455 2,400 2,470 2,505 2,560 2,620 2,660 2,685 8,215 21,245
Estimated Outlays................... 305 910 1,042 1,646 2,393 2,467 2,516 2,568 2,628 2,664 6,297 19,141
Increases in Grants to Institutions of
Higher Education:
Budget Authority.................... 595 245 245 245 215 0 0 0 0 0 1,545 1,545
Estimated Outlays................... 78 388 289 300 255 195 33 9 0 0 1,309 1,545
TOTAL CHANGES IN DIRECT SPENDING:
Estimated Budget Authority.......... -5,355 -615 480 2,070 2,690 655 -800 -880 -990 -1,150 -730 -3,895
Estimated Outlays................... -5,368 -442 176 1,361 2,603 2,117 -206 -303 -372 -481 -1,670 -914
CHANGES IN SPENDING SUBJECT TO APPROPRIATIONPell Grant Program: \1\
Estimated Authorization Level....... 28,311 34,167 39,386 44,784 50,780 51,989 53,300 0 0 0 197,428 302,716
Estimated Outlays................... 6,795 29,150 35,302 40,577 46,115 50,950 52,279 40,482 1,066 0 157,939 302,716
MEMORANDUM
Student Loan Spending Under the CBO
Baseline:
Estimated Budget Authority.......... 4,575 5,248 5,825 6,011 5,800 5,738 5,681 5,586 5,480 5,389 26,859 54,733
Estimated Outlays................... 3,241 3,889 4,506 4,839 4,734 4,764 4,769 4,752 4,712 4,638 21,209 44,844
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Assumes the maximum award for academic years 2013-2014 and 2014-2015 is the same level ($11,600) as that specified for academic year 2012-2013.
Note.--* = Less than $500,000.
Basis of estimate: For this estimate, CBO assumes that H.R.
2669 will be enacted early in fiscal year 2008.
As required under the Federal Credit Reform Act of 1990,
the costs of student loans are estimated on a net-present-value
basis rather than the cash basis used for most other federal
programs. H.R. 2669 would affect such credit estimates in
several ways: by reducing interest rates charged on student
loans, by reducing certain payments to private lenders of
federally guaranteed loans, by decreasing payments to guaranty
agencies, and by increasing certain fees paid to the government
by such lenders.
In fiscal year 2006, the student aid programs provided an
estimated $16 billion in federal grant aid to over 5 million
students and an estimated $61 billion in federal loan aid or
guarantees to 8 million students and parents. The current grant
aid is mostly discretionary spending (i.e., from annual
appropriation action); the loan aid is virtually all direct
spending.
H.R. 2669 would expand loan aid to student borrowers while
reducing the federal cost of providing that aid, establish new
mandatory grant aid to students, and establish several other
mandatory grant programs to institutions of higher education.
The bill also would authorize a major increase in discretionary
funding for the Pell Grant Program.
Direct spending--student loans
Provisions Affecting Borrowers. H.R. 2669 would make
several changes affecting student loan borrowers. The bill
would reduce interest rates and increase the borrowing limits
for some borrowers, expand borrower repayment options, provide
loan forgiveness for borrowers working in specified public-
sector jobs, and expand eligibility by altering the
determination of financial need. Combined, these changes are
estimated to increase costs by $795 million in 2008, by $9.5
billion over the 2008-2012 period, and by $16.3 billion over
the 2008-2017 period.
Reductions in Interest Rates. Under current law, the
interest rate charged borrowers for both subsidized and
unsubsidized student loans is 6.8 percent for new loans
disbursed after June 30, 2006. H.R. 2669 would reduce the rate
for new subsidized loans in stages: for successive 12-month
periods beginning in July 2008, the rates would be 6.12
percent, 5.44 percent, 4.76 percent, 4.08 percent, and 3.4
percent, respectively. Between $30 billion and $34 billion in
new loans would be affected each year. Beginning in July 2013,
for new loans, the rate would revert back to the 6.8 percent
rate prescribed in current law.
For guaranteed student loans, private lenders are paid
interest based on a formula; if that rate exceeds what the
borrower pays, the federal government is responsible for paying
the difference between the two rates. When the lender formula
produces a lower rate than the borrower pays, the lender must
return the difference to the government. Consequently, any
reduction in the borrower's interest rate increases federal
costs by either increasing the payments made to lenders or
reducing the rebate lenders pay to the government. In the
direct student loan program, the interest rate reductions
reduce federal collections. In both cases--either through an
increase in federal payments for loan guarantees or a decrease
in federal collections for direct loans--the net cost of
providing the student loan assistance rises and is measured as
an increase in the subsidy cost, recorded on a present-value
basis at the time of loan disbursement. CBO estimates that, as
a result, loan subsidy costs would rise by $6.2 billion over
the 2008-2012 period and $8.2 billion over the 2008-2017 period
(see Table 2).
Increases in Loan Limits. H.R. 2669 would increase the
annual loan limits for third- and fourth-year undergraduate
students, and adjust the lifetime loan limits to accommodate
those increases. Under current law, the maximum loan a third-
or fourth-year dependent student can borrow is $5,500, and the
lifetime limits are $23,000 for undergraduates and $65,500 for
combined undergraduate and graduate school borrowing. For
third- and fourth-year independent students, the maximum annual
limit is $10,500 and lifetime limits are $46,000 for
undergraduates and $138,500 for combined undergraduates and
graduate borrowers.
Beginning in 2008, the legislation would increase the
third- and fourth-year limit to $7,500 and the respective
lifetime limits to $30,500 and $73,000 for dependent students.
The third- and fourth-year limit would rise for independent
students to $12,500, and the respective lifetime limits would
rise to $53,500 and $156,000. Overall, the increases in the
loan limits would raise loan volume between $1 billion and $3
billion each year and would increase subsidy costs by $1.4
billion over the 2008-2012 period and $3.5 billion over the
2008-2017 period, CBO estimates.
Income-based Repayment and Economic Deferment. Beginning in
October 2007 for all student loan borrowers, the current
maximum three-year period for which a borrower could receive an
economic hardship deferment would be eliminated. (A deferment
is a repayment status during which a borrower does not have to
make any payment on their student loan.) In addition, the
eligibility criteria for an economic hardship deferment would
be altered. Currently, borrowers are eligible for an economic
hardship deferment if their income is below 100 percent of
poverty for a family of two or their income is below 220
percent of poverty for a family of two and their debt payments
exceed 20 percent of their income. H.R. 2669 would set the
eligibility at 150 percent of poverty based on family size.
TABLE 2.--DIRECT SPENDING OUTLAY EFFECTS OF MAJOR PROVISIONS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------------------
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008-2012 2008-2017
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
STUDENT LOANS
Provisions Affecting Borrowers:
Interest Rate Reductions--Estimated Outlays. 205 665 1,205 1,780 2,370 2,020 0 0 0 0 6,225 8,245
Loan Limit Increases--Estimated Outlays..... 80 250 345 370 380 390 400 410 415 425 1,425 3,465
Income-Based Repayment--Estimated Outlays... 455 130 130 135 140 150 155 160 165 170 990 1,790
Loan Forgiveness--Estimated Outlays......... 50 85 165 245 290 315 335 365 390 395 835 2,635
Needs Analysis--Estimated Outlays........... 5 6 10 15 15 15 15 15 20 20 51 136
Subtotal, Provisions Affecting 795 1,136 1,855 2,545 3,195 2,890 905 950 990 1,010 9,526 16,271
Borrowers--Estimated Outlays...........
Provisions Affecting Lenders:
Special Allowance Payment--Estimated Outlays -3,110 -2,255 -2,385 -2,500 -2,620 -2,735 -2,855 -2,975 -3,105 -3,240 -12,870 -27,780
Lender Insurance--Estimated Outlays......... -765 -235 -255 -265 -275 -285 -295 -310 -325 -335 -1,795 -3,345
Lender Fees--Estimated Outlays.............. -230 -160 -175 -180 -190 -200 -210 -215 -225 -235 -935 -2,020
Subtotal, Provisions--Affecting Lenders-- -4,105 -2,650 -2,815 -2,945 -3,085 -3,220 -3,360 -3,500 -3,655 -3,810 -15,600 -33,145
Estimated Outlays......................
Provisions Affecting Guaranty Agencies:
Retention of Guaranty Agency Collections-- -1,365 -135 -140 -145 -155 -160 -165 -170 -175 -180 -1,940 -2,790
Estimated Outlays..........................
Guaranty Agency Fee--Estimated Outlays...... -1,040 * * * * * * * * * -1,040 -1,040
Subtotal, Provisions--Affecting Guaranty -2,405 -135 -140 -145 -155 -160 -165 -170 -175 -180 -2,980 -3,830
Agencies--Estimated Outlays............
Net Programmatic Interactions for Student Loan -35 -91 -55 -40 * -55 -135 -160 -160 -165 -221 -896
Changes--Estimated Outlays.....................
GRANT PROGRAMS
Provisions Affecting Grant Aid to Students:
Mandatory Pell Grants--Estimated Outlays.... 202 830 982 1,556 2,278 2,361 2,411 2,463 2,518 2,554 5,848 18,156
Other Grants--Estimated Outlays............. 104 80 60 90 115 107 105 105 110 110 449 985
Subtotal, Provisions--Affecting Grant 305 910 1,042 1,646 2,393 2,467 2,516 2,568 2,628 2,664 6,297 19,141
Aid to Students--Estimated Outlays.....
Grant Aid to Institutions--Estimated Outlays.... 78 388 289 300 255 195 33 9 0 0 1,309 1,546
TOTAL CHANGES IN DIRECT SPENDINGEstimated Outlays............................... -5,368 -442 176 1,361 2,603 2,117 -206 -303 -372 -481 -1,670 -914
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes.--* = Costs or savings of less than $500,000. Components may not sum to totals because of rounding.
In addition, beginning in October 2007, the bill would
establish a new income-based repayment plan available to all
student loan borrowers similar to the current income-contingent
repayment (ICR) plan in the direct student loan program. If
borrowers' total federal student loan payments would exceed 15
percent of their calculated income, which is their adjusted
gross income less an amount which is 150 percent of poverty for
their family size, borrowers could elect to have their payments
limited to 15 percent of their calculated income. If their
payments are less than the amount due, payments would first be
credited to interest, and then to principal. Any unpaid
interest due on the loans would be capitalized. If, or when,
borrowers are able to make 100 percent of their principal and
interest payments, borrowers would return to a 10-year
repayment, with some qualifications. At the end of 20 years,
any unpaid principal, including any unpaid capitalized
interest, would be paid by the government in case of a
guaranteed loan and would be forgiven in the case of a direct
loan.
Using the CBO's Long-Term (CBOLT) model, we estimated the
eligible population based on the projected earnings for workers
with some post-secondary schooling. CBO expects that
participation in this program would be relatively low because
of the required capitalization of interest and the seeming
reluctance of borrowers to apply for similar relief elsewhere
(for example, the low participation in the current ICR plan).
CBO estimates that extending the economic deferment
combined with the new income-based repayment plan would
increase federal costs by $1.0 billion over the 2008-2012
period and $1.8 billion over the 2008-2017 period.
Loan Forgiveness for Certain Public-Sector Jobs. The bill
would create two new loan forgiveness programs for public-
sector borrowers. The first, loan forgiveness for service in
areas of national need, would forgive loans to new borrowers as
of October 1, 2007, who are employed in certain public-sector
jobs, including law enforcement, public safety, emergency
management, public health, early childhood and bilingual
education, nursing, social work and child welfare, public
interest legal services, speech pathology, and library science.
For each year of full-time employment, a borrower would
have up to $1,000 of his or her loans forgiven, up to a
lifetime maximum of $5,000. Based on data from the Bureau of
Labor Statistics and the Department of Education, CBO estimates
that this provision would cost $2.7 billion over 10 years and
that approximately 115,000 borrowers each year would be
eligible for some amount of forgiveness in the initial years,
with the total growing over 10 years.
The second program, income-contingent repayment for public-
sector employees, would provide forgiveness to borrowers who
agree to repay their loans through the income-contingent
repayment plan under the direct loan program beginning in
October 2007. To be eligible, a borrower would have to be
employed in a public-sector job for 10 years and make 120
payments on the loan. Eligible public-sector jobs include
government, emergency management, public safety, law
enforcement, public health, early childhood education, social
work in a public child or family service agency, and public
interest legal services. Once borrowers met these criteria,
they would have their remaining outstanding loan balance
forgiven.
Based on data from the Census Bureau, the Survey of Income
and Program Participation, the Bureau of Labor Statistics, and
the Department of Education, CBO estimates that approximately
50,000 new borrowers each year would eventually be eligible
for, and participate in, income-contingent loan forgiveness
each year. The cost of the loan forgiveness would be covered by
savings from borrowers switching from the guaranteed loan
program to the income-contingent repayment plan in the direct
program. As a result, CBO estimates the program would save $70
million between 2008 and 2017.
Changes in Calculation of Needs Analysis. The bill would
change the way eligibility is calculated for Pell grants and
subsidized student loans; the latter is classified as mandatory
spending (see the section on ``Spending Subject to
Appropriation'' for the discretionary impact on Pell grants).
Those changes include:
Raising the level at which a student
automatically qualifies to have no expected family
contribution;
Changing the definition of untaxed income
and the treatment of education savings accounts;
Expanding the discretion of financial aid
officers;
Increasing income protection allowances for
dependent and independent students; and
Changing eligibility for the simplified
needs test.
Using data on applicants for federal financial assistance,
CBO estimates that those provisions in total would add costs of
$51 million over the 2008-2012 period and $136 million over the
2008-2017 period to the student loan program.
Provisions Affecting Lenders. H.R. 2669 would alter
payments to lenders in the guaranteed student loan program. The
quarterly payments to lenders on all new loans would be
reduced, federal insurance against default would be lowered,
and lenders' origination fees would be increased. Combined,
these changes would reduce costs by an estimated $4.1 billion
in 2008, $15.6 billion over the 2008-2012 period, and $33.1
billion over the 2008-2017 period,
Reduction of Special Allowance Payments to Lenders. Under
current law, private lenders receive quarterly payments from
the government when the interest rate formula used to pay
lenders would provide an interest rate higher than that which
would apply to borrowers. Such payments are referred to as
special allowance payments. The specific lender formulas are
based on the 91-day commercial paper rate plus:
1.74 percent for loans when borrowers are in
school, in the six-month grace period after leaving
school, or in a deferment period (for example, for
economic hardship);
2.34 percent when the borrower is repaying
the loan; and
2.64 percent when the borrower has
consolidated the loan or the borrower is a parent
(including graduate students participating in the
parent program: GradPLUS).
Beginning in October 2007, H.R. 2669 would lower those
``add-ons'' by 55 basis points (or 0.55 percentage points--
roughly one-half of one percent) for new student and new
consolidation loans and by 85 basis points for new parent and
new GradPLUS loans.
CBO projects new loan volume in the guaranteed loan program
will rise from nearly $58 billion in 2008 to $86 billion by
2017, and that loan volume for new consolidations will range
from about $21 billion to $28 billion a year over the same
period. CBO estimates that the reduced special allowance
payments would reduce federal spending by $12.9 billion over
the 2008-2012 period and $27.8 billion over the 2008-2017
period.
Reductions in Percentage Guaranteed. The bill would reduce
the percentages that lenders receive when borrowers default on
their loans in two ways: lowering the insurance rate from 97
percent of unpaid principal to 95 percent and eliminating the
differential treatment (99 percent insurance) accorded to
lenders defined as exceptional performers. Consequently, all
lenders would receive the same insurance rate (95 percent) on
loans originating after September 2007. CBO estimates that
those changes together would reduce outlays by $1.8 billion
over the 2008-2012 period and by $3.3 billion over the 2008-
2017 period.
The reduction in the percentage guaranteed rate from 97
percent to 95 percent would apply for loans whose first
disbursement is after September 2007, including new
consolidation loans. CBO estimates the two-point reduction in
the insured percentage by itself would save about $0.2 billion
over the 2008-2017 period.
Under current law, exceptional performers--lenders who
exceed standards for various administrative activities--are
insured at 99 percent rather than 97 percent. Based on recent
information from the Department of Education, CBO estimates
that, in any given year, about 90 percent of outstanding
principal is held by lenders with that designation. H.R. 2669
would reduce the insurance rate for those lenders from 99
percent to 95 percent on loans whose first disbursement is on
or after October 2007. CBO estimates that the reduction for
those lenders would save about $3.2 billion over the 2008-2017
period.
Increased Loan Fees From Lenders. Under current law,
lenders pay the federal government 0.5 percent on each new loan
(including consolidations). Beginning in October 2007, H.R.
2669 would eliminate this fee on new loans for relatively small
lenders and all nonprofit lenders, but increase the fee on new
loans made by other lenders to 1.0 percent. CBO estimates that
for about 70 percent of loans, the fee would increase by 0.5
percentage points; the remainder would see the fee eliminated.
Based on its projections of loans to be disbursed over the
projection period, CBO estimates that the modified fee would
lower federal costs by $2.0 billion over the 2008-2017 period.
Loan Auction. H.R. 2669 would authorize a series of
activities that could introduce an auction process for student
loans. Those activities would begin with a planning study of
alternative market-based mechanisms for setting lenders'
yields, followed by a pilot program that would test the
recommended approach. That is, the government could auction the
right to make federally guaranteed loans with the ``winners''
of such auction determined by bidding for the lowest acceptable
payments by the government to such prospective lenders. Upon
completion of an evaluation by the Government Accountability
Office, the Secretary of Education could implement the approach
for the entire student loan program. Because of the substantial
uncertainties about the specific approach that would be adopted
as well as the significant discretion allowed the Secretary of
Education, CBO does not have a sufficient basis upon which to
estimate the budgetary effects of this provision.
Provisions Affecting Guaranty Agencies. H.R. 2669 would
lower payments to guaranty agencies that administer the
guaranteed student loan program on behalf of the government.
The share of default collections retained by the guaranty
agencies would be lowered and the method of federal payment to
manage the overall portfolio would be changed. Combined, those
changes would reduce costs by an estimated $2.4 billion in
2008, $3.0 billion over the 2008-2012 period, and $3.8 billion
over the 2008-2017 period.
Retention of Guaranty Agency Collections. Under current
law, nonfederal guaranty agencies are allowed to retain 23
percent of their collections on defaulted loans. H.R. 2669
would reduce that percentage to 16 percent beginning in fiscal
year 2008. CBO estimates that reducing the retention rates
would save $1.9 billion over the 2008-2012 period and $2.8
billion over the 2008-2017 period.
Account Maintenance Fee. Guaranty agencies currently
receive federal payments of up to 0.1 percent of the original
principal of their outstanding insured loans to support their
administrative costs. Starting in October 2007, H.R. 2669 would
change the percentage fee to a fixed dollar payment per loan.
Based on information provided by the Department of Education,
CBO expects that the fee would be set at about $7.50 per loan
in 2008. CBO estimates that the change, on average, would
reduce payments tied to outstanding loans, but would have no
significant net budgetary impact with respect to future loans.
The savings with respect to outstanding loans reflect the surge
in consolidations in the past several years and for which are
much larger than the average loan and for which the current 0.1
percent fee exceeds the fixed $7.50 amount. Reduced costs for
outstanding loans would total $1.0 billion.
Programmatic Interactions for Student Loans. There are
interactions among the numerous loan-related provisions
included in H.R. 2669. For example, increasing loan volume by
raising the borrowing limits would affect the overall savings
from decreasing lenders' yields and the percentages of loans
guaranteed. The combined effect of all the interactions is to
lower costs by $221 million over the 2008-2012 period and by
$896 million over the 2008-2017 period.
Direct spending--grant programs
Increases in Grant Aid to Students. H.R. 2669 also would
create new grant programs, increase funding for the existing
Pell Grant Program, and expand eligibility for the Academic
Competitiveness and SMART grant programs. Combined, those
changes would increase costs by $305 million in 2008, by $6.3
billion over the 2008-2017 period, and by $19.1 billion over
the 2008-2017 period, CBO estimates.
Mandatory Pell Grant Add-on. The bill would appropriate
$19.3 billion over the next 10 years to create a direct
spending add-on to the existing discretionary Pell Grant
program. The mandatory funds in H.R. 2669 would be added to the
funds provided in the annual appropriation act to raise the
maximum award level above that set in such appropriation acts
(currently $4,310 for academic year 2007-2008).
CBO estimates that, along with the costs of other
provisions in the bill that affect Pell grants, the additional
funds provided would allow the maximum grant to be increased by
approximately $200 for academic year 2008-2009 and by
additional amounts each year until the increase reached
approximately $5,200 in 2012 and beyond. Any additional amounts
realized in future grants awards could vary depending on the
underlying discretionary maximum award level set in annual
appropriation acts. CBO estimates that the outlays associated
with those increases would total $5.8 billion over the 2008-
2012 period and $18.2 billion over the 2008-2017 period.
TEACH Grants. Beginning in academic year 2008-2009, H.R.
2669 would establish a new grant program for students who meet
certain criteria and submit an agreement to teach specific
high-need subjects, such as mathematics and science, for at
least 4 years in schools that meet criteria for enrollment of
low-income students. Each undergraduate participant would be
eligible for up to $4,000 (plus $500 for a Bonus TEACH grant
for some students) up to a maximum of $16,000 ($18,000 for
those participating in the Bonus TEACH Program); graduate
students would be eligible for up to a maximum of $8,000
($10,000 for those participating in the Bonus TEACH program).
CBO estimates costs for this grant program would total $0.4
billion over the 2008-2012 period and $0.9 billion over the
2008-2017 period.
To be eligible for a TEACH grant, a student would have to
meet the following requirements:
Maintain a grade point average of at least
3.25 and display high academic aptitude on certain
admissions tests; and
Engage in coursework and other requirements
necessary to begin a career in teaching.
If the grant recipient fails to complete the service
requirement, the grants would become a direct loan that the
recipient would have to repay with interest.
CBO estimates that more than 25,000 students would
participate in the grant program in a typical year. CBO bases
this estimate on data from the Department of Education,
including the Digest of Education Statistics, the Condition of
Education, the Schools and Staffing Survey, Teacher Attrition
and Mobility, and the National Postsecondary Student Aid Study.
Academic Competitiveness Grant and SMART Grant Programs.
The bill would adjust how a student's academic year is
determined and expand eligibility to part-time students for
both the Academic Competitiveness and SMART grant programs.
Currently, only full-time students are eligible for grants.
Because funding for these programs is capped at specified
amounts and the Secretary has the authority to proportionately
reduce award levels to stay within the provided amounts, CBO
estimates these changes would have no net impact on federal
spending over the 2008-2012 or 2008-2017 periods.
Incentives and Rewards for Low Tuition. The bill would
appropriate $15 million per year for 2008 through 2012 to
provide grants to institutions that increase their tuition by
less than the national average. The Secretary of Education
would award grants to the institutions starting with the one
with the lowest tuition increase, and continuing until the
funds are exhausted. The grants would be used to increase Pell
grants at the institution by 25 percent. CBO estimates that
outlays would increase by $74 million over five years and by
$75 million over 10 years.
Grants to Institutions of Higher Education. H.R. 2669 would
appropriate funds for the existing Federal Perkins Loan Program
and create several new grant programs for institutions of
higher education. Combined, these changes would cost $1.3
billion over the 2008-2012 period and $1.5 billion over the
2008-2017 period. Estimated outlays reflect the historical
patterns of spending for higher education programs and other
federal grant programs.
Federal Perkins Loan Program. The bill would appropriate
$100 million each year for fiscal years 2008 through 2012 for
capital contributions to the existing Federal Perkins Loan
Program. CBO estimates this provision would increase outlays by
$407 million between 2008 and 2012 and by $500 over 10 years.
Cooperative Education Rewards Program. Under this new
program, $15 million a year for 2008 through 2012 would be
available to support programs for students that provide
alternating or parallel periods of academic study and of public
or private employment. The grants would range from $1,000 to
$75,000 annually, and the grants would have to be matched by
the institutions. The federal share would decline in stages
over five years from 85 percent to 25 percent. CBO estimates
the grant program would increase outlays by $75 million over
the 2008-2017 period.
Centers of Excellence. H.R. 2669 would set up a new grant
program to encourage minority institutions to create centers of
excellence that would focus on implementing policies that would
improve the preparation of teachers. Funding for the centers
would total $50 million for the 2008-2012 period, with a
minimum grant of $500,000 for any participating institution.
CBO estimates that all of the outlays associated with those
grants would occur during the 2008-2012 period.
Upward Bound. The bill would appropriate $30 million for
each of fiscal years 2008 through 2011 to provide funding to
Upward Bound projects that received assistance in fiscal year
2006 but not in fiscal year 2007 and that also received a grant
score above a certain level. CBO estimates that this provision
would increase outlays by $109 million over five years and $120
million over 10 years.
Investment in Historically Black Colleges and Universities
and Other Minority Serving Institutions. The bill also would
create the Investment in Historically Black Colleges and
Universities and Other Minority Serving Institutions to provide
grants to such institutions to enhance their undergraduate
programs in educating and training under-represented
populations in all areas of study. For the purposes of this
estimate, CBO assumes the program would expire after 2012, and
thus would not result in any new budget authority after that
year. H.R. 2669 would appropriate $100 million for each of
fiscal years 2008 through 2012, resulting in a total cost of
$500 million over 10 years.
College Access Challenge Grants Program. H.R. 2669 would
appropriate $300 million in fiscal year 2008 to create the
College Access Challenge Grants. The funds, which would be
available for obligation through fiscal year 2012, would be
used to award grants to philanthropic organizations that are
members of eligible consortia to provide: (1) need-based
grants, (2) school-based mentoring programs, and (3) outreach
programs to encourage students to pursue higher education. CBO
estimates outlays would total $300 million over the 2008-2012
period.
Spending subject to appropriation
Implementing H.R. 2669 would also result in additional
discretionary spending. The vast majority of additional
discretionary spending would result from the reauthorization
of, and changes to, the Pell Grant Program. Projected spending
subject to appropriation is summarized in Table 3. For this
estimate, CBO assumes that the necessary amounts to implement
the bill will be appropriated and that spending will follow the
historical pattern for the program.
H.R. 2669 would authorize the appropriation of such sums as
may be necessary for the Pell Grant program through fiscal year
2013. The General Education Provisions Act would automatically
extend this authorization through 2014. This estimate assumes
that sufficient funds are appropriated to provide the maximum
grant to all students eligible for it. On that basis, CBO
estimates that the cumulative changes in H.R. 2669 would
increase outlays for Pell grants by $6.8 billion in 2008 and
$158.0 billion over the 2008-2012 period. If funding were
enacted at the authorized levels, CBO estimates that 5.7
million students would receive grants in academic year 2008-
2009 and 6.5 million would receive grants in 2012-2013, up from
the 5.3 million that CBO estimates will receive grants in the
upcoming 2007-2008 academic year.
Pell Grants. The bill would make several changes to the
underlying Pell Grant program. First, it would set the
authorized maximum award level at $7,600 for academic year
2008-2009 and raise it by $1,000 each academic year up to
$11,600 for academic year 2012-2013.
Historically, the authorized maximum award level has been
replaced with a lower maximum award level during the
appropriations process. The maximum award level for Pell grants
for the upcoming academic year (2007-2008) was set by the
Revised Continuing Appropriations Resolution, 2007 (Public Law
110-5) at $4,310.
Effective upon enactment, the bill also would eliminate the
tuition sensitivity provision, which reduces Pell awards for
some students who attend low-cost postsecondary institutions.
In addition, beginning in academic year 2009-2010 it would
allow students who attend year-round institutions to receive
multiple Pell grants in the same academic year. Assuming the
appropriation of the necessary amounts, CBO estimates that
these provisions would cost $6.8 billion in 2008 and $153.0
billion through 2012.
Other portions of the bill would make changes to the
formulas for calculating who is eligible for Pell grants and
how much each applicant would receive. Those changes, described
below, would not take effect until the 2009-2010 academic year.
CBO's estimate assumes that funding for the maximum authorized
award level would be provided. If the appropriated award level
is set below the authorized level, the ultimate costs would be
lower.
TABLE 3.--ESTIMATED DISCRETIONARY COSTS FOR THE PELL GRANT PROGRAM UNDER H.R. 2669
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------
2007 2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATIONPell Grant Spending Under Current Law:
Budget Authority.......................... 13,661 0 0 0 0 0
Estimated Outlays......................... 13,179 10,660 281 0 0 0
Proposed Changes:
Pell Grants:
Estimated Authorization Level......... 0 28,311 33,166 37,906 42,822 48,454
Estimated Outlays..................... 0 6,795 28,910 34,206 38,991 44,076
Income Protection Allowances:
Estimated Authorization Level......... 0 0 327 714 1,084 1,420
Estimated Outlays..................... 0 0 78 413 795 1,157
Simplified Needs Test and Automatic Zero:
Estimated Authorization Level......... 0 0 330 364 403 422
Estimated Outlays..................... 0 0 79 332 373 407
Definition and Treatment of Untaxed
Income:
Estimated Authorization Level......... 0 0 581 658 747 806
Estimated Outlays..................... 0 0 139 588 678 759
Interactions:
Estimated Authorization Level......... 0 0 -237 -256 -272 -322
Estimated Outlays..................... 0 0 -57 -237 -259 -284
Total Changes:
Estimated Authorization Level..... 0 28,311 34,167 39,386 44,784 50,780
Estimated Outlays................. 0 6,795 29,150 35,302 40,577 46,115
Pell Grant Spending Under H.R. 2669 \1\
Estimated Authorization Level \2\......... 13,661 28,311 34,167 39,386 44,784 50,780
Estimated Outlays......................... 13,179 17,455 29,431 35,302 40,577 46,115
----------------------------------------------------------------------------------------------------------------
\1\ In addition to the discretionary spending for Pell grants shown in this table, H.R. 2669 also would provide
a new mandatory add-on to the Pell Grant Program. Those funds would constitute direct spending, and would
total $5.8 billion over the 2008-2012 period and $18.2 billion over the 2008-2017 period as shown in table 2
(on page 5 of this estimate).
\2\ The Concurrent Resolution on the Budget for Fiscal Year 2006 (H. Con. Res. 95) requires that, for budget
enforcement purposes, the estimate of new discretionary budget authority for the Pell Grant program include
the accumulated shortfall or surplus from prior award years. The current estimated shortfall for fiscal year
2008 is $258 million. This amount is not included in figures in the table.
Income Protection Allowances. H.R. 2669 would raise the
income protection allowances for both dependent and independent
students (but not for parents of dependent students). The
income protection allowance is a set amount of a student's
income that is not counted toward his or her expected family
contribution. Under current law, these allowances are inflated
by the Consumer Price Index (CPI) each year. This legislation
would increase these levels for academic years 2009-2010
through 2012-2013 at rates greater than inflation and then
return to CPI adjustments after academic year 2012-2013. CBO
estimates that this provision would cost $2.4 billion through
2012.
Simplified Needs Test and Automatic Zero Changes. The bill
would raise the income level at which a student automatically
qualifies to have no expected family contribution from $20,000
to $30,000, beginning in academic year 2009-2010. It also would
inflate this level by the CPI for each academic year after
2009-2010. H.R. 2669 would change eligibility for the
simplified needs test and expand the discretion of financial
aid officers. CBO estimates that implementing these changes
would cost $1.2 billion over the 2008-2012 period.
Definitions and Treatment of Untaxed Income. The bill would
eliminate certain categories of untaxed income, such as the
earned income tax credit and welfare and Social Security
benefits, from the calculation of total income for students and
parents. It also would change the treatment of education
savings accounts. CBO estimates that these changes would cost
$2.2 billion through 2012.
Interactions. The cumulative impact of the above changes to
the Pell Grant program is less than when each is measured
separately from current law because their effects overlap. For
example, a student may be eligible for the maximum Pell grant
because of both the increased income protection allowances and
the increase in the automatic zero expected family contribution
level. As a result, the combined effect of these changes is
$840 million less over the 2008-2012 period than when each
change is estimated separately.
Intergovernmental and private-sector impact: H.R. 2669
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments. The bill would authorize funding for
student aid and higher education programs and increase
requirements for public colleges and universities that
participate in voluntary federal programs. Any costs to those
institutions or to state, local, or tribal governments would
result from complying with conditions for receiving federal
assistance.
Estimate prepared by: Federal Costs: Deborah Kalcevic and
Justin Humphrey; Impact on State, Local, and Tribal
Governments: Lisa Ramirez-Branum; Impact on the Private Sector:
Nabeel A. Alsalam.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
XIII. Statement of General Performance Goals and Objectives
In accordance with clause 3(c) of rule XIII of the House of
Representatives, the goal of H.R. 2669 is to amend the Higher
Education Act consistent with the policy announced in the
Committee's budget instructions to reduce the deficit by
$750,000,000 for the period of fiscal years 2007 through 2012
without reducing assistance that makes college more affordable
for students. The Committee expects the Department of Education
to comply with H.R. 2669 and implement the changes to the law
in accordance with these stated goals.
XIV. Constitutional Authority Statement
Under clause 3(d)(1) of rule XIII of the House of
Representatives, the Committee must include a statement citing
the specific powers granted to Congress in the Constitution to
enact the law proposed by H.R. 2669. The Committee believes
that the amendments made by this bill are within Congress'
authority under Article I, section 8, clause 1 of the U.S.
Constitution.
XV. Committee Estimate
Clause 3(d)(2) of rule XIII of the House of Representatives
requires an estimate and a comparison of the costs that would
be incurred in carrying out H.R. 2669. However, clause
3(d)(3)(B) of that rule provides that this requirement does not
apply when the Committee has included in its report a timely
submitted cost estimate of the bill prepared by the Director of
the Congressional Budget Office under section 402 of the
Congressional Budget Act.
XVI. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
HIGHER EDUCATION ACT OF 1965
* * * * * * *
TITLE I--GENERAL PROVISIONS
* * * * * * *
PART C--COST OF HIGHER EDUCATION
[SEC. 131. IMPROVEMENTS IN MARKET INFORMATION AND PUBLIC ACCOUNTABILITY
IN HIGHER EDUCATION.
[(a) Improved Data Collection.--
[(1) Development of uniform methodology.--The
Secretary shall direct the Commissioner of Education
Statistics to convene a series of forums to develop
nationally consistent methodologies for reporting costs
incurred by postsecondary institutions in providing
postsecondary education.
[(2) Redesign of data systems.--On the basis of the
methodologies developed pursuant to paragraph (1), the
Secretary shall redesign relevant parts of the
postsecondary education data systems to improve the
usefulness and timeliness of the data collected by such
systems.
[(3) Information to institutions.--The Commissioner
of Education Statistics shall--
[(A) develop a standard definition for the
following data elements:
[(i) tuition and fees for a full-time
undergraduate student;
[(ii) cost of attendance for a full-
time undergraduate student, consistent
with the provisions of section 472;
[(iii) average amount of financial
assistance received by an undergraduate
student who attends an institution of
higher education, including--
[(I) each type of assistance
or benefit described in section
428(a)(2)(C)(i) ;
[(II) fellowships; and
[(III) institutional and
other assistance; and
[(iv) number of students receiving
financial assistance described in each
of subclauses (I), (II), and (III) of
clause (iii);
[(B) not later than 90 days after the date of
enactment of the Higher Education Amendments of
1998, report the definitions to each
institution of higher education and within a
reasonable period of time thereafter inform the
Committee on Labor and Human Resources of the
Senate and the Committee on Education and the
Workforce of the House of Representatives of
those definitions; and
[(C) collect information regarding the data
elements described in subparagraph (A) with
respect to at least all institutions of higher
education participating in programs under title
IV, beginning with the information from
academic year 2000-2001 and annually
thereafter.
[(b) Data Dissemination.--The Secretary shall make available
the data collected pursuant to subsection (a). Such data shall
be available in a form that permits the review and comparison
of the data submissions of individual institutions of higher
education. Such data shall be presented in a form that is
easily understandable and allows parents and students to make
informed decisions based on the costs for typical full-time
undergraduate students.
[(c) Study.--
[(1) In general.--The Commissioner of Education
Statistics shall conduct a national study of
expenditures at institutions of higher education. Such
study shall include information with respect to--
[(A) the change in tuition and fees compared
with the consumer price index and other
appropriate measures of inflation;
[(B) faculty salaries and benefits;
[(C) administrative salaries, benefits and
expenses;
[(D) academic support services;
[(E) research;
[(F) operations and maintenance; and
[(G) institutional expenditures for
construction and technology and the potential
cost of replacing instructional buildings and
equipment.
[(2) Evaluation.--The study shall include an
evaluation of--
[(A) changes over time in the expenditures
identified in paragraph (1);
[(B) the relationship of the expenditures
identified in paragraph (1) to college costs;
and
[(C) the extent to which increases in
institutional financial aid and tuition
discounting practices affect tuition increases,
including the demographics of students
receiving such discounts, the extent to which
financial aid is provided to students with
limited need in order to attract a student to a
particular institution, and the extent to which
Federal financial aid, including loan aid, has
been used to offset the costs of such
practices.
[(3) Final report.--The Commissioner of Education
Statistics shall submit a report regarding the findings
of the study required by paragraph (1) to the
appropriate committees of Congress not later than
September 30, 2002.
[(4) Higher education market basket.--The Bureau of
Labor Statistics, in consultation with the Commissioner
of Education Statistics, shall develop a higher
education market basket that identifies the items that
comprise the costs of higher education. The Bureau of
Labor Statistics shall provide a report on the market
basket to the Committee on Labor and Human Resources of
the Senate and the Committee on Education and the
Workforce of the House of Representatives not later
than September 30, 2002.
[(5) Fines.--In addition to actions authorized in
section 487(c), the Secretary may impose a fine in an
amount not to exceed $25,000 on an institution of
higher education for failing to provide the information
described in paragraph (1) in a timely and accurate
manner, or for failing to otherwise cooperate with the
National Center for Education Statistics regarding
efforts to obtain data on the cost of higher education
under this section and pursuant to the program
participation agreement entered into under section 487.
[(d) Student Aid Recipient Survey.--(1) The Secretary shall
survey student aid recipients on a regular cycle, but not less
than once every 3 years--
[(A) to identify the population of students receiving
Federal student aid;
[(B) to determine the income distribution and other
socioeconomic characteristics of federally aided
students;
[(C) to describe the combinations of aid from State,
Federal, and private sources received by students from
all income groups;
[(D) to describe the debt burden of loan recipients
and their capacity to repay their education debts; and
[(E) to disseminate such information in both
published and machine readable form.
[(2) The survey shall be representative of full-time and
part-time, undergraduate, graduate, and professional and
current and former students in all types of institutions, and
should be designed and administered in consultation with the
Congress and the postsecondary education community.]
SEC. 131. CONSUMER INFORMATION AND PUBLIC ACCOUNTABILITY IN HIGHER
EDUCATION.
(a) College Opportunity On-Line (Cool) Website Re-Design
Process.--In carrying out this section, the Commissioner of
Education Statistics--
(1) shall identify the data elements related to
college costs that are of greatest importance to
prospective students, enrolled students, and their
families, paying particular attention to low-income,
non-traditional student populations, and first-
generation college students;
(2) shall convene a group of individuals with
expertise in the collection and reporting of data
related to institutions of higher education, the use of
consumer data, and consumer marketing in general to--
(A) determine the relevance of particular
data elements to prospective students, enrolled
students, and families;
(B) assess the cost-effectiveness of various
ways in which institutions of higher education
might produce relevant data;
(C) determine the general comparability of
the data across institutions of higher
education; and
(D) make recommendations regarding the
inclusion of specific data items and the most
effective and least burdensome methods of
collecting and reporting useful data from
institutions of higher education; and
(3) shall ensure that the redesigned COOL website--
(A) uses, to the extent practicable, data
elements currently provided by institutions of
higher education to the Secretary;
(B) includes clear and uniform information
determined to be relevant to prospective
students, enrolled students, and families;
(C) provides comparable information, by
ensuring that data are based on accepted
criteria and common definitions;
(D) includes a sorting function that permits
users to customize their search for and
comparison of institutions of higher education
based on the information identified through the
process as prescribed in paragraph (1) as being
of greatest relevance to choosing an
institution of higher education.
(b) Data Collection.--
(1) Data system.--The Commissioner of Education
Statistics shall continue to redesign the relevant
parts of the Integrated Postsecondary Education Data
System to include additional data as required by this
section and to continue to improve the usefulness and
timeliness of data collected by such System in order to
inform consumers about institutions of higher
education.
(2) College consumer profile.--The Secretary shall
continue to publish on the COOL website, for each
academic year and in accordance with standard
definitions developed by the Commissioner of Education
Statistics (including definitions developed under
section 131(a)(3)(A) as in effect on the day before the
date of enactment of the College Cost Reduction Act of
2007), from at least all institutions of higher
education participating in programs under title IV the
following information:
(A) The tuition and fees charged for a first-
time, full-time undergraduate student.
(B) The room and board charges for a first-
time, full-time undergraduate student.
(C) The price of attendance for a first-time,
full-time undergraduate student, consistent
with the provisions of section 472.
(D) The average amount of financial
assistance received by a first-year, full-time
undergraduate student, including--
(i) each type of assistance or
benefits described in 428(a)(2)(C)(ii);
(ii) institutional and other
assistance; and
(iii) Federal loans under parts B, D,
and E of title IV.
(E) The number of first-time, full-time
undergraduate students receiving financial
assistance described in each clause of
subparagraph (D).
(F) The institutional instructional
expenditure per full-time equivalent student.
(G) Student enrollment information, including
information on the number and percentage of
full-time and part-time students, and the
number and percentage of resident and non-
resident students.
(H) Faculty-to-student ratios.
(I) Faculty information, including the total
number of faculty and the percentage of faculty
who are full-time employees of the institution
and the percentage who are part-time.
(J) Completion and graduation rates of
undergraduate students, identifying whether the
completion or graduation rates are from a 2-
year or 4-year program of instruction and, in
the case of a 2-year program of instruction,
the percentage of students who transfer to 4-
year institutions prior or subsequent to
completion or graduation.
(K) A link to the institution of higher
education with information of interest to
students including mission, accreditation,
student services (including services for
students with disabilities), transfer of credit
policies, any articulation agreements entered
into by the institution, and, if appropriate,
placement rates and other measures of success
in preparing students for entry into or
advancement in the workforce.
(L) The college affordability information
elements specified in subsection (c).
(M) Any additional information that the
Secretary may require.
(c) College Affordability Information Elements.--The college
affordability information elements required by subsection
(b)(2)(L) shall include, for each institution submitting data--
(1) the sticker price of the institution for the 3
most recent academic years;
(2) the net tuition price of the institution for the
3 most recent academic years;
(3) the percentage change in both the sticker price
and the net tuition price over the 3-year time period
that is being reported;
(4) the percentage change in the higher education
price index (as defined in section 401B(d)) over the
same 3-year time period; and
(5) whether the institution has been placed on
affordability alert status as required by subsection
(d)(2).
(d) Outcomes and Actions.--
(1) Response from institution.--Effective on June 30,
2008, an institution that increases its sticker price
at a percentage rate for any 3-year interval ending on
or after that date that exceeds two times the rate of
change in the higher education price index (as defined
in section 401B(d)) over the same time period shall
provide a report to the Secretary, in such a form, at
such time, and containing such information as the
Secretary may require. Such report shall be published
by the Secretary on the COOL website, and shall
include--
(A) a description of the factors contributing
to the increase in the institution's costs and
in the tuition and fees charged to students;
and
(B) if determinations of tuition and fee
increases are not within the exclusive control
of the institution, a description of the agency
or instrumentality of State government or other
entity that participates in such determinations
and the authority exercised by such agency,
instrumentality, or entity.
(2) Consequences for 2-year continuation of
failure.--If the Secretary determines that an
institution that is subject to paragraph (1) has failed
to reduce the subsequent increase in sticker price to
equal to or below two times the rate of change in the
higher education price index (as defined in section
401B(d)) for 2 consecutive academic years subsequent to
the 3-year interval used under paragraph (1), the
Secretary shall place the institution on affordability
alert status.
(3) Exemptions.--Notwithstanding paragraph (2), an
institution shall not be placed on affordability alert
status if, for any 3-year interval for which sticker
prices are computed under paragraph (1)--
(A) with respect the the class of
institutions described in paragraph (5) to
which the institution belongs, the sticker
price of the institution is in the lowest
quartile of institutions within such class, as
determined by the Secretary, during the last
year of such 3-year interval; or
(B) the institution has a percentage change
in its sticker price computed under paragraph
(1) that exceeds two times the rate of change
in the higher education price index (as defined
in section 401B(d)) over the same time period,
but the dollar amount of the sticker price
increase is less than $500.
(4) Information to state agencies.--Any institution
that reports under paragraph (1)(B) that an agency or
instrumentality of State government or other entity
participates in the determinations of tuition and fee
increases shall, prior to submitting any information to
the Secretary under this subsection, submit such
information to, and request the comments and input of,
such agency, instrumentality, or entity. With respect
to any such institution, the Secretary shall provide a
copy of any communication by the Secretary with that
institution to such agency, instrumentality, or entity.
(5) Classes of institutions.--For purposes of this
subsection, the classes of institutions shall be those
sectors used by the Integrated Postsecondary Education
Data System, based on whether the institution is
public, nonprofit private, or for-profit private, and
whether the institution has a 4-year, 2-year, or less
than 2-year program of instruction.
(6) Data rejection.--Nothing in this subsection shall
be construed as allowing the Secretary to reject the
data submitted by an individual institution of higher
education.
(e) Information to the Public.--The Secretary shall work with
public and private entities to promote broad public awareness,
particularly among middle and high school students and their
families, of the information made available under this section,
including by distribution to students who participate in or
receive benefits from means-tested federally funded education
programs and other Federal programs determined by the
Secretary.
(f) Fines.--In addition to actions authorized in section
487(c), the Secretary may impose a fine in an amount not to
exceed $25,000 on an institution of higher education for
failing to provide the information required by this section in
a timely and accurate manner, or for failing to otherwise
cooperate with the National Center for Education Statistics
regarding efforts to obtain data under subsection (c) and
pursuant to the program participation agreement entered into
under section 487.
(g) Regulations.--The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of
this section.
(h) Definitions.--For the purposes of this section:
(1) Net tuition price.--The term ``net tuition
price'' means the sticker price, minus the average
grants provided to such students, for any academic
year.
(2) Sticker price.--The term ``sticker price'' means
the average tuition and fees charged to a first-time,
full-time, full-year undergraduate student by an
institution of higher education for any academic year.
SEC. 132. STATE COMMITMENT TO AFFORDABLE COLLEGE EDUCATION.
(a) Maintenance of Effort Required.--No State shall reduce
the total amount provided by the State for public institutions
of higher education in such State for any academic year
beginning on or after July 1, 2008, to an amount which is less
than the average amount provided by such State to such
institutions of higher education during the 5 most recent
preceeding academic years for which satisfactory data is
available.
(b) Waiver.--The Secretary may waive the requirements of this
section, if the Secretary determines that such a waiver would
be equitable due to exceptional or uncontrollable
circumstances, such as a natural disaster or a precipitous and
unforeseen decline in the financial resources of the State
educational agency.
(c) Withholding of All Leap Funds for Violations.--
Notwithstanding any other provision of law, the Secretary of
Education shall withhold from any State that violates
subsection (a) (except a State that receives a waiver under
subsection (b)) any amount that would otherwise be available to
the State under the Leveraging Educational Assistance
Partnership Program under subpart 4 of part A of title IV until
such State has corrected such violation.-
* * * * * * *
TITLE II--TEACHER QUALITY ENHANCEMENT
* * * * * * *
-
PART C--CENTERS OF EXCELLENCE
SEC. 231. DEFINITIONS
As used in this part:
(1) Eligible institution.--The term ``eligible
institution'' means--
(A) an institution of higher education that
has a teacher preparation program that meets
the requirements of section 203(b)(2)and that
is--
(i) a part B institution (as defined
in section 322);
(ii) a Hispanic-serving institution
(as defined in section 502);
(iii) a Tribal College or University
(as defined in section 316);
(iv) an Alaska Native-serving
institution (as defined in section
317(b)); or
(v) a Native Hawaiian-serving
institution (as defined in section
317(b));
(B) a consortium of institutions described in
subparagraph (A); or
(C) an institution described in subparagraph
(A), or a consortium described in subparagraph
(B), in partnership with any other institution
of higher education, but only if the center of
excellence established under section 232 is
located at an institution described in
subparagraph (A).
(2) Highly qualified.--The term ``highly qualified''
when used with respect to an individual means that the
individual is highly qualified as determined under
section 9101 of the Elementary and Secondary Education
Act of 1965 (20 U.S.C. 7801) or section 602 of the
Individuals with Disabilities Education Act (20 U.S.C.
1401).
(3) Scientifically based reading research.--The term
``scientifically based reading research'' has the
meaning given such term in section 1208 of the
Elementary and Secondary Education Act of 1965 (20
U.S.C. 6368).
(4) Scientifically based research.--The term
``scientifically based research'' has the meaning given
such term in section 9101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 7801).
SEC. 232. CENTERS OF EXCELLENCE
(a) Program Authorized.--From the amounts appropriated to
carry out this part, the Secretary is authorized to award
competitive grants to eligible institutions to establish
centers of excellence.
(b) Use of Funds.--Grants provided by the Secretary under
this part shall be used to ensure that current and future
teachers are highly qualified, by carrying out one or more of
the following activities:
(1) Implementing reforms within teacher preparation
programs to ensure that such programs are preparing
teachers who are highly qualified, are able to
understand scientifically based research, and are able
to use advanced technology effectively in the
classroom, including use for instructional techniques
to improve student academic achievement, by--
(A) retraining faculty; and
(B) designing (or redesigning) teacher
preparation programs that--
(i) prepare teachers to close student
achievement gaps, are based on rigorous
academic content, scientifically based
research (including scientifically
based reading research), and
challenging State student academic
content standards; and
(ii) promote strong teaching skills.
(2) Providing sustained and high-quality preservice
clinical experience, including the mentoring of
prospective teachers by exemplary teachers,
substantially increasing interaction between faculty at
institutions of higher education and new and
experienced teachers, principals, and other
administrators at elementary schools or secondary
schools, and providing support, including preparation
time, for such interaction.
(3) Developing and implementing initiatives to
promote retention of highly qualified teachers and
principals, including minority teachers and principals,
including programs that provide--
(A) teacher or principal mentoring from
exemplary teachers or principals; or
(B) induction and support for teachers and
principals during their first 3 years of
employment as teachers or principals,
respectively.
(4) Awarding scholarships based on financial need to
help students pay the costs of tuition, room, board,
and other expenses of completing a teacher preparation
program.
(5) Disseminating information on effective practices
for teacher preparation and successful teacher
certification and licensure assessment preparation
strategies.
(6) Activities authorized under sections 202, 203,
and 204.
(c) Application.--Any eligible institution desiring a grant
under this section shall submit an application to the Secretary
at such a time, in such a manner, and accompanied by such
information as the Secretary may require.
(d) Minimum Grant Amount.--The minimum amount of each grant
under this part shall be $500,000.
(e) Limitation on Administrative Expenses.--An eligible
institution that receives a grant under this part may not use
more than 2 percent of the grant funds for purposes of
administering the grant.
(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out this part.
SEC. 233. APPROPRIATIONS
There shall be available to the Secretary, from funds not
otherwise appropriated, $50,000,000 for the period beginning
with fiscal year 2008 and ending with fiscal year 2012, to
carry out this part beginning with academic year 2008--2009,
which shall remain available until expended. The authority to
carry out this part shall expire at the end of fiscal year
2012.-
* * * * * * *
TITLE IV--STUDENT ASSISTANCEPart A--Grants to Students in Attendance at
Institutions of Higher Education
* * * * * * *
Subpart 1--Federal Pell Grants
SEC. 401. FEDERAL PELL GRANTS: AMOUNT AND DETERMINATIONS; APPLICATIONS.
(a) Program Authority and Method of Distribution.--(1) For
each fiscal year through [fiscal year 2004] fiscal year 2013,
the Secretary shall pay to each eligible institution such sums
as may be necessary to pay to each eligible student (defined in
accordance with section 484) for each academic year during
which that student is in attendance at an institution of higher
education, as an undergraduate, a Federal Pell Grant in the
amount for which that student is eligible, as determined
pursuant to subsection (b). Not less than 85 percent of such
sums shall be advanced to eligible institutions prior to the
start of each payment period and shall be based upon an amount
requested by the institution as needed to pay eligible students
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) Nothing in this section shall be interpreted to prohibit
the Secretary from paying directly to students, in advance of
the beginning of the academic term, an amount for which they
are eligible, in cases where the eligible institution elects
not to participate in the disbursement system required by
paragraph (1).
(3) Grants made under this subpart shall be known as
``Federal Pell Grants''.
(b) Purpose and Amount of Grants.--(1) * * *
[(2)(A) The amount of the Federal Pell Grant for a student
eligible under this part shall be--
[(i) $4,500 for academic year 1999-2000;
[(ii) $4,800 for academic year 2000-2001;
[(iii) $5,100 for academic year 2001-2002;
[(iv) $5,400 for academic year 2002-2003; and
[(v) $5,800 for academic year 2003-2004,
less an amount equal to the amount determined to be the
expected family contribution with respect to that student for
that year.]-
(2)(A) The amount of the Federal Pell Grant for a student
eligible under this part shall be--
(i) $7,600 for academic year 2008--2009;
(ii) $8,600 for academic year 2009--2010;
(iii) $9,600 for academic year 2010--2011;
(iv) $10,600 for academic year 2011--2012; and
(v) $11,600 for academic year 2012--2013,
less an amount equal to the amount determined to be the
expected family contribution with respect to that student for
that year.
* * * * * * *
[(3)(A) For any academic year for which an appropriation Act
provides a maximum basic grant in an amount in excess of
$2,700, the amount of a student's basic grant shall equal
$2,700 plus--
[(i) one-half of the amount by which such maximum basic grant
exceeds $2,700; plus
[(ii) the lesser of--
[(I) the remaining one-half of such excess; or
[(II) the sum of the student's tuition and, if the
student has dependent care expenses (as described in
section 472(8)) or disability-related expenses (as
described in section 472(9)), an allowance determined
by the institution for such expenses.
[(B) An institution that charged only fees in lieu of tuition
as of October 1, 1998, may include in the institution's
determination of tuition charged, fees that would normally
constitute tuition.]
[(4)] (3) No Federal Pell Grant under this subpart shall
exceed the difference between the expected family contribution
for a student and the cost of attendance (as defined in section
472) at the institution at which that student is in attendance.
If, with respect to any student, it is determined that the
amount of a Federal Pell Grant plus the amount of the expected
family contribution for that student exceeds the cost of
attendance for that year, the amount of the Federal Pell Grant
shall be reduced until the combination of expected family
contribution and the amount of the Federal Pell Grant does not
exceed the cost of attendance at such institution.
[(5)] (4) No Federal Pell Grant shall be awarded to a student
under this subpart if the amount of that grant for that student
as determined under this subsection for any academic year is
less than $400, except that a student who is eligible for a
Federal Pell Grant that is equal to or greater than $200 but
less than $400 shall be awarded a Federal Pell Grant of $400.
[(6)(A) The Secretary may allow, on a case-by-case basis, a
student to receive 2 Pell grants during a single award year,
if--
[(i) the student is enrolled full-time in an
associate or baccalaureate degree program of study that
is 2 years or longer at an eligible institution that is
computed in credit hours; and
[(ii) the student completes course work toward
completion of an associate or baccalaureate degree that
exceeds the requirements for a full academic year as
defined by the institution.
(B) The Secretary shall promulgate regulations implementing
this paragraph.]
(5) Year-round pell grants.--The Secretary is
authorized, for students enrolled in a baccalaureate
degree, associate's degree, or certificate program of
study at an eligible institution, to award such
students not more than two Pell grants during an award
year to permit such students to accelerate progress
toward their degree or certificate objectives by
enrolling in courses for more than 2 semesters, or 3
quarters, or the equivalent, in a given academic year.
[(7)] (6) Notwithstanding any other provision of this
subpart, the Secretary shall allow the amount of the Federal
Pell Grant to be exceeded for students participating in a
program of study abroad approved for credit by the institution
at which the student is enrolled when the reasonable costs of
such program are greater than the cost of attendance at the
student's home institution, except that the amount of such
Federal Pell Grant in any fiscal year shall not exceed the
grant level specified in the appropriate Appropriation Act for
this subpart for such year. If the preceding sentence applies,
the financial aid administrator at the home institution may use
the cost of the study abroad program, rather than the home
institution's cost, to determine the cost of attendance of the
student.
[(8)] (7) No Federal Pell Grant shall be awarded under this
subpart to any individual who is incarcerated in any Federal or
State penal institution.-
(8) 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) $840,000,000 for fiscal year
2008;
(ii) $870,000,000 for fiscal year
2009;
(iii) $1,340,000,000 for fiscal year
2010;
(iv) $2,280,000,000 for fiscal year
2011;
(v) $2,350,000,000 for fiscal year
2012;
(vi) $2,400,000,000 for fiscal year
2013;
(vii) $2,450,000,000 for fiscal year
2014;
(viii) $2,510,000,000 for fiscal year
2015;
(ix) $2,550,000,000 for fiscal year
2016; and
(x) $2,570,000,000 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 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) $200 for each of the award years
2008--2009 and 2009--2010;
(ii) $300 for award year 2010--2011;
and
(iii) $500 for award year 2011--2012
and each subsequent award year.
(C) 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. 401A. ACADEMIC COMPETITIVENESS GRANTS.
(a) * * *
* * * * * * *
(c) Definition of Eligible Student.--In this section the term
``eligible student'' means a [full-time] student who, for the
academic year for which the determination of eligibility is
made--
[(1) is a citizen of the United States;]-
(1) is an eligible student under section 484,
including being enrolled or accepted for enrollment in
a degree, certificate, or other eligible program
leading to a recognized educational credential at an
institution of higher education;
* * * * * * *
(3) in the case of a student enrolled or accepted for
enrollment in--
(A) the first academic year of a program of
undergraduate education at a two- or four-year
degree-granting institution of higher
education--
(i) * * *
(ii) has not been previously enrolled
in a program of undergraduate
education, except as part of a
secondary school program of study;
* * * * * * *
(d) Grant Award.--
(1) * * *
* * * * * * *
-
(3) Adjustment for less than full-time enrollment.--A
grant awarded under this section to an eligible student
who attends an eligible institution on a less than
full-time (but at least half-time or more) basis shall
be reduced in the same proportion as would a Federal
Pell Grant pursuant to section 401(b)(2)(B).
* * * * * * *
-
(g) Determination of Academic Year.--Notwithstanding section
481(a)(2), for the purpose of determining eligibility for a
grant under this section, a student shall be considered to be
enrolled or accepted for enrollment in the first, second,
third, or fourth academic year of a program of undergraduate
education based on the student's class standing, as determined
by the institution of higher education at which the student is
enrolled or accepted for enrollment.-
[(g)] (h) Sunset Provision.--The authority to make grants
under this section shall expire at the end of academic year
2010-2011.-
SEC. 401B. INCENTIVES AND REWARDS FOR LOW TUITION.
(a) Rewards for Low Tuition.--For an institution of higher
education that, for academic year 2008--2009 or any succeeding
academic year, has an annual net tuition price increase
(expressed as a percentage) for the most recent academic year
for which satisfactory data is available that is equal to or
less than the percentage change in the higher education price
index for such academic year, the Secretary shall provide such
institution an amount sufficient to provide a 25 percent
increase under subpart 1 of part A of title IV to each Pell
Grant recipient attending such institution for the next award
year beginning after the date of such determination. Each such
institution shall distribute any amounts received under this
subsection among such Pell Grant recipients by increasing the
amount of their Pell Grant awards by 25 percent.
(b) Rewards for Guaranteed Tuition.--
(1) Bonus.--For each institution of higher education
that the Secretary of Education determines complies
with the requirements of paragraph (2) or (3) of this
subsection, the Secretary shall provide to such
institution a bonus amount equal to 25 percent of the
aggregate amount of aid received by students at the
institution under section 401(a). Such institution
shall award the bonus amount to the Pell Grant
recipients who were in attendance at the institution
during the award year that such institution satisfied
the eligibility criteria for maintaining low tuition
and fees. Each such student shall receive an amount
that equals 25 percent of their total Pell Grant award
for such award year, except that no student shall
recieve an amount under this section that would cause
the amount of total financial aid received by such
student to exceed the cost of attendance of the
institution. If there are additional funds remaining
after all eligible students have been paid from the
bonus amount, the institution shall award all excess
funds first to remaining Pell Grant recipients who were
not in attendance at the institution during such award
year, and then to other eligible students under this
title in attendance at such institution in the form of
need-based aid.
(2) 4-year institutions.--An institution of higher
education that provides a program of instruction for
which it awards a bachelor's degree complies with the
requirements of this paragraph if such institution
guarantees that for any academic year beginning on or
after July 1, 2008, and for each of the 4 succeeding
continuous academic years, the net tuition price
charged to an undergraduate student will not exceed--
(A) the amount that the student was charged
for an academic year at the time he or she
first enrolled in the institution of higher
education, plus
(B) the product of the percentage increase in
the higher education price index for the prior
academic year, or the most recent prior
academic year for which data is available,
multiplied by the amount determined under
subparagraph (A).
(3) Less-than 4-year institutions.--An institution of
higher education that does not provide a program of
instruction for which it awards a bachelor's degree
complies with the requirements of this paragraph if
such institution guarantees that for any academic year
(or the equivalent) beginning on or after July 1, 2008,
and for each of the 1.5 succeeding continuous academic
years, the net tuition price charged to an
undergraduate student will not exceed--
(A) the amount that the student was charged
for an academic year at the time he or she
first enrolled in the institution of higher
education, plus
(B) the product of the percentage increase in
the higher education price index for the prior
academic year, or the most recent prior
academic year for which data is available,
multiplied by the amount determined under
subparagraph (A).
(c) Maintaining Affordable Tuition.--For any institution of
higher education whose increase in the annual net tuition price
(expressed as a percentage), for the most recent academic year
for which satisfactory data is available, is greater than the
percentage increase in the higher education price index for
such academic year, the Secretary shall require such
institution to submit to the Secretary the following
information, within 6 months of such determination:
(1) a detailed report on the exact causes for the net
tuition price increase that outlines revenues and
expenditures; and
(2) cost containment strategies to lower net tuition
prices.
(d) Priority.--In awarding incentives and rewards under this
section, the Secretary shall give priority to institutions of
higher education with the lowest annual net tuition price
increase (expressed as a percentage) for the most recent
academic year for which satisfactory data is available, when
compared with other institutions of higher education with
annual net tuition price increases that are equal to or less
than the percentage change in the higher education price index
for such academic year.
(e) Definitions.--
(1) Net tuition price.--The term ``net tuition
price'' has the same meaning as provided in section
131(k).
(2) Higher education price index.--The term ``higher
education price index'' means a statistical measure of
change over time in the prices of a fixed market basket
of goods and services purchased by colleges and
universities through current fund educational and
general expenditures (excluding expenditures for
research), as developed by the Bureau of Labor
Statistics.
(f) Funding.--There shall be available to the Secretary to
carry out this section, from funds not otherwise appropriated,
$15,000,000 for each of the fiscal years 2008 through 2012.
(g) Sunset.--The authority to carry out this section shall
expire at the end of fiscal year 2012.-
Subpart 2--Federal Early Outreach and Student Services Programs
CHAPTER 1--FEDERAL TRIO PROGRAMS
* * * * * * *
SEC. 402C. UPWARD BOUND.
(a) * * *
* * * * * * *
-
(f) Absolute Priority Prohibited in Upward Bound Program.--
Except as otherwise expressly provided by amendment to this
section, the Secretary shall not implement or enforce, and
shall rescind, the absolute priority for Upward Bound Program
participant selection and evaluation published by the
Department of Education in the Federal Register on September
22, 2006 (71 Fed. Reg. 55447 et seq.).
(g) Additional Funds.--
(1) Authorization and appropriation.--There are
authorized to be appropriated, and there are
appropriated to the Secretary, from funds not otherwise
appropriated, $30,000,000 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.
(2) Use of funds.--The amounts made available by
paragraph (1) shall be available to provide assistance
to all Upward Bound projects that received assistance
in fiscal year 2006 but that did not receive assistance
in fiscal year 2007 (other than new applicants) with a
grant score above 70. Such assistance shall be made
available in the form of 4-year grants.-
* * * * * * *
-
Subpart 9--TEACH Grants
SEC. 420L. 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 eligible student (defined in accordance
with section 484) who files an application and
agreement in accordance with section 420M, and who
qualifies--
(A) under paragraph (2) of section 420M(a), a
TEACH Grant in the amount of $4,000 for each
academic year during which that student is in
attendance at the institution; and
(B) under paragraphs (2) and (3) of section
420M(a), a Bonus TEACH Grant in the amount of
$500 (in addition to the amount of the TEACH
Grant under subparagraph (A)) for each academic
year during which that student so qualifies.
(2) Reference.--Grants made under--
(A) paragraph (1)(A) shall be known as
``Teacher Education Assistance for College and
Higher Education Grants'' or ``TEACH Grants'';
and
(B) paragraph (1)(B) shall be known as Bonus
TEACH Grants.
(b) Payment Methodology.--
(1) Prepayment.--Not less than 85 percent of any
funds provided to an institution under subsection (a)
shall be advanced to eligible institutions prior to the
start of each payment period and shall be based upon an
amount requested by the institution as needed to pay
eligible students 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 students, in advance of the beginning of
the academic term, an amount for which they are
eligible, in cases where the eligible institution
elects not to participate in the disbursement system
required by paragraph (1).
(3) Distribution of grants to students.--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 student's account shall be
limited to tuition and fees and, in the case of
institutionally-owned housing, room and board. The
student may elect to have the institution provide other
such goods and services by crediting the student's
account.
(c) Reductions in Amount.--
(1) Part-time students.--In any case where a student
attends an institution of higher education on less than
a full-time basis (including a student who attends an
institution of higher education on less than a half-
time basis) during any academic year, the amount of a
grant under this subpart for which that student is
eligible shall be reduced in proportion to the degree
to which that student 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 institution at which that student is in
attendance. If, with respect to any student, it is
determined that the amount of a TEACH Grant or a Bonus
TEACH Grant exceeds the cost of attendance for that
year, the amount of the TEACH Grant or Bonus TEACH
Grant, respectively, shall be reduced until such grant
does not exceed the cost of attendance at such
institution.
(d) Period of Eligibility for Grants.--
(1) Undergraduate students.--The period during which
an undergraduate student may receive grants under this
subpart shall be the period required for the completion
of the first undergraduate baccalaureate course of
study being pursued by that student at the institution
at which the student is in attendance except that--
(A) any period during which the student is
enrolled in a noncredit or remedial course of
study as defined in paragraph (3) shall not be
counted for the purpose of this paragraph; and
(B) the total amount that a student may
receive under this subpart for undergraduate
study shall not exceed $16,000 with respect to
a student who receives only TEACH Grants, and
$18,000 with respect to a student who receives
TEACH Grants and Bonus TEACH Grants.
(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 being pursued by that
student at the institution at which the student is in
attendance, except that the total amount that a student
may receive under this subpart for graduate study shall
not exceed $8,000 with respect to a student who
receives only TEACH Grants, and $10,000 with respect to
a student who receives TEACH Grants and Bonus TEACH
Grants.
(3) Remedial course; study abroad.--Nothing in this
section shall exclude from eligibility courses of study
which are noncredit or remedial in nature (including
courses in English language acquisition) which are
determined by the institution to be necessary to help
the student be prepared for the pursuit of a first
undergraduate baccalaureate degree or certificate or,
in the case of courses in English language instruction,
to be necessary to enable the student to utilize
already existing knowledge, training, or skills.
Nothing in this section shall exclude from eligibility
programs of study abroad that are approved for credit
by the home institution at which the student is
enrolled.
SEC. 420M. ELIGIBILITY; APPLICATIONS.
(a) Applications; Demonstration of Eligibility.--
(1) Filing required.--The Secretary shall from time
to time set dates by which students shall file
applications for grants under this subpart. Each
student desiring a grant under this subpart for any
year shall file an application containing such
information and assurances as the Secretary may deem
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) for a TEACH
Grant 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 high 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 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 math,
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.
(3) Demonstration of bonus teach grant eligibility.--
Each application submitted under paragraph (1) for a
Bonus TEACH Grant shall contain such information as is
necessary to demonstrate that the applicant is--
(A) eligible for, and has applied for, a
TEACH Grant; and
(B) a student enrolled in a qualified teacher
preparation program, as defined in section
420N.
(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) with respect to an applicant for--
(i) TEACH Grants, teach in any of the
following fields: mathematics, science,
a foreign language, bilingual
education, or special education, or as
a reading specialist, or another field
documented as high-need by the Federal
Government, State government, or local
education agency and approved by the
Secretary; or
(ii) TEACH Grants and Bonus TEACH
Grants, teach mathematics, science, or
a science-related field;
(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
and Bonus 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 and Bonus TEACH Grants received by such recipient shall
be treated as a Direct Loan under part D of title IV, and shall
be subject to repayment, together with interest thereon
accruing after the period of service, in accordance with terms
and conditions specified by the Secretary in regulations under
this subpart.
SEC. 420N. 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.
(2) Qualified teacher preparation program.--The term
``qualified teacher preparation program'' means a
program for students and teachers described in
subparagraph (A) or (B) of section 420M(a)(2) (referred
to jointly in this paragraph as ``teacher candidates'')
that--
(A) recruits and prepares teacher candidates
who major in science, technology fields,
special education, foreign language,
engineering, or mathematics disciplines to
become certified as elementary and secondary
teachers in those disciplines, special
education teachers, or teachers of English
Language Learners, with the goals of improving
teacher knowledge and effectiveness and
increasing elementary and secondary student
academic achievement;
(B) is implemented by an institution of
higher education in partnership with high-need
local educational agencies;
(C) offers a baccalaureate degree with a
concurrent teacher certification to teacher
candidates;
(D) is implemented in coordination with the
faculty of the relevant departments of the
institution of higher education;
(E) utilizes experienced teachers who have a
demonstrated record of success in teaching
underserved students to instruct teacher
candidates in the disciplines described in
subparagraph (A);
(F) provides teacher candidates with--
(i) support services, including
mentoring by experienced teachers who
have a demonstrated record of success
in teaching underserved students;
(ii) exposure to, and field
experience in, the classroom within the
first year of entering the qualified
teacher preparation program; and
(iii) other related support practices
while the teacher candidates are
participating in the program, and after
such candidates graduate from the
institution of higher education and are
employed as teachers;
(G) participates in partnerships which
include the institution of higher education and
local educational agencies and charter
districts to provide opportunities for teacher
candidate field work;
(H) focuses on increasing the number of
teachers in the disciplines described in
subparagraph (A); and
(I) encourages individuals from
underrepresented populations to enter into the
teaching profession.
SEC. 420O. PROGRAM PERIOD AND FUNDING.
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 and Bonus TEACH Grants
in accordance with this subpart to each eligible applicant.-
Part B--Federal Family Education Loan Program
* * * * * * *
SEC. 425. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND ON
FEDERAL LOAN INSURANCE.
(a) Annual and Aggregate Limits.--
(1) Annual limits.--(A) The total of loans made to a
student in any academic year or its equivalent (as
determined by the Secretary) which may be covered by
Federal loan insurance under this part may not exceed--
(i) * * *
* * * * * * *
(iii) in the case of a student at an eligible
institution who has successfully completed the
first and second years of a program of
undergraduate education but has not
successfully completed the remainder of such
program--
(I) [$5,500] $7,500; or
* * * * * * *
(2) Aggregate limits.--(A) The aggregate insured
unpaid principal amount for all such insured loans made
to any student shall not at any time exceed--
(i) [$23,000] $30,500, in the case of any
student who has not successfully completed a
program of undergraduate education, excluding
loans made under section 428A or 428B; and
(ii) [$65,500] $73,000, in the case of any
graduate or professional student (as defined by
regulations of the Secretary) and (I) including
any loans which are insured by the Secretary
under this section, or by a guaranty agency,
made to such student before the student became
a graduate or professional student), but (II)
excluding loans made under section 428A or
428B,
except that the Secretary may increase the limit
applicable to students who are pursuing programs which
the Secretary determines are exceptionally expensive.
* * * * * * *
SEC. 427. ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF FEDERALLY
INSURED STUDENT LOANS.
(a) List of Requirements.--Except as provided in section
428C, a loan by an eligible lender shall be insurable by the
Secretary under the provisions of this part only if--
(1) * * *
(2) evidenced by a note or other written agreement
which--
(A) * * *
* * * * * * *
(C) provides that periodic installments of
principal need not be paid, but interest shall
accrue and be paid, during any period--
(i) * * *
* * * * * * *
(iii) [not in excess of 3 years] for
any reason which the lender determines,
in accordance with regulations
prescribed by the Secretary under
section 435(o), has caused or will
cause the borrower to have an economic
hardship;
* * * * * * *
SEC. 427A. APPLICABLE INTEREST RATES.
(a) * * *
* * * * * * *
(l) Interest Rates for New Loans on or After July 1, 2006.--
(1) * * *
* * * * * * *
-
(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, 2013, 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, 6.80 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, 6.12 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, 5.44 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, 4.76 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, 4.08 percent on the
unpaid principal balance of the loan.
(F) For a loan for which the first
disbursement is made on or after July 1, 2012
and before July 1, 2013, 3.40 percent on the
unpaid principal balance of the loan.-
* * * * * * *
SEC. 428. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.
(a) * * *
(b) Insurance Program Agreements To Qualify Loans for
Interest Subsidies.--
(1) Requirements of insurance program.--Any State or
any nonprofit private institution or organization may
enter into an agreement with the Secretary for the
purpose of entitling students who receive loans which
are insured under a student loan insurance program of
that State, institution, or organization to have made
on their behalf the payments provided for in subsection
(a) if the Secretary determines that the student loan
insurance program--
(A) authorizes the insurance in any academic
year, as defined in section 481(a)(2), or its
equivalent (as determined under regulations of
the Secretary) for any student who is carrying
at an eligible institution or in a program of
study abroad approved for credit by the
eligible home institution at which such student
is enrolled at least one-half the normal full-
time academic workload (as determined by the
institution) in any amount up to a maximum of--
(i) * * *
* * * * * * *
(iii) in the case of a student at an
eligible institution who has
successfully completed the first and
second years of a program of
undergraduate education but has not
successfully completed the remainder of
such program--
(I) [$5,500] $7,500; or
* * * * * * *
(B) provides that the aggregate insured
unpaid principal amount for all such insured
loans made to any student shall be any amount
up to a maximum of--
(i) [$23,000] $30,500, in the case of
any student who has not successfully
completed a program of undergraduate
education, excluding loans made under
section 428A or 428B; and
(ii) [$65,500] $73,000, in the case
of any graduate or professional student
(as defined by regulations of the
Secretary), and (I) including any loans
which are insured by the Secretary
under this section, or by a guaranty
agency, made to such student before the
student became a graduate or
professional student, but (II)
excluding loans made under section 428A
or 428B,
* * * * * * *
[(G) insures 98 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);
[(ii) for any loan for which the
first disbursement of principal is made
on or after July 1, 2006, the preceding
provisions of this subparagraph shall
be applied by substituting ``97
percent'' for ``98 percent''; and
[(iii) 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);]-
(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);-
* * * * * * *
(M) provides that periodic installments of
principal need not be paid, but interest shall
accrue and be paid by the Secretary, during any
period--
(i) * * *
* * * * * * *
(iv) [not in excess of 3 years] for
any reason which the lender determines,
in accordance with regulations
prescribed by the Secretary under
section 435(o), has caused or will
cause the borrower to have an economic
hardship;
* * * * * * *
(c) Guaranty Agreements for Reimbursing Losses.--
(1) Authority to enter into agreements.--(A) * * *
* * * * * * *
[(D) Reimbursements of losses made by the Secretary
on loans submitted for claim by an eligible lender,
servicer, or guaranty agency designated for exceptional
performance under section 428I shall not be subject to
additional review by the Secretary or repurchase by the
guaranty agency for any reason other than a
determination by the Secretary that the eligible
lender, servicer, or guaranty agency engaged in fraud
or other purposeful misconduct in obtaining designation
for exceptional performance.]
[(E)] (D) Notwithstanding any other provisions of
this section, in the case of a loan made pursuant to a
lender-of-last-resort program, the Secretary shall
apply the provisions of--
(i) * * *
* * * * * * *
[(F)] (E) Notwithstanding any other provisions of
this section, in the case of an outstanding loan
transferred to a guaranty agency from another guaranty
agency pursuant to a plan approved by the Secretary in
response to the insolvency of the latter such guarantee
agency, the Secretary shall apply the provision of--
(i) * * *
* * * * * * *
[(G)] (F)(i) Notwithstanding any other provisions of
this section, in the case of exempt claims, the
Secretary shall apply the provisions of--
(I) * * *
* * * * * * *
[(H)] (G) Notwithstanding any other provision of this
section, the Secretary shall exclude a loan made
pursuant to a lender-of-last-resort program when making
reimbursement payment calculations under subparagraphs
(B) and (C).
* * * * * * *
(6) Secretary's equitable share.--(A) For the purpose
of paragraph (2)(D), the Secretary's equitable share of
payments made by the borrower shall be that portion of
the payments remaining after the guaranty agency with
which the Secretary has an agreement under this
subsection has deducted from such payments--
(i) * * *
[(ii) an amount equal to 24 percent of such
payments for use in accordance with section
422B, except that, beginning on October 1,
2003, this subparagraph shall be applied by
substituting ``23 percent'' for ``24
percent''.]
(ii) an amount equal to 23 percent of such
payments for use in accordance with section
422B, except that beginning October 1, 2007,
this subparagraph shall be applied by
substituting ``16 percent'' for ``23 percent''.
* * * * * * *
(k) Information on Defaults.--
(1) * * *
* * * * * * *
(4) Student loan information.--
(A) Notwithstanding any other provision of
law or regulation, a lender, secondary market,
holder, or guaranty agency shall provide, free
of charge and in a timely and effective manner,
any student loan information maintained by that
entity that is requested by an institution of
higher education or any third-party servicer
(as defined in section 481(c)) working on
behalf of that institution to prevent student
loan defaults.
(B) An institution and any third-party
servicer obtaining access to information under
subparagraph (A) shall safeguard that
information in order to prevent potential
abuses of that information, including identity
theft.
(C) Any third party servicer that obtains
information under this paragraph--
(i) shall only use the information in
a manner directly related to the
default prevention work the servicer is
performing on behalf of the institution
of higher education; and
(ii) shall be subject to any
regulations established by the
Secretary pursuant to section 432
concerning the misuse of such
information, including any penalties
for such misuse.
* * * * * * *
[SEC. 428I. SPECIAL INSURANCE AND REINSURANCE RULES.
[(a) Designation of Lenders, Servicers, and Guaranty
Agencies.--
[(1) Authority.--Whenever the Secretary determines
that an eligible lender, servicer, or guaranty agency
has a compliance performance rating that equals or
exceeds 97 percent, the Secretary shall designate the
eligible lender, servicer, or guaranty agency, as the
case may be, for exceptional performance. The Secretary
shall notify each appropriate guaranty agency of the
eligible lenders and servicers designated under this
section.
[(2) Compliance performance rating.--For purposes of
paragraph (1), a compliance performance rating is
determined with respect to compliance with due
diligence in the collection of loans under this part
for each year for which the determination is made. Such
rating is equal to the percent of all due diligence
requirements applicable to each loan, on average, as
established by the Secretary by regulation, with
respect to--
[(A) loans serviced during the period by the
eligible lender or servicer; or
[(B) loans on which loan collection was
attempted by the guaranty agency.
[(b) Payment to Lenders and Servicers.--
[(1) 99 Percent payment rule.--Each guaranty agency
shall pay each eligible lender or servicer (as agent
for an eligible lender) designated under subsection (a)
99 percent of the unpaid principal and interest of all
loans for which claims are submitted for payment by
that eligible lender or servicer for the one-year
period following the receipt by the guaranty agency of
the notification of designation under this section or
until the guaranty agency receives notice from the
Secretary that the designation of the lender or
servicer under subsection (a) has been revoked.
[(2) Revocation authority.--The Secretary shall
revoke the designation of a lender or servicer under
subsection (a) if any quarterly audit required under
subsection (c)(5) is not received by the Secretary by
the date established by the Secretary or if the audit
indicates the lender or servicer failed to maintain 97
percent or higher compliance with program regulations,
as reflected in the performance of not less than 97
percent of all due diligence requirements applicable to
each loan, on average, as established by the Secretary
for the purpose of this section, for 2 consecutive
months or 90 percent for 1 month.
[(3) Documentation.--Nothing in this section shall
restrict or limit the authority of guaranty agencies to
require the submission of claims documentation
evidencing servicing performed on loans, except that
the guaranty agency may not require greater
documentation than that required for lenders and
servicers not designated under subsection (a).
[(4) Payments to guaranty agencies.--The Secretary
shall pay to each guaranty agency designated under
subsection (a) the appropriate percentage under this
subsection for the 1-year period following the receipt
by the guaranty agency of the notification of
designation under subsection (a).
[(c) Supervision of Designated Lenders and Servicers.--
[(1) Audits for lenders and servicers.--Each eligible
lender or servicer desiring a designation under
subsection (a) shall have a financial and compliance
audit of the loan portfolio of such eligible lender or
servicer conducted annually by a qualified independent
organization from a list of qualified organizations
promulgated by the Secretary in accordance with
standards established by the Comptroller General and
the Secretary. The standards shall measure the lender's
or servicer's compliance with the due diligence
standards and shall include a defined statistical
sampling technique designed to measure the performance
rating of the eligible lender or servicer for the
purpose of this section. Each eligible lender or
servicer shall submit the audit required by this
section to the Secretary and to each appropriate
guaranty agency.
[(2) Additional information on lenders and
servicers.--Each appropriate guaranty agency shall
provide the Secretary with such other information in
its possession regarding an eligible lender or servicer
desiring designation as may relate to the Secretary's
determination under subsection (a), including but not
limited to any information suggesting that the
application of a lender or servicer for designation
under subsection (a) should not be approved.
[(3) Secretary's determinations.--The Secretary shall
make the determination under subsection (a) based upon
the audits submitted under this section, such other
information as provided by any guaranty agency under
paragraph (2), and any information in the possession of
the Secretary or submitted by any other agency or
office of the Federal Government. If the results of the
audit are not persuasively rebutted by such other
information, the Secretary shall inform the eligible
lender or servicer and the appropriate guaranty agency
that its application for designation as an exceptional
lender or servicer has been approved.
[(4) Cost of audit.--Each eligible lender or servicer
shall pay for all the costs of the audits required
under this section.
[(5) Compliance audit.--In order to maintain its
status as an exceptional eligible lender or servicer,
the lender or servicer shall undergo a quarterly
compliance audit at the end of each quarter (other than
the quarter in which status as an exceptional lender or
servicer is established through a financial and
compliance audit, as described in subsection (c)(1)),
and submit the results of such audit to the Secretary
and such appropriate guaranty agency. The compliance
audit will review compliance with due diligence
requirements for the period since the last audit.
[(6) Loss of designation.--If the audit performed
pursuant to paragraph (5) fails to meet the standards
for designation as an exceptional lender or servicer
under subsection (a)(1), the lender or servicer shall
lose its designation as an exceptional lender or
servicer. A lender or servicer receiving a compliance
audit not meeting the standard for designation as an
exceptional lender or servicer may reapply for
designation under subsection (a) at any time.
[(7) Due diligence standards.--Due diligence
standards used for determining compliance under
paragraph (5) shall be promulgated by the Secretary
after consultation with lenders, guaranty agencies and
servicers and shall consist of a list of specific
elements for the Federal regulations selected to
provide an indication of systems degradation.
[(8) Additional revocation authority.--
Notwithstanding any other provision of this section,
designation under subsection (a) may be revoked at any
time by the Secretary if the Secretary determines that
the eligible lender or servicer has failed to maintain
an overall level of regulatory compliance consistent
with the audit submitted by the eligible lender or
servicer under this section or if the Secretary
believes the lender or servicer may have engaged in
fraud in securing designation under subsection (a) or
is failing to service loans in accordance with program
regulations.
[(d) Supervision of Designated Guaranty Agencies.--
[(1) Audit of guaranty agencies.--Each guaranty
agency desiring a designation under subsection (a)
shall have a financial and compliance audit of the
defaulted loan portfolio of such guaranty agency
conducted annually by a qualified independent
organization or person from a list of qualified
organizations or persons promulgated by the Secretary
in accordance with standards established by the
Comptroller General and the Secretary. The standards
shall include defined statistical sampling techniques
designed to measure the performance rating of the
guaranty agency for the purpose of this section. Each
guaranty agency shall submit the audit required by this
paragraph to the Secretary.
[(2) Quarterly sample audits.--The Secretary may
require quarterly sample audits as a means of
determining continued qualification of the guaranty
agency for designation as an exceptional guaranty
agency.
[(3) Secretary's determinations.--The Secretary shall
make the determination under subsection (a) based upon
the audits submitted under this section and other
information in his possession. If the results of the
audit are not persuasively rebutted by such other
information, the Secretary shall inform the guaranty
agency that its application for designation as an
exceptional guaranty agency has been approved.
[(4) Costs of audits.--Each guaranty agency shall pay
for all of the costs of the audits regulated by this
section.
[(5) Revocation for fraud.--The Secretary may revoke
the designation of a guaranty agency under subsection
(a) at any time if the Secretary has reason to believe
the guaranty agency secured its designation under
subsection (a) through fraud or fails to comply with
applicable regulations.
[(6) Revocation based on performance.--Designation as
an exceptional guaranty agency may be revoked at any
time by the Secretary upon 30 days notice and an
opportunity for a hearing before the Secretary upon a
finding by the Secretary that the guaranty agency has
failed to maintain an acceptable overall level of
regulatory compliance.
[(e) Special Rule.--Reimbursements made by the Secretary on
loans submitted for claim by an eligible lender or loan
servicer designated for exceptional performance under this
section shall not be subject to additional review by the
Secretary or repurchase by the guaranty agency for any reason
other than a determination by the Secretary that the eligible
lender, loan servicer, or guaranty agency engaged in fraud or
other purposeful misconduct in obtaining designation for
exceptional performance.
[(f) Limitation.--Nothing in this section shall be construed
to affect the processing of claims on student loans of eligible
lenders not subject to this paragraph.
[(g) Claims.--A lender, servicer, or guaranty agency
designated under subsection (a) failing to service loans or
otherwise comply with applicable program regulations shall be
considered in violation of section 3729 of title 31, United
States Code, .
[(h) Evaluation.--Not later than 3 years after the date of
enactment of this Act, the Comptroller General shall submit to
the Chairman of the Senate Labor and Human Resources Committee
and the House Committee on Education and Labor, an evaluation
of the provisions of this section including, but not limited
to, the following:
[(1) The effectiveness of due diligence performed by
lenders and servicers receiving designation as
exceptional lenders or servicers from the perspective
of securing maximum collections from borrowers.
[(2) A quantification of the dollar volume of claims
that were paid to exceptional lenders and servicers
that would not have been paid under applicable program
provisions prior to the enactment of this section.
[(3) An assessment of the impact of this section on
the financial condition of guaranty agencies.
[(4) An assessment of the savings to lenders,
servicers, and guaranty agencies resulting from
designation as exceptional performance.
[(5) An identification of specific administration
steps that lenders, servicers, and guaranty agencies do
not have to perform as a result of designation as
exceptional lenders, servicers, or guaranty agencies.
[(6) A recommendation for program modifications
applicable to all program participants based on the
findings of the evaluation.
[(7) A recommendation for modifications to this
section and whether the program should be continued.
[(i) Termination.--After receipt of the study authorized in
subsection (h), the Secretary may terminate such program if he
determines such termination to be in the fiscal interest of the
United States.
[(j) Definitions.--For the purpose of this section--
[(1) the term ``due diligence requirements'' means
the activities required to be performed by lenders on
delinquent loans pursuant to regulations issued by the
Secretary;
[(2) the term ``eligible loan'' means a loan made,
insured or guaranteed under part B of title IV;
[(3) the term ``servicer'' means an entity servicing
and collecting student loans which--
[(A) has substantial experience in servicing
and collecting consumer loans or student loans;
[(B) has an independent financial audit
annually which is furnished to the Secretary
and any other parties designated by the
Secretary;
[(C) has business systems which are capable
of meeting the requirements of part B of title
IV;
[(D) has adequate personnel who are
knowledgeable about the student loan programs
authorized by part B of title IV; and
[(E) does not have any owner, majority
shareholder, director, or officer of the entity
who has been convicted of a felony.]
* * * * * * *
[SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.
[(a) Purpose.--It is the purpose of this section--
[(1) to bring more highly trained individuals into
the early child care profession; and
[(2) to keep more highly trained child care providers
in the early child care field for longer periods of
time.
[(b) Definitions.--In this section:
[(1) Child care facility.--The term ``child care
facility'' means a facility, including a home, that--
[(A) provides child care services; and
[(B) meets applicable State or local
government licensing, certification, approval,
or registration requirements, if any.
[(2) Child care services.--The term ``child care
services'' means activities and services provided for
the education and care of children from birth through
age 5 by an individual who has a degree in early
childhood education.
[(3) Degree.--The term ``degree'' means an
associate's or bachelor's degree awarded by an
institution of higher education.
[(4) Early childhood education.--The term ``early
childhood education'' means education in the areas of
early child education, child care, or any other
educational area related to child care that the
Secretary determines appropriate.
[(5) Institution of higher education.--
Notwithstanding section 102, the term ``institution of
higher education'' has the meaning given the term in
section 101.
[(c) Demonstration Program.--
[(1) In general.--The Secretary may carry out a
demonstration program of assuming the obligation to
repay, pursuant to subsection (d), a loan made,
insured, or guaranteed under this part or part D
(excluding loans made under sections 428B and 428C or
comparable loans made under part D) for any new
borrower after the date of enactment of the Higher
Education Amendments of 1998, who--
[(A) completes a degree in early childhood
education;
[(B) obtains employment in a child care
facility; and
[(C) has worked full time for the 2
consecutive years preceding the year for which
the determination is made as a child care
provider in a low-income community.
[(2) Low-income community.--For the purposes of this
subsection, the term ``low-income community'' means a
community in which 70 percent of households within the
community earn less than 85 percent of the State median
household income.
[(3) Award basis; priority.--
[(A) Award basis.--Subject to subparagraph
(B), loan repayment under this section shall be
on a first-come, first-served basis and subject
to the availability of appropriations.
[(B) Priority.--The Secretary shall give
priority in providing loan repayment under this
section for a fiscal year to student borrowers
who received loan repayment under this section
for the preceding fiscal year.
[(4) Regulations.--The Secretary is authorized to
prescribe such regulations as may be necessary to carry
out the provisions of this section.
[(d) Loan Repayment.--
[(1) In general.--The Secretary shall assume the
obligation to repay--
[(A) after the second consecutive year of
employment described in subparagraphs (B) and
(C) of subsection (c)(1), 20 percent of the
total amount of all loans made after date of
enactment of the Higher Education Amendments of
1998, to a student under this part or part D;
[(B) after the third consecutive year of such
employment, 20 percent of the total amount of
all such loans; and
[(C) after each of the fourth and fifth
consecutive years of such employment, 30
percent of the total amount of all such loans.
[(2) Construction.--Nothing in this section shall be
construed to authorize the refunding of any repayment
of a loan made under this part or part D.
[(3) Interest.--If a portion of a loan is repaid by
the Secretary under this section for any year, the
proportionate amount of interest on such loan which
accrues for such year shall be repaid by the Secretary.
[(4) Special rule.--In the case where a student
borrower who is not participating in loan repayment
pursuant to this section returns to an institution of
higher education after graduation from an institution
of higher education for the purpose of obtaining a
degree in early childhood education, the Secretary is
authorized to assume the obligation to repay the total
amount of loans made under this part or part D incurred
for a maximum of two academic years in returning to an
institution of higher education for the purpose of
obtaining a degree in early childhood education. Such
loans shall only be repaid for borrowers who qualify
for loan repayment pursuant to the provisions of this
section, and shall be repaid in accordance with the
provisions of paragraph (1).
[(5) Ineligibility of national service award
recipients.--No student borrower may, for the same
volunteer service, receive a benefit under both this
section and subtitle D of title I of the National and
Community Service Act of 1990 (42 U.S.C. 12601 et
seq.).
[(e) Repayment to Eligible Lenders.--The Secretary shall pay
to each eligible lender or holder for each fiscal year an
amount equal to the aggregate amount of loans which are subject
to repayment pursuant to this section for such year.
[(f) Application for Repayment.--
[(1) In general.--Each eligible individual desiring
loan repayment under this section shall submit a
complete and accurate application to the Secretary at
such time, in such manner, and containing such
information as the Secretary may require.
[(2) Conditions.--An eligible individual may apply
for loan repayment under this section after completing
each year of qualifying employment. The borrower shall
receive forbearance while engaged in qualifying
employment unless the borrower is in deferment while so
engaged.
[(g) Evaluation.--
[(1) In general.--The Secretary shall conduct, by
grant or contract, an independent national evaluation
of the impact of the demonstration program assisted
under this section on the field of early childhood
education.
[(2) Competitive basis.--The grant or contract
described in subsection (b) shall be awarded on a
competitive basis.
[(3) Contents.--The evaluation described in this
subsection shall--
[(A) determine the number of individuals who
were encouraged by the demonstration program
assisted under this section to pursue early
childhood education;
[(B) determine the number of individuals who
remain employed in a child care facility as a
result of participation in the program;
[(C) identify the barriers to the
effectiveness of the program;
[(D) assess the cost-effectiveness of the
program in improving the quality of--
[(i) early childhood education; and
[(ii) child care services;
[(E) identify the reasons why participants in
the program have chosen to take part in the
program;
[(F) identify the number of individuals
participating in the program who received an
associate's degree and the number of such
individuals who received a bachelor's degree;
and
[(G) identify the number of years each
individual participates in the program.
[(4) Interim and final evaluation reports.--The
Secretary shall prepare and submit to the President and
the Congress such interim reports regarding the
evaluation described in this subsection as the
Secretary deems appropriate, and shall prepare and so
submit a final report regarding the evaluation by
January 1, 2002.
[(h) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section $10,000,000 for
fiscal year 1999, and such sums as may be necessary for each of
the 4 succeeding fiscal years.]-
SEC. 428K. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED.
(a) Program Authorized.--
(1) Loan forgiveness authorized.--The Secretary shall
forgive, in accordance with this section, the student
loan obligation of a borrower in the amount specified
in subsection (c), for any new borrower after the date
of enactment of the College Cost Reduction Act of 2007,
who--
(A) is employed full-time in an area of
national need described in subsection (b); and
(B) is not in default on a loan for which the
borrower seeks forgiveness.
(2) Method of loan forgiveness.--To provide loan
forgiveness under paragraph (1), the Secretary is
authorized to carry out a program--
(A) through the holder of the loan, to assume
the obligation to repay a qualified loan amount
for a loan made, insured, or guaranteed under
this part; and
(B) to cancel a qualified loan amount for a
loan made under part D of this title.
(3) Regulations.--The Secretary is authorized to
issue such regulations as may be necessary to carry out
the provisions of this section.
(b) Areas of National Need.--For purposes of this section, an
individual shall be treated as employed in an area of national
need if the individual is employed full-time as any of the
following:
(1) Early childhood educators.--An individual who is
employed as an early childhood educator in an eligible
preschool program or eligible early childhood education
program in a low-income community, and who is involved
directly in the care, development, and education of
infants, toddlers, or young children age 5 and under.
(2) Nurses.--An individual who is employed--
(A) as a nurse in a clinical setting; or
(B) as a member of the nursing faculty at an
accredited school of nursing (as those terms
are defined in section 801 of the Public Health
Service Act (42 U.S.C. 296)).
(3) Foreign language specialists.--An individual who
has obtained a baccalaureate degree in a critical
foreign language and is employed--
(A) in an elementary or secondary school as a
teacher of a critical foreign language; or
(B) in an agency of the United States
Government in a position that regularly
requires the use of such critical foreign
language.
(4) Librarians.--An individual who is employed as a
librarian in--
(A) a public library that serves a geographic
area within which the public schools have a
combined average of 30 percent or more of their
total student enrollments composed of children
counted under section 1113(a)(5) of the
Elementary and Secondary Education Act of 1965;
or
(B) an elementary or secondary school which
is in the school district of a local
educational agency which is eligible in such
year for assistance pursuant to title I of the
Elementary and Secondary Education Act of 1965,
and which for the purpose of this paragraph and
for that year has been determined by the
Secretary (pursuant to regulations and after
consultation with the State educational agency
of the State in which the school is located) to
be a school in which the enrollment of children
counted under section 1113(a)(5) of the
Elementary and Secondary Education Act of 1965
exceeds 30 percent of the total enrollment of
that school.
(5) Highly qualified teachers: bilingual education
and low-income communities.--An individual who--
(A) is highly qualified as such term is
defined in section 9101 of the Elementary and
Secondary Education Act of 1965; and
(B)(i) is employed as a full-time teacher of
bilingual education; or
(ii) is employed as a teacher in a public or
nonprofit private elementary or secondary
school which is in the school district of a
local educational agency which is eligible in
such year for assistance pursuant to title I of
the Elementary and Secondary Education Act of
1965, and which for the purpose of this
paragraph and for that year has been determined
by the Secretary (pursuant to regulations and
after consultation with the State educational
agency of the State in which the school is
located) to be a school in which the enrollment
of children counted under section 1113(a)(5) of
the Elementary and Secondary Education Act of
1965 exceeds 40 percent of the total enrollment
of that school.
(6) Child welfare workers.--An individual who--
(A) has obtained a degree in social work or a
related field with a focus on serving children
and families; and
(B) is employed in public or private child
welfare services.
(7) Speech-language pathologists.--An individual who
is a speech-language pathologist, who is employed in an
eligible preschool program or an elementary or
secondary school, and who has, at a minimum, a graduate
degree in speech-language pathology, or communication
sciences and disorders.
(8) National service.--An individual who is engaged
as a participant in a project under the National and
Community Service Act of 1990 (as such terms are
defined in section 101 of such Act (42 U.S.C. 12511)).
(9) Public sector employees.--An individual who is
employed in public safety (including as a first
responder, firefighter, police officer, or other law
enforcement or public safety officer), emergency
management (including as an emergency medical
technician), public health, or public interest legal
services (including prosecution or public defense).
(c) Qualified Loan Amount.--At the end of each school,
academic, or calendar year of full-time employment in an area
of national need described in subsection (b), not to exceed 5
years, the Secretary shall forgive not more than $1,000 of the
student loan obligation of a borrower that is outstanding after
the completion of each such school, academic, or calendar year
of employment, as appropriate, not to exceed $5,000 in the
aggregate for any borrower.
(d) Construction.--Nothing in this section shall be construed
to authorize the refunding of any repayment of a loan.
(e) Segal Americorps Education Award and National Service
Award Recipients.--A student borrower who qualifies for the
maximum education award under subtitle D of title I of the
National and Community Service Act of 1990 (42 U.S.C. 12601 et
seq.) shall receive under this section the amount, if any, by
which the maximum benefit available under this section exceeds
the maximum education award available under such subtitle.
(f) Ineligibility for Double Benefits.--No borrower may
receive a reduction of loan obligations under both this section
and section 428J or 460.
(g) Definitions.--In this section:
(1) Critical foreign language.--The term ``critical
foreign language'' includes the languages of Arabic,
Korean, Japanese, Chinese, Pashto, Persian-Farsi,
Serbian-Croatian, Russian, Portuguese, and any other
language identified by the Secretary of Education, in
consultation with the Defense Language Institute, the
Foreign Service Institute, and the National Security
Education Program, as a critical foreign language need.
(2) Early childhood educator.--The term ``early
childhood educator'' means an early childhood educator
who works directly with children in an eligible
preschool program or eligible early childhood education
program who has completed a baccalaureate or advanced
degree in early childhood development, early childhood
education, or in a field related to early childhood
education.
(3) Eligible preschool program.--The term ``eligible
preschool program'' means a program that provides for
the care, development, and education of infants,
toddlers, or young children age 5 and under, meets any
applicable State or local government licensing,
certification, approval, and registration requirements,
and is operated by--
(A) a public or private school that is
supported, sponsored, supervised, or
administered by a local educational agency;
(B) a Head Start agency serving as a grantee
designated under the Head Start Act (42 U.S.C.
9831 et seq.);
(C) a nonprofit or community based
organization; or
(D) a child care program, including a home.
(4) Eligible early childhood education program.--The
term ``eligible early childhood education program''
means--
(A) a family child care program, center-based
child care program, State prekindergarten
program, school program, or other out-of-home
early childhood development care program,
that--
(i) is licensed or regulated by the
State; and
(ii) serves 2 or more unrelated
children who are not old enough to
attend kindergarten;
(B) a Head Start Program carried out under
the Head Start Act (42 U.S.C. 9831 et seq.); or
(C) an Early Head Start Program carried out
under section 645A of the Head Start Act (42
U.S.C. 9840a).
(5) Low-income community.--In this subsection, the
term ``low-income community'' means a community in
which 70 percent of households earn less than 85
percent of the State median household income.
(6) Nurse.--The term ``nurse'' means a nurse who
meets all of the following:
(A) The nurse graduated from--
(i) an accredited school of nursing
(as those terms are defined in section
801 of the Public Health Service Act
(42 U.S.C. 296));
(ii) a nursing center; or
(iii) an academic health center that
provides nurse training.
(B) The nurse holds a valid and unrestricted
license to practice nursing in the State in
which the nurse practices in a clinical
setting.
(C) The nurse holds one or more of the
following:
(i) A graduate degree in nursing, or
an equivalent degree.
(ii) A nursing degree from a
collegiate school of nursing (as
defined in section 801 of the Public
Health Service Act (42 U.S.C. 296)).
(iii) A nursing degree from an
associate degree school of nursing (as
defined in section 801 of the Public
Health Service Act (42 U.S.C. 296)).
(iv) A nursing degree from a diploma
school of nursing (as defined in
section 801 of the Public Health
Service Act (42 U.S.C. 296)).
(7) Speech-language pathologist.--The term ``speech-
language pathologist'' means a speech-language
pathologist who--
(A) has received, at a minimum, a graduate
degree in speech-language pathology or
communication sciences and disorders from an
institution of higher education accredited by
an agency or association recognized by the
Secretary pursuant to section 496(a) of this
Act; and
(B) provides speech-language pathology
services under section 1861(ll)(1) of the
Social Security Act (42 U.S.C. 1395x(ll)(1), or
meets or exceeds the qualifications for a
qualified speech-language pathologist under
subsection (ll)(3) of such section (42 U.S.C.
1395x(ll)(3)).
(h) Program Funding.--There shall be available to the
Secretary to carry out this section, from funds not otherwise
appropriated, such sums as may be necessary to provide loan
forgiveness in accordance with this section to each eligible
individual.-
* * * * * * *
SEC. 435. DEFINITIONS FOR STUDENT LOAN INSURANCE PROGRAM.
As used in this part:
(a) * * *
* * * * * * *
(o) Economic Hardship.--
(1) In general.--For purposes of this part and part
E, a borrower shall be considered to have an economic
hardship if--
(A) such borrower is working full-time and is
earning an amount which does not exceed the
greater of--
(i) * * *
(ii) an amount equal to [100 percent
of the poverty line for a family of 2]
150 percent of the poverty line
applicable to the borrower's family
size as determined in accordance with
section 673(2) of the Community Service
Block Grant Act; or
[(B) such borrower is working full-time and
has a Federal educational debt burden that
equals or exceeds 20 percent of such borrower's
adjusted gross income, and the difference
between such borrower's adjusted gross income
minus such burden is less than 220 percent of
the greater of--
[(i) the annual earnings of an
individual earning the minimum wage
under section 6 of the Fair Labor
Standards Act of 1938; or
[(ii) the income official poverty
line (as defined by the Office of
Management and Budget, and revised
annually in accordance with section
673(2) of the Community Services Block
Grant Act) applicable to a family of
two; or]
[(C)] (B) such borrower meets such other
criteria as are established by the Secretary by
regulation in accordance with paragraph (2).
(2) Considerations.--In establishing criteria for
purposes of paragraph [(1)(C)] (1)(B), the Secretary
shall consider the borrower's income and debt-to-income
ratio as primary factors.
* * * * * * *
SEC. 438. SPECIAL ALLOWANCES.
(a) * * *
(b) Computation and Payment.--
(1) * * *
(2) Rate of special allowance.--(A) * * *
* * * * * * *
(I) Loans disbursed on or after january 1, 2000.--
(i) In general.--Notwithstanding
subparagraphs (G) and (H), but subject to
paragraph (4) and [clauses (ii), (iii), and
(iv)] the following clauses of this
subparagraph, and except as provided in
subparagraph (B), the special allowance paid
pursuant to this subsection on loans for which
the first disbursement is made on or after
January 1, 2000, shall be computed--
(I) * * *
* * * * * * *
(ii) In school and grace period.--In the case
of any loan--
(I) * * *
(II) for which the first disbursement
is made on or after July 1, 2006, and
for which the applicable rate of
interest is described in [section
427A(l)(1)] section 427A(l)(1) or
(l)(4), but only with respect to (aa)
periods prior to the beginning of the
repayment period of the loan; or (bb)
during the periods in which principal
need not be paid (whether or not such
principal is in fact paid) by reason of
a provision described in section
427(a)(2)(C) or 428(b)(1)(M);
* * * * * * *
(v) Recapture of excess interest.--
(I) * * *
* * * * * * *
(III) Special allowance support
level.--For purposes of this clause,
the term ``special allowance support
level'' means, for any loan, a number
expressed as a percentage equal to the
sum of the rates determined under
subclauses (I) and (III) of clause (i),
and applying any substitution rules
applicable to such loan under [clauses
(ii), (iii), and (iv)] clauses (ii),
(iii), (iv), and (vi) in determining
such sum.-
(vi) Reduction for loans on or after october
1, 2007.--With respect to a loan on which the
applicable interest rate is determined under
section 427A(l), the percentage to be added
under clause (i)(III) in computing the special
allowance payment pursuant to this subparagraph
shall be the following:
(I) In general and plus
loans.--1.79 percent in the
case of a loan described in
clause (i) or (iii) for which
the first disbursement of
principal is made on or after
October 1, 2007.
(II) In school and grace
period.--1.19 percent in the
case of a loan described in
clause (ii)(II) for which the
first disbursement of principal
is made on or after October 1,
2007.
(III) Consolidation loans.--
2.09 percent in the case of a
loan described in clause (iv)
for which the first
disbursement of principal is
made on or after October 1,
2007.-
* * * * * * *
(5) Definition of eligible loan.--As used in this
section, the term ``eligible loan'' means a loan--
(A) * * *
[As used in this section, the term ``eligible loan'' includes
all loans subject to section 428I.]
* * * * * * *
(d) Loan Fees From Lenders.--
(1) * * *
[(2) Amount of loan fees.--With respect to any loan
under this part for which the first disbursement was
made on or after October 1, 1993, the amount of the
loan fee which shall be deducted under paragraph (1)
shall be equal to 0.50 percent of the principal amount
of the loan.]-
(2) Amount of loan fees.--
(A) Amount.--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--
(i) except as provided in clauses
(ii) and (iii), 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;
(ii) 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, that is held by any
holder other than a holder described in
subclause (I) or (II) of clause (iii);
and
(iii) 0.0 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, that is held by--
(I) any holder that, together
with its affiliated holders, is
designated by the Secretary as
a small lender under
subparagraph (B); or
(II) any holder that--
(aa) is a unit of
State or local
government or a
nonprofit private
entity; and
(bb) is not owned in
whole or in part by, or
controlled or operated
by, or otherwise
affiliated with, a for-
profit entity.
(B) Designation of small lenders.--In
determining which holders of eligible loans
qualify as small lenders for purposes of
subparagraph (A)(iii)(I), the Secretary shall,
using the most recently available data with
respect to the total principal amount of
eligible loans held by holders--
(i) rank all holders of eligible
loans (combined with their affiliated
holders) in descending order by total
principal amount of eligible loans
held;
(ii) calculate the total principal
amount of eligible loans held by all
holders; and
(iii) identify the subset of
consecutively ranked holders under
clause (i), starting with the lowest
ranked holder, that together hold a
total principal amount of such loans
equal to 15 percent of the total amount
calculated under clause (ii), but
excluding the holder, if any, whose
holdings when added cause the total
holdings of the subset to equal but not
exceed such 15 percent of such total
amount calculated; and
(iv) designate as small lenders any
holder identified as a member of the
subset under clause (iii).-
* * * * * * *
PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
* * * * * * *
SEC. 455. TERMS AND CONDITIONS OF LOANS.
(a) * * *
(b) Interest Rate.--
(1) * * *
* * * * * * *
(7) Interest rate provision for new loans on or after
july 1, 2006.--
(A) * * *
* * * * * * *
-
(D) Reduced rates for undergraduate fdsl.--
Notwithstanding the preceding paragraphs of
this subsection, 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, 2013, 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, 6.80
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, 6.12
percent on the unpaid principal balance
of the loan.
(iii) For a loan for which the first
disbursement is made on or after July
1, 2009, and before July 1, 2010, 5.44
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, 4.76
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, 4.08
percent on the unpaid principal balance
of the loan.
(vi) For a loan for which the first
disbursement is made on or after July
1, 2012, and before July 1, 2013, 3.40
percent on the unpaid principal balance
of the loan.-
* * * * * * *
(d) Repayment Plans.--
(1) Design and selection.--Consistent with criteria
established by the Secretary, the Secretary shall offer
a borrower of a loan made under this part a variety of
plans for repayment of such loan, including principal
and interest on the loan. The borrower shall be
entitled to accelerate, without penalty, repayment on
the borrower's loans under this part. The borrower may
choose--
(A) * * *
* * * * * * *
(C) an extended repayment plan, consistent
with section [428(b)(9)(A)(v)]
428(b)(9)(A)(iv), except that the borrower
shall annually repay a minimum amount
determined by the Secretary in accordance with
section 428(b)(1)(L); and
(D) an income contingent repayment plan, with
varying annual repayment amounts based on the
income of the borrower, paid over an extended
period of time prescribed by the Secretary, not
to exceed 25 years, except that the plan
described in this subparagraph shall not be
available to the borrower of a Federal Direct
PLUS loan made on behalf of a dependent
student.
* * * * * * *
(e) Income Contingent Repayment.--
(1) * * *
* * * * * * *
-
(7) Repayment plan for public sector employees.--
(A) In general.--The Secretary shall forgive
the balance due on any loan made under this
part or section 428C(b)(5) for a borrower--
(i) who has made 120 payments on such
loan pursuant to income-contingent
repayment; and
(ii) who is employed, and was
employed for the 10-year period in
which the borrower made the 120
payments described in clause (i), in a
public sector job.
(B) Public sector job.--In this paragraph,
the term ``public sector job'' means a full-
time job in emergency management, government,
public safety, law enforcement, public health,
education (including early childhood
education), social work in a public child or
family service agency, or public interest legal
services (including prosecution or public
defense).
(8) Return to standard repayment.--A borrower who is
repaying a loan made under this part pursuant to
income-contingent repayment may choose, at any time, to
terminate repayment pursuant to income-contingent
repayment and repay such loan under the standard
repayment plan.
(9) 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); or
(iii) makes payments under a standard repayment plan
described in section 428(b)(9)(A)(i) or subsection
(d)(1)(A).-
(f) Deferment.--
(1) * * *
(2) Eligibility.--A borrower of a loan made under
this part shall be eligible for a deferment during any
period--
(A) * * *
* * * * * * *
(D) [not in excess of 3 years] during which
the Secretary determines, in accordance with
regulations prescribed under section 435(o),
that the borrower has experienced or will
experience an economic hardship.
* * * * * * *
SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.
(a) * * *
(b) Calculation Basis.--[Account]
(1) For fiscal years 2006 and 2007.--For fiscal years
2006 and 2007, account maintenance fees payable to
guaranty agencies under subsection (a)(3) shall be
calculated on the basis of 0.10 percent of the original
principal amount of outstanding loans on which
insurance was issued under part B.-
(2) For fiscal year 2008 and succeeding fiscal
years.--
(A) Unit cost basis.--For fiscal year 2008
and each succeeding fiscal year, the Secretary
shall calculate the account maintenance fees
payable to guaranty agencies under subsection
(a)(3), on a per-loan cost basis in accordance
with subparagraph (B) of this paragraph.
(B) Determinations.--To determine the amount
that shall be paid under subsection (a)(3) per
outstanding loan guaranteed by a guaranty
agency for fiscal year 2008 and succeeding
fiscal years, the Secretary shall--
(i) establish the per-loan cost basis
amount by--
(I) dividing the total amount
of account maintenance fees
paid under subsection (a)(3) in
fiscal year 2006, by
(II) the number of loans
under part B that were
outstanding in that fiscal
year; and
(ii) determine on October 1 of fiscal
year 2008 and each subsequent fiscal
year, and pay to each guaranty agency,
an amount equal to the product of the
number of loans under part B that are
outstanding on October 1 of that fiscal
year and insured by that guaranty
agency, multiplied by--
(I) the amount determined
under clause (i); increased by
(II) a percentage equal to
the percentage increase in the
GDP price index (as determined
by the Bureau of Labor
Statistics of the Department of
Labor) between the calendar
quarter ending on June 30,
2006, and the calendar quarter
ending on the June 30 preceding
such October 1 of such fiscal
year.-
* * * * * * *
Part E--Federal Perkins Loans
SEC. 461. APPROPRIATIONS AUTHORIZED.
(a) * * *
(b) Authorization of Appropriations.--(1) * * *
* * * * * * *
-
(3) In addition to any amounts appropriated pursuant to
paragraph (1) or (2) of this subsection, there shall be
available to the Secretary for contributions to student loan
funds established under part E, from funds not otherwise
appropriated, $100,000,000 for each of the fiscal years 2008
through 2012. The sum of the amount made available under this
subsection for any such fiscal year, plus the amount so
appropriated for such fiscal year, shall, for purposes of
allocations under section 462, be treated as the amount
appropriated pursuant to section 461(b) for such fiscal year.
(4) The authority to make contributions to student loan funds
under this part shall expire at the end of fiscal year 2012.-
* * * * * * *
SEC. 464. TERMS OF LOANS.
(a) * * *
* * * * * * *
(c) Contents of Loan Agreement.--(1) * * *
(2)(A) No repayment of principal of, or interest on, any loan
from a student loan fund assisted under this part shall be
required during any period--
(i) * * *
* * * * * * *
(iv) [not in excess of 3 years] for any reason which the
lender determines, in accordance with regulations prescribed by
the Secretary under section 435(o), has caused or will cause
the borrower to have an economic hardship; or
* * * * * * *
PART F--NEED ANALYSIS
* * * * * * *
SEC. 475. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.
(a) * * *
* * * * * * *
(g) Student Contribution From Available Income.--
(1) * * *
(2) Adjustment to student income.--The adjustment to
student income is equal to the sum of--
(A) * * *
* * * * * * *
[(D) an income protection allowance of $2,200
(or a successor amount prescribed by the
Secretary under section 478);]-
(D) an income protection allowance of the
following amount (or a successor amount
prescribed by the Secretary under section
478)--
(i) for the 2009--2010 academic year,
$3,750;
(ii) for the 2010--2011 academic
year, $4,500;
(iii) for the 2011--2012 academic
year, $5,250; and
(iv) for the 2012--2013 academic
year, $6,000;-
* * * * * * *
SEC. 476. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT
DEPENDENTS OTHER THAN A SPOUSE.
(a) * * *
(b) Family's Contribution From Available Income.--
(1) In general.--The family's contribution from
income is determined by--
(A) deducting from total income (as defined
in section 480)--
(i) * * *
* * * * * * *
[(iv) an income protection allowance
of the following amount (or a successor
amount prescribed by the Secretary
under section 478)--
[(I) $5,000 for single
students;
[(II) $5,000 for married
students where both are
enrolled pursuant to subsection
(a)(2); and
[(III) $8,000 for married
students where one is enrolled
pursuant to subsection
(a)(2);]-
(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 the 2009--
2010 academic year,
$6,690;
(bb) for the 2010--
2011 academic year,
$7,160;
(cc) for the 2011--
2012 academic year,
$7,630; and
(dd) for the 2012--
2013 academic year,
$8,090; and
(II) for married students
where 1 is enrolled pursuant to
subsection (a)(2)--
(aa) for the 2009--
2010 academic year,
$10,720;
(bb) for the 2010--
2011 academic year,
$11,470;
(cc) for the 2011--
2012 academic year,
$12,220; and
(dd) for the 2012--
2013 academic year,
$12,960;-
* * * * * * *
SEC. 478. REGULATIONS; UPDATED TABLES.
(a) * * *
(b) Income Protection Allowance.--
(1) Revised tables.--
(A) In general.--For each academic year after
academic year 1993-1994, the Secretary shall
publish in the Federal Register a revised table
of income protection allowances for the purpose
of sections 475(c)(4) and 477(b)(4). Such
revised table shall be developed by increasing
each of the dollar amounts contained in the
table in each such section by a percentage
equal to the estimated percentage increase in
the Consumer Price Index (as determined by the
Secretary) between December 1992 and the
December next preceding the beginning of such
academic year, and rounding the result to the
nearest $10. [For the 2007-2008]
(B) Special rule for 2007-2008 academic
year.--For the 2007-2008 academic year, the
Secretary shall revise the tables in accordance
with this paragraph, except that the Secretary
shall increase the amounts contained in the
table in section 477(b)(4) by a percentage
equal to the greater of the estimated
percentage increase in the Consumer Price Index
(as determined under the [preceding sentence]
subparagraph (A)) or 5 percent.-
(C) Special rule for 2009--2010 through
2012--2013 academic years.--For the 2009--2010
academic year, and for each of the 3 succeeding
academic years, the Secretary shall revise the
tables in accordance with this paragraph,
except that, for the table in section
477(b)(4), the Secretary shall revise such
table by increasing the amounts contained in
such table for the preceding academic year by
10 percent.-
(2) Revised amounts.--For each academic year after
academic year 2007-2008, the Secretary shall publish in
the Federal Register revised income protection
allowances for the purpose of sections 475(g)(2)(D) and
476(b)(1)(A)(iv). Such revised allowances [shall be
developed by increasing each of the dollar amounts
contained in such section by a percentage equal to the
estimated percentage increase in the Consumer Price
Index (as determined by the Secretary) between December
2006 and the December next preceding the beginning of
such academic year, and rounding the result to the
nearest $10.] shall be developed--
(A) for academic year 2008-2009, by
increasing each of the dollar amounts contained
in such section as such section was in effect
on the day before the date of enactment of the
College Cost Reduction Act of 2007 by a
percentage equal to the estimated percentage
increase in the Consumer Price Index (as
defined in section 478(f)) between December
2006 and the December next preceding the
beginning of such academic year, and rounding
the result to the nearest $10; and
(B) for each academic year after 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 defined in section 478(f))
between December 2011 and the December next
preceding the beginning of such academic year,
and rounding the result to the nearest $10.
* * * * * * *
SEC. 479. SIMPLIFIED NEEDS TESTS.
(a) * * *
(b) Simplified Needs Test.--
(1) Eligibility.--An applicant is eligible to file a
simplified form containing the elements required by
paragraph (2) if--
(A) in the case of an applicant who is a
dependent student--
(i) the student's parents--
(I) * * *
(II) certify that the parents
are not required to file a
Federal income tax return;
[or]-
(III) 1 of whom is a
dislocated worker; or-
[(III)] (IV) received, or the
student received, benefits at
some time during the previous
[12-month] 24-month period
under a means-tested Federal
benefit program as defined
under subsection (d); and
* * * * * * *
(B) in the case of an applicant who is an
independent student--
(i) the student (and the student's
spouse, if any)--
(I) * * *
(II) certifies that the
student (and the student's
spouse, if any) is not required
to file a Federal income tax
return; [or]-
(III) 1 of whom is a
dislocated worker; or-
[(III)] (IV) received
benefits at some time during
the previous [12-month] 24-
month period under a means-
tested Federal benefit program
as defined under subsection
(d); and
* * * * * * *
(c) Zero Expected Family Contribution.--The Secretary shall
consider an applicant to have an expected family contribution
equal to zero if--
(1) in the case of a dependent student--
(A) the student's parents--
(i) file, or are eligible to file, a
form described in subsection (b)(3);
(ii) certify that the parents are not
required to file a Federal income tax
return; [or]-
(iii) 1 of whom is a dislocated
worker; or-
[(iii)] (iv) received, or the student
received, benefits at some time during
the previous [12-month] 24-month period
under a means-tested Federal benefit
program as defined under subsection
(d); and
(B) the sum of the adjusted gross income of
the parents is less than or equal to [$20,000]
$30,000; or
(2) in the case of an independent student with
dependents other than a spouse--
(A) the student (and the student's spouse, if
any)--
(i) files, or is eligible to file, a
form described in subsection (b)(3);
(ii) certifies that the student (and
the student's spouse, if any) is not
required to file a Federal income tax
return; [or]-
(iii) is a dislocated worker; or-
[(iii)] (iv) received benefits at
some time during the previous [12-
month] 24-month period under a means-
tested Federal benefit program as
defined under subsection (d); and
(B) the sum of the adjusted gross income of
the student and spouse (if appropriate) is less
than or equal to [$20,000] $30,000.
An individual is not required to qualify or file for the earned
income credit in order to be eligible under this subsection.
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).
[(d) Definition of Means-Tested Federal Benefit Program.--In
this section, the term]
(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
``means-tested Federal benefit program'' means a
mandatory spending program of the Federal Government,
other than a program under this title, in which
eligibility for the program's benefits, or the amount
of such benefits, are determined on the basis of income
or resources of the individual or family seeking the
benefit, and may include such programs as--
[(1)] (A) the supplemental security income
program under title XVI of the Social Security
Act (42 U.S.C. 1381 et seq.);
[(2)] (B) the food stamp program under the
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.);
[(3)] (C) the free and reduced price school
lunch program established under the Richard B.
Russell National School Lunch Act (42 U.S.C.
1751 et seq.);
[(4)] (D) the program of block grants for
States for temporary assistance for needy
families established under part A of title IV
of the Social Security Act (42 U.S.C. 601 et
seq.);
[(5)] (E) the special supplemental nutrition
program for women, infants, and children
established by section 17 of the Child
Nutrition Act of 1966 (42 U.S.C. 1786); and
[(6)] (F) other programs identified by the
Secretary.
SEC. 479A. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.
(a) In General.--Nothing in this part shall be interpreted as
limiting the authority of the financial aid administrator, on
the basis of adequate documentation, to make adjustments on a
case-by-case basis to the cost of attendance or the values of
the data items required to calculate the expected student or
parent contribution (or both) to allow for treatment of an
individual eligible applicant with special circumstances.
However, this authority shall not be construed to permit aid
administrators to deviate from the contributions expected in
the absence of special circumstances. Special circumstances may
include tuition expenses at an elementary or secondary school,
medical or dental expenses not covered by insurance, unusually
high child care costs, recent unemployment of a family member,
a family member who is a dislocated worker (as defined in
section 101 of the Workforce Investment Act of 1998 (29 U.S.C.
2801)), the number of parents enrolled at least half-time in a
degree, certificate, or other program leading to a recognized
educational credential at an institution with a program
participation agreement under section 487, or other changes in
a family's income, a family's assets, or a student's status.
Special circumstances shall be conditions that differentiate an
individual student from a class of students rather than
conditions that exist across a class of students. Adequate
documentation for such adjustments shall substantiate such
special circumstances of individual students. In addition,
nothing in this title shall be interpreted as limiting the
authority of the student financial aid administrator in such
cases to request and use supplementary information about the
financial status or personal circumstances of eligible
applicants in selecting recipients and determining the amount
of awards under this title. No student or parent shall be
charged a fee for collecting, processing, or delivering such
supplementary information.
* * * * * * *
SEC. 480. DEFINITIONS.
As used in this part:
(a) Total Income.--(1) * * *
(2) No portion of any student financial assistance received
from any program by an individual, no portion of a national
service educational award or post-service benefit received by
an individual under title I of the National and Community
Service Act of 1990 (42 U.S.C. 12571 et seq.), [and no portion]
no portion of any tax credit taken under section 25A of the
Internal Revenue Code of 1986, and no distribution from any
qualified education benefit described in subsection (f)(3) that
is not subject to Federal income tax, shall be included as
income or assets in the computation of expected family
contribution for any program funded in whole or in part under
this Act.
[(b) Untaxed Income and Benefits.--The term ``untaxed income
and benefits'' means--
[(1) child support received;
[(2) welfare benefits, including assistance under a
State program funded under part A of title IV of the
Social Security Act and aid to dependent children;
[(3) workman's compensation;
[(4) veterans' benefits such as death pension,
dependency, and indemnity compensation, but excluding
veterans' education benefits as defined in subsection
(c);
[(5) interest on tax-free bonds;
[(6) 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);
[(7) cash support or any money paid on the student's
behalf, except, for dependent students, funds provided
by the student's parents;
[(8) the amount of earned income credit claimed for
Federal income tax purposes;
[(9) untaxed portion of pensions;
[(10) credit for Federal tax on special fuels;
[(11) the amount of foreign income excluded for
purposes of Federal income taxes;
[(12) untaxed social security benefits;
[(13) payments to individual retirement accounts and
Keogh accounts excluded from income for Federal income
tax purposes; and
[(14) any other untaxed income and benefits, such as
Black Lung Benefits, Refugee Assistance, railroad
retirement benefits, or Job Training Partnership Act
noneducational benefits or benefits received through
participation in employment and training activities
under title I of the Workforce Investment Act of
1998.]-
(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, railroad retirement benefits, or
Job Training Partnership Act noneducational
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.-
* * * * * * *
(f) Assets.--(1) * * *
* * * * * * *
(3) A qualified education benefit [shall not be considered an
asset of a student for purposes of section 475] shall be
considered an asset of the parent for purposes of section 475.-
(4) A qualified education benefit shall be considered an
asset of the student for purposes of section 476 and 477.-
[(4)] (5) In determining the value of assets in a
determination of need under this title (other than for subpart
4 of part A), the value of a qualified education benefit shall
be--
(A) * * *
* * * * * * *
[(5)] (6) In this subsection:
(A) * * *
* * * * * * *
(j) Other Financial Assistance.--(1) * * *
(2) Notwithstanding paragraph (1), a tax credit taken under
section 25A of the Internal Revenue Code of 1986, 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, shall not be treated as
estimated financial assistance for purposes of section 471(3).
* * * * * * *
Part G--General Provisions Relating to Student Assistance Programs
* * * * * * *
-
SEC. 484C. 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)(ii), 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 currently 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. 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) 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)
to a borrower as calculated under the standard
repayment plan under section 428(b)(9)(A)(i) or
455(d)(1)(A); exceeds
(B) 15 percent of the result obtained by
calculating 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) who has a partial financial hardship 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)(2)(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 and then toward the
principal of the loan;
(3) any interest due and not paid under paragraph (2)
shall be capitalized;
(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) shall not exceed the monthly amount
calculated under section 428(b)(9)(A)(i) or
455(d)(1)(A) 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) is in deferment due to an economic
hardship described in section 435(o) for a
period of time prescribed by the Secretary, not
to exceed 20 years; or
(B)(i) makes the election to participate in
income-based repayment under paragraph (1); and
(ii) for a period of time prescribed by the
Secretary, not to exceed 20 years (including
any period during which the borrower is in
deferment due to an economic hardship described
in section 435(o)), meets 1 or more of the
following requirements:
(I) has made reduced monthly payments
under paragraph (1);
(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) when the borrower first
made the election described in this
subsection;
(III) has made payments under a
standard repayment plan under section
428(b)(9)(A)(i) or 455(d)(1)(A);
(IV) has made payments under an
income-contingent repayment plan under
section 455(d)(1)(D); and
(8) a borrower who is repaying a loan made under this
part 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.-
* * * * * * *
-
PART I--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND
OTHER MINORITY-SERVING INSTITUTIONS
SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND OTHER MINORITY-SERVING INSTITUTION.
(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)); or
(6) an Asian and Pacific Islander-serving 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, $100,000,000 for each of the
fiscal years 2008 through 2012. The authority to carry
out this section shall expire at the end of fiscal year
2012.
(2) Allocation and allotment.--
(A) In general.--Of the amounts made
available under paragraph (1) for any fiscal
year--
(i) 40 percent shall be available for
allocation under subparagraph (B);
(ii) 40 percent shall be available
for allocation under subparagraph (C);
and
(iii) 20 percent 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 and
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) $34,000,000 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 and natural
sciences, mathematics, computer
science and information
technology and sciences,
engineering, language
instruction in the less-
commonly taught languages and
international affairs, and
nursing and allied health
professions; and
(ii) $6,000,000 shall be available to
eligible institutions described in
subsection (a)(5) and shall be
available for a competitive grant
program to award 10 grants of $600,000
annually for programs in the following
areas: science, technology,
engineering, or mathematics (STEM);
health education; internationalization
or globalization; teacher preparation;
or 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 (in this subparagraph referred to
as the ``allocable amount'')--
(i) 60 percent of the allocable
amount 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 60 percent
of the allocable amount 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 60 percent for
purposes described in subsection (c) of
such section;
(ii) 30 percent of the allocable
amount 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 30 percent
of the allocable amount 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 60 percent for
purposes described in subsection (a) of
such section; and
(iii) 10 percent of the allocable
amount for such fiscal year shall be
available to eligible institutions
described in subsection (a)(6) for
activities described in section 311(c).
(c) Definitions.--
(1) Predominantly black institution.--The term
``Predominantly Black institution'' means an
institution of higher education that--
(A) has an enrollment of needy undergraduate
students as required and defined by paragraph
(2);
(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 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 it 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 bachelors 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.
(2) Enrollment of needy students.--The term
``enrollment of needy students'' means the enrollment
at an eligible institution 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 benefits program
(as defined in paragraph (4));
(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
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.
(3) Low-income individual.--The term ``low-income
individual'' has the meaning given such term in section
402A(g).
(4) 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, or both, are
determined on the basis of income or resources of the
individual or family seeking the benefit.
(5) Asian american and pacific islander-serving
institution.--The term ``Asian American and 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 Pacific
Islander students from subgroups with low
levels of college degree attainment.
(6) 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).
(7) Pacific islander.--The term ``Pacific Islander''
has the meaning given the term ``Native Hawaiian'' or
``Other Pacific Islander'' in such Standards for
Maintaining, Collecting, and Presenting Federal Data on
Race and Ethnicity.
(8) Low levels of college degree attainment.--The
term ``low levels of college degree attainment'' mean
college degree attainment that is less than 20 percent
for adults ages 25 through 29 as reported by the
National Center for Educational Statistics.
(d) Termination of Authority.--The authority to carry out
this section expires at the end of fiscal year 2012.-
* * * * * * *
-
TITLE VIII--COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT
RESTRAIN TUITION INCREASES
SEC. 801. DEFINITION OF COOPERATIVE EDUCATION.
For the purpose of this title the term ``cooperative
education'' means the provision of alternating or parallel
periods of academic study and public or private employment in
order to give students work experiences related to their
academic or occupational objectives and an opportunity to earn
the funds necessary for continuing and completing their
education.
SEC. 802. AUTHORIZATION OF APPROPRIATIONS; RESERVATIONS.
(a) Appropriations.--There shall be available to the
Secretary to carry out this title from funds not otherwise
appropriated $15,000,000 for each of the fiscal years 2008
through 2012.
(b) Reservations.--Of the amount appropriated for each such
fiscal year--
(1) not less than 50 percent shall be available for
carrying out grants to institutions of higher education
and combinations of such institutions described in
section 803(a)(1)(A) for cooperative education under
section 803;
(2) not less than 25 percent shall be available for
carrying out grants to institutions of higher education
described in section 803(a)(1)(B) for cooperative
education under section 803;
(3) not more than 11 percent shall be available for
demonstration projects under paragraph (1) of section
804(a);
(4) not more than 11 percent shall be available for
training and resource centers under paragraph (2) of
section 804(a); and
(5) not more than 3 percent shall be available for
research under paragraph (3) of section 804(a).
(c) Availability of Appropriations.--Appropriations under
this title shall not be available for the payment of
compensation of students for employment by employers under
arrangements pursuant to this title.
(d) Sunset.--The authority to carry out this title shall
expire at the end of fiscal year 2012.
SEC. 803. GRANTS FOR COOPERATIVE EDUCATION.
(a) Grants Authorized.--
(1) In general.--The Secretary is authorized--
(A) from the amount available under section
802(b)(1) in each fiscal year and in accordance
with the provisions of this title, to make
grants to institutions of higher education or
combinations of such institutions that have not
previously received a grant under this
paragraph to pay the Federal share of the cost
of planning, establishing, expanding, or
carrying out programs of cooperative education
by such institutions or combinations of
institutions; and
(B) from the amount available under section
802(b)(2) in each fiscal year and in accordance
with the provisions of this title, to make
grants to institutions of higher education that
are operating an existing cooperative education
program (as determined by the Secretary) to pay
the cost of planning, establishing, expanding,
or carrying out programs of cooperative
education by such institutions.
(2) Program requirement.--Cooperative education
programs assisted under this section shall provide
alternating or parallel periods of academic study and
of public or private employment, giving students work
experience related to their academic or occupational
objectives and the opportunity to earn the funds
necessary for continuing and completing their
education.
(3) Amount of grants.--
(A) The amount of each grant awarded pursuant
to paragraph (1)(A) to any institution of
higher education or combination of such
institutions in any fiscal year shall not
exceed $500,000.
(B)(i) Except as provided in clauses (ii) and
(iii), the Secretary shall award grants in each
fiscal year to each institution of higher
education described in paragraph (1)(B) that
has an application approved under subsection
(b) in an amount which bears the same ratio to
the amount reserved pursuant to section
802(b)(2) for such fiscal year as the number of
unduplicated students placed in cooperative
education jobs during the preceding fiscal year
(other than cooperative education jobs under
section 804 and as determined by the Secretary)
by such institution of higher education bears
to the total number of all such students placed
in such jobs during the preceding fiscal year
by all such institutions.
(ii) No institution of higher education shall receive
a grant pursuant to paragraph (1)(B) in any fiscal year
in an amount which exceeds 25 percent of such
institution's cooperative education program's personnel
and operating budget for the preceding fiscal year.
(iii) The minimum annual grant amount which an
institution of higher education is eligible to receive
under paragraph (1)(B) is $1,000 and the maximum annual
grant amount is $75,000.
(4) Limitation.--The Secretary shall not award grants
pursuant to paragraphs (1)(A) and (1)(B) to the same
institution of higher education or combination of such
institution in any one fiscal year.
(5) Uses.--Grants under paragraph (1)(B) shall be
used exclusively--
(A) to expand the quality and participation
of a cooperative education program;
(B) for outreach in new curricular areas; and
(C) for outreach to potential participants
including underrepresented and nontraditional
populations.
(b) Applications.--Each institution of higher education or
combination of such institutions desiring to receive a grant
under this section shall submit an application to the Secretary
at such time and in such manner as the Secretary shall
prescribe. Each such application shall--
(1) set forth the program or activities for which a
grant is authorized under this section;
(2) specify each portion of such program or
activities which will be performed by a nonprofit
organization or institution other than the applicant,
and the compensation to be paid for such performance;
(3) provide that the applicant will expend during
such fiscal year for the purpose of such program or
activities not less than the amount expended for such
purpose during the previous fiscal year;
(4) describe the plans which the applicant will carry
out to assure, and contain a formal statement of the
institution's commitment which assures, that the
applicant will continue the cooperative education
program beyond the 5-year period of Federal assistance
described in subsection (c)(1) at a level which is not
less than the total amount expended for such program
during the first year such program was assisted under
this section;
(5) provide that, in the case of an institution of
higher education that provides a 2-year program which
is acceptable for full credit toward a bachelor's
degree, the cooperative education program will be
available to students who are certificate or associate
degree candidates and who carry at least one-half the
normal full-time academic workload;
(6) provide that the applicant will--
(A) for each fiscal year for which the
applicant receives a grant, make such reports
with respect to the impact of the cooperative
education program in the previous fiscal year
as may be essential to ensure that the
applicant is complying with the provisions of
this section, including--
(i) the number of unduplicated
student applicants in the cooperative
education program;
(ii) the number of unduplicated
students placed in cooperative
education jobs;
(iii) the number of employers who
have hired cooperative education
students;
(iv) the average income for students
derived from working in cooperative
education jobs; and
(v) the increase or decrease in the
number of unduplicated students placed
in cooperative education jobs in each
fiscal year compared to the previous
fiscal year; and
(B) keep such records as are essential to
ensure that the applicant is complying with the
provisions of this title, including the
notation of cooperative education employment on
the student's transcript;
(7) describe the extent to which programs in the
academic discipline for which the application is made
have had a favorable reception by public and private
sector employers;
(8) describe the extent to which the institution is
committed to extending cooperative education on an
institution-wide basis for all students who can
benefit;
(9) describe the plans that the applicant will carry
out to evaluate the applicant's cooperative education
program at the end of the grant period;
(10) provide for such fiscal control and fund
accounting procedures as may be necessary to assure
proper disbursement of, and accounting for, Federal
funds paid to the applicant under this title;
(11) demonstrate a commitment to serving all
underserved populations; and
(12) include such other information as is essential
to carry out the provisions of this title.
(c) Duration of Grants; Federal Share.--
(1) Duration of grants.--No individual institution of
higher education may receive, individually or as a
participant in a combination of such institutions--
(A) a grant pursuant to subsection (a)(1)(A)
for more than 5 fiscal years; or
(B) a grant pursuant to subsection (a)(1)(B)
for more than 5 fiscal years.
(2) Federal share.--The Federal share of a grant
under section 803(a)(1)(A) may not exceed--
(A) 85 percent of the cost of carrying out
the program or activities described in the
application in the first year the applicant
receives a grant under this section;
(B) 70 percent of such cost in the second
such year;
(C) 55 percent of such cost in the third such
year;
(D) 40 percent of such cost in the fourth
such year; and
(E) 25 percent of such cost in the fifth such
year.
(3) Special rule.--Any provision of law to the
contrary notwithstanding, the Secretary shall not waive
the provisions of this subsection.
(d) Maintenance of Effort.--If the Secretary determines that
a recipient of funds under this section has failed to maintain
the fiscal effort described in subsection (b)(3), then the
Secretary may elect not to make grant payments under this
section to such recipient.
SEC. 804. DEMONSTRATION AND INNOVATION PROJECTS; TRAINING AND RESOURCE
CENTERS; AND RESEARCH.
(a) Authorization.--The Secretary is authorized, in
accordance with the provisions of this section, to make grants
and enter into contracts--
(1) from the amounts available in each fiscal year
under section 802(b)(3), for the conduct of
demonstration projects designed to demonstrate or
determine the feasibility or value of innovative
methods of cooperative education ;
(2) from the amounts available in each fiscal year
under section 802(b)(4), for the conduct of training
and resource centers designed to--
(A) train personnel in the field of
cooperative education;
(B) improve materials used in cooperative
education programs if such improvement is
conducted in conjunction with other activities
described in this paragraph;
(C) furnish technical assistance to
institutions of higher education to increase
the potential of the institution to continue to
conduct a cooperative education program without
Federal assistance;
(D) encourage model cooperative education
programs which furnish education and training
in occupations in which there is a national
need;
(E) support partnerships under which an
institution carrying out a comprehensive
cooperative education program joins with one or
more institutions of higher education in order
to--
(i) assist the institutions other
than the comprehensive cooperative
education institution to develop and
expand an existing program of
cooperative education; or
(ii) establish and improve or expand
comprehensive cooperative education
programs; and
(F) encourage model cooperative education
programs in the fields of science and
mathematics for women and minorities who are
underrepresented in such fields; and
(3) from the amounts available in each fiscal year
under section 802(b)(5), for the conduct of research
relating to cooperative education.
(b) Administrative Provision.--
(1) In general.--To carry out this section, the
Secretary may--
(A) make grants to or contracts with
institutions of higher education, or
combinations of such institutions; and
(B) make grants to or contracts with other
public or private nonprofit agencies or
organizations, whenever such grants or
contracts will make an especially significant
contribution to attaining the objectives of
this section.
(2) Limitation.--
(A) The Secretary may not use more than 3
percent of the amount appropriated to carry out
this section in each fiscal year to make grants
or enter into contracts described in paragraph
(1)(A).
(B) The Secretary may use not more than 3
percent of the amount appropriated to carry out
this section in each fiscal year to make grants
or enter into contracts described in paragraph
(1)(B).
(c) Supplement Not Supplant.--A recipient of a grant or
contract under this section may use the funds provided only to
supplement and, to the extent possible, increase the level of
funds that would, in the absence of such funds, be made
available from non-Federal sources to carry out the activities
supported by such grant or contract, and in no case to supplant
such funds from non-Federal sources.
XVII. COMMITTEE CORRESPONDENCE
None.
MINORITY VIEWS
Republican Members of the Committee on Education and Labor
are committed to ensuring that every child in America is
afforded the highest quality education possible. We also remain
committed to the principle of a balanced budget without raising
taxes. A balanced budget can be obtained by supporting pro-
growth economic policies, restraining excessive entitlement
spending, and ensuring programs are working as efficiently as
possible--Committee Republicans have supported all of these
proposals.
While Committee Republicans appreciated the ability to
contribute and improve the final bill, we strongly disagree
with the abuse of the reconciliation process, the level of cuts
that were included in the final bill and the significant amount
of new entitlement spending that is not focused on increasing
access to higher education for low-income students. In
addition, we strongly object to the shift in focus of
entitlement spending away from individuals to institutions of
higher education that have failed to control excessive tuition
increases thereby causing the most harm to the exact students
this bill should be supporting.
The Abuse of the Reconciliation Process
Committee Republicans reject the idea that the
reconciliation process should be used to overhaul the student
loan programs in a manner that could not pass under regular
order and that results in an unprecedented expansion of
entitlement spending coupled with minimal deficit reduction.
Under Republican leadership, the Committee established a strong
record on matters of deficit reduction. In the Fiscal Year (FY)
2006 budget, the then-Education & the Workforce Committee was
tasked with finding more than $12 billion in budget savings
over five years--the second highest total of any House
Committee. Not only did we find those savings through slashing
costly subsidies to student loan lenders, but we also found
nearly eight billion dollars in additional savings, which we
translated into new and expanded benefits for ALL college
students. In short, reconciliation served its deficit reduction
purpose--and then some. The reconciliation bill in this
Congress only produced $750 million for deficit reduction.
The Committee, under the reconciliation process in the
109th Congress, made $20 billion worth of changes to the
student loan programs that eliminated wasteful federal
subsidies and reduced the potential for fraud and abuse in the
programs. For example, the Committee permanently prohibited the
creation of new loans through certain tax-exempt bonds issued
from 1980-1993 that guarantee a 9.5 percent yield to lenders.
The Committee also increased risk sharing on the part of
private lenders in the Federal Family Education Loan (FFEL)
program by decreasing the percentage that a lender will receive
when a borrower defaults on a student loan. Finally, the
Committee supported a provision in the Deficit Reduction Act
(DRA) that moved the administrative portion of the section 458
account from a mandatory spending account to a discretionary
spending account.
The billions in savings to the American taxpayer were
achieved at the same time the Committee expanded benefits for
ALL students and made changes that ensured students would be
able to pay for their college education. Building upon the
President's FY 2006 budget request the Committee, under
Republican leadership, expanded loan limits for first year,
second year, and graduate students. For the first time ever,
graduate students would be able to access Federal PLUS loans,
which permit borrowers to borrow up to the cost of attendance.
In addition, the Committee reduced fees paid by students from
up to four percent to just one percent over the five year
period.
While making it clear that decisions over school curricula
are best made by State and local authorities, the Committee
also included a program to provide additional grant funds to
Pell-eligible, high achieving college students. The Academic
Competitiveness Grant (ACG) program provides first year college
students who completed a rigorous high school curriculum at a
public or private high school an extra $750 in grant aid;
second year college students who completed a rigorous high
school curriculum at a public or private high school receive
$1,300 in additional grant aid. The National Science and
Mathematics Access to Retain Talent (SMART) Grants of up to
$4,000 go to third and fourth year students who are majoring in
math, science, or certain foreign languages.
Finally, the Deficit Reduction Act included a provision to
make permanent provisions included in the Taxpayer-Teacher
Protection Act of 2004 that would more than triple the amount
of student loan forgiveness available to highly qualified math,
science, and special education teachers. The increase from
$5,000 to $17,500 in loan forgiveness for these qualified
educators was based on a proposal from President Bush's FY 2005
budget request.
The changes made last Congress resulted in more financial
aid being available to students today than at any time in
history.
In sum, under Republican leadership, the Committee used the
reconciliation process for the purpose it was intended--to
reduce the federal deficit. Unfortunately, the Committee, under
Democrat leadership, has subverted the original intent of the
reconciliation process and abused the process to shield the
billions of new entitlement spending included in the bill. This
point is made clear by the fact that the Committee on Education
and Labor was the only Committee given a reconciliation
instruction in the Budget Resolution. In fact, during the
budget debate in the Senate, Budget Committee Chairman Conrad
called the House instruction a ``stalking-horse for a
significant expansion of spending.'' The reconciliation process
has been clearly abused here. The process was meant for deficit
reduction, not as a backdoor way to spend billions of dollars
on new programs.
New Entitlement Spending
The Democrat-led student loan bill, the College Cost
Reduction Act, finds $19 billion in savings within higher
education programs over the next five years. In the last
Congress, two-thirds of our budget reconciliation savings went
towards deficit reduction and one-third went toward increasing
student benefits like higher loan limits, more grant aid for
low-income, high-achieving students, and loan forgiveness for
high-demand teachers. And while this bill does some of the
same, it also targets new aid toward those who already have
graduated and to institutions of higher education. These are
examples of misplaced priorities; student aid is intended to go
to students.
The bill then spends almost all of the $19 billion on new
entitlement spending, including nine new entitlement programs,
most of which does not even further the goals of college access
and persistence.
For example, the bill spends less than one-third of the
savings on the Pell Grant program. Instead, the money is spent
on assisting those who have already taken advantage of
government subsidies and graduated from college and new
programs aimed at institutions rather than students. In
contrast, the defeated Republican substitute would have spent
$12 billion on increasing the Pell Grant. Assuming the House
stands behind the maximum Pell Grant award included in the
Labor/HHS/Education Appropriations bill, this infusion of funds
would increase the maximum Pell Grant to $5,050 in the 2008-
2009 academic year and raise it to $5,450 by the 2012-2013
academic year. The Republican substitute would have increased
the Pell Grant without creating a maze of new rules and
regulations for students, parents, and institutions to
navigate.
The most expensive provision in the bill reduces interest
rates for a subsection of borrowers--individuals that received
subsidized loans for their undergraduate education. The
interest rate is slowly phased down to 3.4 percent for a five
year period. The 3.4 percent is only in effect for one year
before it jumps back up to 6.8 percent. Democrats claim that a
typical borrower would save $4,400 over the life of the loan
due to the interest rate cut. It is impossible for a borrower
to save that much under this bill. In order to save the full
$4,400, the 3.4 percent rate must stay in effect for years at a
time--and they must consolidate their loans and stretch out
repayment over 15 years. In reality, a college freshman in the
fall of 2012--when the rate is at 3.4 percent--would only end
up saving $6.42 per month once he or she begins repaying the
student loan. Worse yet, these new benefits would not be aimed
at a single college student. By definition, they are intended
for those already have graduated from college. Republicans, in
contrast, believe benefits should be aimed squarely at those
attending or hoping to attend college.
The bill also establishes another repayment program for
borrowers, costing almost $1 billion to U.S. taxpayers. This
proposal caps a borrower's monthly repayment amount at 15
percent of the borrower's discretionary income. The student
loan programs already have four different repayment options and
the ability to enter into deferment or forbearance during times
of financial distress. Borrowers are able to switch between
plans to ensure that they are repaying their loans in a manner
that suits their current financial situation. A new repayment
plan will only add confusion and complication to an already
complex program.
Finally, the bill spends over $1.6 billion of new
entitlement spending in providing aid to institutions without
the accountability provided by the annual appropriations
process. This represents a major policy shift in how mandatory
funds are spent. The federal government historically reserves
entitlement funding streams for programs that provide a direct
benefit to an individual--such as a Social Security check,
Medicare benefit, or a student loan. These benefits are
portable and can be used by the individual wherever they live
or to purchase services. The creation of new entitlement
spending to an institution of higher education takes the
spending of taxpayer dollars outside the purview and oversight
conducted by the Appropriations Committee and a steady flow of
funds goes to institutions regardless of the need or the
quality of the program that is being funded. The country's debt
is already fueled primarily by the skyrocketing growth in
entitlement spending. If this growth in spending continues, it
will be more difficult for future generations to continue to
enjoy the same standard of living that we enjoy today.
Level of Cuts
The reconciliation bill voted on in Committee threatens the
stability of the Federal Family Education Loan (FFEL) program.
Just last Congress, the Committee cut approximately $20 billion
from the student loan program in the DRA. Just two short years
later, the Committee, under Democrat leadership, is cutting an
additional $19 billion from the FFEL program. The Committee
took this action without even allowing enough time to pass to
analyze the impact of the changes that took place in the DRA.
Not one hearing has taken place on the impact of the DRA from
last Congress or on the impact of additional cuts proposed in
this legislation. In addition, the bill was only introduced one
day prior to the markup, leaving very little time for Members
and others to understand the true impact of the cuts.
Republicans believe that the private-market student loan
program can withstand the level of the cuts included in the
DRA, even though that substantial reduction in subsidies paid
to student loan providers participating in the FFEL program
could lead to some reduced access to loans. However, additional
cuts to student loan providers should have been more carefully
studied if the Committee intended to ensure a viable FFEL
program for students and institutions of higher education
across the country who count on the FFEL program for their
student loans.
A more reasonable alternative would have been to accept the
Republican substitute. This bill would have trimmed the
subsidies provided to student loan providers in the FFEL
program while maintaining the stability of the program, thereby
ensuring that competition between the FFEL program and the
government-run Direct Loan program continues in the future.
Specifically, the Republican substitute would have adopted the
same cut to lender insurance rates, saved the federal
government $11 billion through lower special allowance
payments, and saved $2.8 billion through restructuring the
manner in which guaranty agencies are reimbursed for their
administrative and collection activities.
One additional area that provides several Republicans with
some concern is the amendment offered during the markup to
require a study of market mechanisms that could then be used to
determine lender returns when making student loans. The study
would specifically look at the use of auctions and provide for
a test of the most promising models. The Department of
Education did a market mechanisms study several years ago with
the Government Accountability Office and others which did not
find auctions to be a workable mechanism for administering the
student loan program. While another look at the issue may shed
new light on the subject, we should not assume that a new study
will necessarily result in a different determination. An
auction system may further complicate the federal student loan
programs, particularly for institutions. In addition, under an
auction system students lose their right to choose a lender,
something Republicans have been fighting to protect in many of
the proposals that have been introduced in the past. If
students have no right to pick their lender, competition in the
student loan program and the benefits that competition brings
are lost altogether.
Conclusion
Committee Republicans appreciated the inclusive nature of
the process that went into developing this bill and hope that
the Committee can work together as this legislation moves to
the House Floor. However, Republicans continue to have major
concerns about the use of the reconciliation process to
legislate significant cuts to the FFEL program and extravagant
new entitlement spending. Had this legislation taken a more
reasonable approach to reducing subsidies and spending more of
the money saved on actual students, rather than college
graduates and institutions, there may well have been a
different result. The cuts made in this bill threaten the
stability of the FFEL program, a program that has been
successful, competitive and is the program of choice for almost
80 percent of student loan borrowers in this country. Committee
Republicans fear that this bill, if left unchanged, will force
smaller lenders out of the business, reduce competition, and
eliminate student benefits. Students should be the main focus
of the student aid proposals the Committee puts forward, but in
the end, they will lose if this bill is passed in its current
form. It is our hope that serving students and ensuring the
stability of both of the student loan programs is the goal of
the bill as it moves to the House Floor.
Howard P. McKeon.
Pete Hoekstra.
Mark Souder.
Judy Biggert.
Todd R. Platts.
Ric Keller.
Joe Wilson.
John Kline.
K. Marchant.
C.W. Boustany, Jr.
Virginia Foxx.
Rob Bishop.
David Davis.
Tim Walberg.