    [105th Congress Public Law 244]
    [From the U.S. Government Publishing Office]

    <DOC>
    [DOCID: f:publ244.105]

    [[Page 112 STAT. 1581]]

    Public Law 105-244
    105th Congress

                                     An Act

     To extend the authorization of programs under the Higher Education Act
      of 1965, and for other purposes. <<NOTE: Oct. 7, 1998 -  [H.R. 6]>>

        Be it enacted by the Senate and House of Representatives of the
    United States of America in Congress assembled, <<NOTE: Higher Education
    Amendments of 1998. Grants. Inter- governmental relations. Loans.>>

    SECTION 1. <<NOTE: 20 USC 1001 note.>> SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Higher
    Education Amendments of 1998''.
        (b) Table of Contents.--The table of contents is as follows:

    Sec. 1. Short title; table of contents.
    Sec. 2. References.
    Sec. 3. General effective date.

                           TITLE I--GENERAL PROVISIONS

    Sec. 101. Revision of title I.
    Sec. 102. Conforming amendments.

                            TITLE II--TEACHER QUALITY

    Sec. 201. Teacher quality enhancement grants.

                          TITLE III--INSTITUTIONAL AID

    Sec. 301. Transfers and redesignations.
    Sec. 302. Findings.
    Sec. 303. Strengthening institutions.
    Sec. 304. Strengthening HBCU's.
    Sec. 305. Endowment challenge grants.
    Sec. 306. HBCU capital financing.
    Sec. 307. Minority science and engineering improvement program.
    Sec. 308. General provisions.

                          TITLE IV--STUDENT ASSISTANCE

                           Part A--Grants to Students

    Sec. 401. Federal Pell Grants.
    Sec. 402. Federal TRIO programs.
    Sec. 403. Gear up program.
    Sec. 404. Academic achievement incentive scholarships.
    Sec. 405. Repeals.
    Sec. 406. Federal supplemental educational opportunity grants.
    Sec. 407. Leveraging educational assistance partnership program.
    Sec. 408. Special programs for students whose families are engaged in
               migrant and seasonal farmwork.
    Sec. 409. Robert C. Byrd Honors Scholarship Program.
    Sec. 410. Child care access means parents in school.
    Sec. 410A. Learning anytime anywhere partnerships.

                  Part B--Federal Family Education Loan Program

    Sec. 411. Limitation repealed.
    Sec. 412. Advances to reserve funds.
    Sec. 413. Guaranty agency reforms.
    Sec. 414. Scope and duration of Federal loan insurance program.

    [[Page 112 STAT. 1582]]

    Sec. 415. Limitations on individual federally insured loans and Federal
               loan insurance.
    Sec. 416. Applicable interest rates.
    Sec. 417. Federal payments to reduce student interest costs.
    Sec. 418. Voluntary flexible agreements with guaranty agencies.
    Sec. 419. Federal PLUS loans.
    Sec. 420. Federal consolidation loans.
    Sec. 421. Default reduction program.
    Sec. 422. Requirements for disbursements of student loans.
    Sec. 423. Unsubsidized loans.
    Sec. 424. Loan forgiveness for teachers.
    Sec. 425. Loan forgiveness for child care providers.
    Sec. 426. Notice to Secretary and payment of loss.
    Sec. 427. Legal powers and responsibilities.
    Sec. 428. Student loan information by eligible lenders.
    Sec. 429. Definitions.
    Sec. 430. Delegation of functions.
    Sec. 431. Discharge.
    Sec. 432. Debt management options.
    Sec. 433. Special allowances.
    Sec. 434. Federal family education loan insurance fund.

                       Part C--Federal Work-study Programs

    Sec. 441. Authorization of appropriations; community services.
    Sec. 442. Allocation of funds.
    Sec. 443. Grants for Federal work-study programs.
    Sec. 444. Flexible use of funds.
    Sec. 445. Work colleges.

               Part D--William D. Ford Federal Direct Loan Program

    Sec. 451. Selection of institutions.
    Sec. 452. Terms and conditions.
    Sec. 453. Contracts.
    Sec. 454. Funds for administrative expenses.
    Sec. 455. Authority to sell loans.
    Sec. 456. Loan cancellation for teachers.

                          Part E--Federal Perkins Loans

    Sec. 461. Authorization of appropriations.
    Sec. 462. Allocation of funds.
    Sec. 463. Agreements with institutions of higher education.
    Sec. 464. Terms of loans.
    Sec. 465. Cancellation for public service.
    Sec. 466. Distribution of assets from student loan funds.
    Sec. 467. Perkins Loan Revolving Fund.

                              Part F--Need Analysis

    Sec. 471. Cost of attendance.
    Sec. 472. Data elements.
    Sec. 473. Family contribution for dependent students.
    Sec. 474. Family contribution for independent students without
               dependents other than a spouse.
    Sec. 475. Family contribution for independent students with dependents
               other than a spouse.
    Sec. 476. Regulations; updated tables and amounts.
    Sec. 477. Simplified needs test; zero expected family contribution.
    Sec. 478. Discretion of student financial aid administrators.
    Sec. 479. Treatment of other financial assistance.
    Sec. 480. Clerical amendments.
    Sec. 480A. Effective dates.

                           Part G--General Provisions

    Sec. 481. Master calendar.
    Sec. 482. Forms and regulations.
    Sec. 483. Student eligibility.
    Sec. 484. State court judgments.
    Sec. 485. Institutional refunds.
    Sec. 486. Institutional and financial assistance information for
               students.
    Sec. 487. National student loan data system.
    Sec. 488. Distance education demonstration programs.

    [[Page 112 STAT. 1583]]

    Sec. 489. Program participation agreements.
    Sec. 490. Regulatory relief and improvement.
    Sec. 490A. Garnishment requirements.
    Sec. 490B. Administrative subpoena authority.
    Sec. 490C. Advisory Committee on Student Financial Assistance.
    Sec. 490D. Meetings and negotiated rulemaking.
    Sec. 490E. Year 2000 requirements at the Department of Education.
    Sec. 490F. Procedures for cancellations and deferments for eligible
               disabled veterans.

                            Part H--Program Integrity

    Sec. 491. State role and responsibilities.
    Sec. 492. Accrediting agency recognition.
    Sec. 493. Eligibility and certification procedures.
    Sec. 494. Program review and data.
    Sec. 495. Review of regulations.

                        TITLE V--DEVELOPING INSTITUTIONS

    Sec. 501. Establishment of new title V.

                   TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

    Sec. 601. International and foreign language studies.
    Sec. 602. Business and international education programs.
    Sec. 603. Institute for International Public Policy.
    Sec. 604. General provisions.

           TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

    Sec. 701. Revision of title VII.
    Sec. 702. Repeals.

               TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                                 Part A--Studies

    Sec. 801. Study of market mechanisms in Federal student loan programs.
    Sec. 802. Study of the feasibility of alternative financial instruments
               for determining lender yields.
    Sec. 803. Student-related debt study required.
    Sec. 804. Study of transfer of credits.
    Sec. 805. Study of opportunities for participation in athletics
               programs.
    Sec. 806. Study of the effectiveness of cohort default rates for
               institutions with few student loan borrowers.

                  Part B--Advanced Placement Incentive Program

    Sec. 810. Advanced placement incentive program.

                   Part C--Community Scholarship Mobilization

    Sec. 811. Short title.
    Sec. 812. Findings.
    Sec. 813. Definitions.
    Sec. 814. Purpose; endowment grant authority.
    Sec. 815. Grant agreement and requirements.
    Sec. 816. Authorization of appropriations.

    Part D--Grants to States for Workplace and Community Transition Training
                        for Incarcerated Youth Offenders

    Sec. 821. Grants to States for workplace and community transition
               training for incarcerated youth offenders.

        Part E--Grants to Combat Violent Crimes Against Women on Campuses

    Sec. 826. Grants to combat violent crimes against women on campuses.
    Sec. 827. Study of institutional procedures to report sexual assaults.

     Part F--Improving United States Understanding of Science, Engineering,
                           and Technology in East Asia

    Sec. 831. Improving United States understanding of science, engineering,
               and technology in East Asia.

                          Part G--Olympic Scholarships

    Sec. 836. Extension of authorization.

    [[Page 112 STAT. 1584]]

                          Part H--Underground Railroad

    Sec. 841. Underground Railroad educational and cultural program.

                     Part I--Summer Travel and Work Programs

    Sec. 846. Authority to administer summer travel and work programs.

                     Part J--Web-based Education Commission

    Sec. 851. Short title; definitions.
    Sec. 852. Establishment of Web-Based Education Commission.
    Sec. 853. Duties of the Commission.
    Sec. 854. Powers of the Commission.
    Sec. 855. Commission personnel matters.
    Sec. 856. Termination of the Commission.
    Sec. 857. Authorization of appropriations.

                              Part K--Miscellaneous

    Sec. 861. Education-welfare study.
    Sec. 862. Release of conditions, covenants, and reversionary interests,
               Guam Community College conveyance, Barrigada, Guam.
    Sec. 863. Sense of Congress regarding good character.
    Sec. 864. Educational merchandise licensing codes of conduct.

                       TITLE IX--AMENDMENTS TO OTHER LAWS

       Part A--Extension and Revision of Indian Higher Education Programs

    Sec. 901. Tribally controlled colleges and universities.
    Sec. 902. Reauthorization of Navajo Community College Act.

                          Part B--Education of the Deaf

    Sec. 911. Short title.
    Sec. 912. Elementary and secondary education programs.
    Sec. 913. Agreement with Gallaudet University.
    Sec. 914. Agreement for the National Technical Institute for the Deaf.
    Sec. 915. Definitions.
    Sec. 916. Gifts.
    Sec. 917. Reports.
    Sec. 918. Monitoring, evaluation, and reporting.
    Sec. 919. Federal endowment programs.
    Sec. 920. Scholarship program.
    Sec. 921. Oversight and effect of agreements.
    Sec. 922. International students.
    Sec. 923. Research priorities.
    Sec. 924. National Study on the Education of the Deaf.
    Sec. 925. Authorization of appropriations.

                    Part C--United States Institute of Peace

    Sec. 931. Authorities of the United States Institute of Peace.

                  Part D--Voluntary Retirement Incentive Plans

    Sec. 941. Voluntary retirement incentive plans.

               Part E--General Education Provisions Act Amendment

    Sec. 951. Amendment to Family Educational Rights and Privacy Act of
               1974.
    Sec. 952. Alcohol or drug possession disclosure.

        Part F--Liaison for Proprietary Institutions of Higher Education

    Sec. 961. Liaison for proprietary institutions of higher education.

                      Part G--Amendments to Other Statutes

    Sec. 971. Nondischareability of certain claims for educational benefits
               provided to obtain higher education.
    Sec. 972. GNMA guarantee fee.

                                 Part H--Repeals

    Sec. 981. Repeals.
    Sec. 982. Repeals of previous higher education amendments provisions.

    SEC. 2. REFERENCES.

        Except as otherwise expressly provided, whenever in this Act an
    amendment or repeal is expressed in terms of an amendment

    [[Page 112 STAT. 1585]]

    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.).

    SEC. 3. GENERAL EFFECTIVE DATE. <<NOTE: 20 USC 1001 note.>>

        Except as otherwise provided in this Act or the amendments made by
    this Act, the amendments made by this Act shall take effect on October
    1, 1998.

                           TITLE I--GENERAL PROVISIONS

    SEC. 101. REVISION OF TITLE I.

        (a) General Provisions.--Title I (20 U.S.C. 1001 et seq.) is amended
    to read as follows:

                          ``TITLE I--GENERAL PROVISIONS

                              ``PART A--DEFINITIONS

    ``SEC. 101. <<NOTE: 20 USC 1001.>> GENERAL DEFINITION OF INSTITUTION OF
                HIGHER EDUCATION.

        ``(a) Institution of Higher Education.--For purposes of this Act,
    other than title IV, the term `institution of higher education' means an
    educational institution in any State that--
                ``(1) admits as regular students only persons having a
            certificate of graduation from a school providing secondary
            education, or the recognized equivalent of such a certificate;
                ``(2) is legally authorized within such State to provide a
            program of education beyond secondary education;
                ``(3) provides an educational program for which the
            institution awards a bachelor's degree or provides not less than
            a 2-year program that is acceptable for full credit toward such
            a degree;
                ``(4) is a public or other nonprofit institution; and
                ``(5) is accredited by a nationally recognized accrediting
            agency or association, or if not so accredited, is an
            institution that has been granted preaccreditation status by
            such an agency or association that has been recognized by the
            Secretary for the granting of preaccreditation status, and the
            Secretary has determined that there is satisfactory assurance
            that the institution will meet the accreditation standards of
            such an agency or association within a reasonable time.

        ``(b) Additional Institutions Included.--For purposes of this Act,
    other than title IV, the term `institution of higher education' also
    includes--
                ``(1) any school that provides not less than a 1-year
            program of training to prepare students for gainful employment
            in a recognized occupation and that meets the provision of
            paragraphs (1), (2), (4), and (5) of subsection (a); and
                ``(2) a public or nonprofit private educational institution
            in any State that, in lieu of the requirement in subsection
            (a)(1), admits as regular students persons who are beyond the
            age of compulsory school attendance in the State in which the
            institution is located.

        ``(c) <<NOTE: Publication.>>  List of Accrediting Agencies.--For
    purposes of this section and section 102, the Secretary shall publish a
    list of nationally

    [[Page 112 STAT. 1586]]

    recognized accrediting agencies or associations that the Secretary
    determines, pursuant to subpart 2 of part H of title IV, to be reliable
    authority as to the quality of the education or training offered.

    ``SEC. 102. <<NOTE: 20 USC 1002.>> DEFINITION OF INSTITUTION OF HIGHER
                EDUCATION FOR PURPOSES OF TITLE IV PROGRAMS.

        ``(a) Definition of Institution of Higher Education for Purposes of
    Title IV Programs.--
                ``(1) Inclusion of additional institutions.--Subject to
            paragraphs (2) through (4) of this subsection, the term
            `institution of higher education' for purposes of title IV
            includes, in addition to the institutions covered by the
            definition in section 101--
                        ``(A) a proprietary institution of higher education
                    (as defined in subsection (b) of this section);
                        ``(B) a postsecondary vocational institution (as
                    defined in subsection (c) of this section); and
                        ``(C) only for the purposes of part B of title IV,
                    an institution outside the United States that is
                    comparable to an institution of higher education as
                    defined in section 101 and that has been approved by the
                    Secretary for the purpose of part B of title IV.
                ``(2) Institutions outside the united states.--
                        ``(A) <<NOTE: Regulations.>> In general.--For the
                    purpose of qualifying as an institution under paragraph
                    (1)(C), the Secretary shall establish criteria by
                    regulation for the approval of institutions outside the
                    United States and for the determination that such
                    institutions are comparable to an institution of higher
                    education as defined in section 101. In the case of a
                    graduate medical or veterinary school outside the United
                    States, such criteria shall include a requirement that a
                    student attending such school outside the United States
                    is ineligible for loans made, insured, or guaranteed
                    under part B unless--
                              ``(i)(I) at least 60 percent of those enrolled
                          in, and at least 60 percent of the graduates of,
                          the graduate medical school outside the United
                          States were not persons described in section
                          484(a)(5) in the year preceding the year for which
                          a student is seeking a loan under part B of title
                          IV; and
                              ``(II) at least 60 percent of the individuals
                          who were students or graduates of the graduate
                          medical school outside the United States (both
                          nationals of the United States and others) taking
                          the examinations administered by the Educational
                          Commission for Foreign Medical Graduates received
                          a passing score in the year preceding the year for
                          which a student is seeking a loan under part B of
                          title IV; or
                              ``(ii) the institution has a clinical training
                          program that was approved by a State as of January
                          1, 1992, or the institution's students complete
                          their clinical training at an approved veterinary
                          school located in the United States.
                        ``(B) <<NOTE: Establishment.>> Advisory panel.--

    [[Page 112 STAT. 1587]]

                              ``(i) In general.--For the purpose of
                          qualifying as an institution under paragraph
                          (1)(C) of this subsection, the Secretary shall
                          establish an advisory panel of medical experts
                          that shall--
                                        ``(I) evaluate the standards of
                                    accreditation applied to applicant
                                    foreign medical schools; and
                                        ``(II) determine the comparability
                                    of those standards to standards for
                                    accreditation applied to United States
                                    medical schools.
                              ``(ii) Special rule.--If the accreditation
                          standards described in clause (i) are determined
                          not to be comparable, the foreign medical school
                          shall be required to meet the requirements of
                          section 101.
                        ``(C) Failure to release information.--The failure
                    of an institution outside the United States to provide,
                    release, or authorize release to the Secretary of such
                    information as may be required by subparagraph (A) shall
                    render such institution ineligible for the purpose of
                    part B of title IV.
                        ``(D) Special rule.--If, pursuant to this paragraph,
                    an institution loses eligibility to participate in the
                    programs under title IV, then a student enrolled at such
                    institution may, notwithstanding such loss of
                    eligibility, continue to be eligible to receive a loan
                    under part B while attending such institution for the
                    academic year succeeding the academic year in which such
                    loss of eligibility occurred.
                ``(3) Limitations based on course of study or enrollment.--
            An institution shall not be considered to meet the definition of
            an institution of higher education in paragraph (1) if such
            institution--
                        ``(A) offers more than 50 percent of such
                    institution's courses by correspondence, unless the
                    institution is an institution that meets the definition
                    in section 521(4)(C) of the Carl D. Perkins Vocational
                    and Applied Technology Education Act;
                        ``(B) enrolls 50 percent or more of the
                    institution's students in correspondence courses, unless
                    the institution is an institution that meets the
                    definition in such section, except that the Secretary,
                    at the request of such institution, may waive the
                    applicability of this subparagraph to such institution
                    for good cause, as determined by the Secretary in the
                    case of an institution of higher education that provides
                    a 2- or 4-year program of instruction (or both) for
                    which the institution awards an associate or
                    baccalaureate degree, respectively;
                        ``(C) has a student enrollment in which more than 25
                    percent of the students are incarcerated, except that
                    the Secretary may waive the limitation contained in this
                    subparagraph for a nonprofit institution that provides a
                    2- or 4-year program of instruction (or both) for which
                    the institution awards a bachelor's degree, or an
                    associate's degree or a postsecondary diploma,
                    respectively; or
                        ``(D) has a student enrollment in which more than 50
                    percent of the students do not have a secondary school
                    diploma or its recognized equivalent, and does not
                    provide a 2- or 4-year program of instruction (or both)
                    for which the institution awards a bachelor's degree or
                    an associate's

    [[Page 112 STAT. 1588]]

                    degree, respectively, except that the Secretary may
                    waive the limitation contained in this subparagraph if a
                    nonprofit institution demonstrates to the satisfaction
                    of the Secretary that the institution exceeds such
                    limitation because the institution serves, through
                    contracts with Federal, State, or local government
                    agencies, significant numbers of students who do not
                    have a secondary school diploma or its recognized
                    equivalent.
                ``(4) Limitations based on management.--An institution shall
            not be considered to meet the definition of an institution of
            higher education in paragraph (1) if--
                        ``(A) the institution, or an affiliate of the
                    institution that has the power, by contract or ownership
                    interest, to direct or cause the direction of the
                    management or policies of the institution, has filed for
                    bankruptcy, except that this paragraph shall not apply
                    to a nonprofit institution, the primary function of
                    which is to provide health care educational services (or
                    an affiliate of such an institution that has the power,
                    by contract or ownership interest, to direct or cause
                    the direction of the institution's management or
                    policies) that files for bankruptcy under chapter 11 of
                    title 11, United States Code, between July 1, 1998, and
                    December 1, 1998; or
                        ``(B) the institution, the institution's owner, or
                    the institution's chief executive officer has been
                    convicted of, or has pled nolo contendere or guilty to,
                    a crime involving the acquisition, use, or expenditure
                    of funds under title IV, or has been judicially
                    determined to have committed fraud involving funds under
                    title IV.
                ``(5) Certification.--The Secretary shall certify an
            institution's qualification as an institution of higher
            education in accordance with the requirements of subpart 3 of
            part H of title IV.
                ``(6) Loss of eligibility.--An institution of higher
            education shall not be considered to meet the definition of an
            institution of higher education in paragraph (1) if such
            institution is removed from eligibility for funds under title IV
            as a result of an action pursuant to part H of title IV.

        ``(b) Proprietary Institution of Higher Education.--
                ``(1) Principal criteria.--For the purpose of this section,
            the term `proprietary institution of higher education' means a
            school that--
                        ``(A) provides an eligible program of training to
                    prepare students for gainful employment in a recognized
                    occupation;
                        ``(B) meets the requirements of paragraphs (1) and
                    (2) of section 101(a);
                        ``(C) does not meet the requirement of paragraph (4)
                    of section 101(a);
                        ``(D) is accredited by a nationally recognized
                    accrediting agency or association recognized by the
                    Secretary pursuant to part H of title IV;
                        ``(E) has been in existence for at least 2 years;
                    and
                        ``(F) <<NOTE: Regulations.>> has at least 10 percent
                    of the school's revenues from sources that are not
                    derived from funds provided under title IV, as
                    determined in accordance with regulations prescribed by
                    the Secretary.

    [[Page 112 STAT. 1589]]

                ``(2) Additional institutions.--The term `proprietary
            institution of higher education' also includes a proprietary
            educational institution in any State that, in lieu of the
            requirement in paragraph (1) of section 101(a), admits as
            regular students persons who are beyond the age of compulsory
            school attendance in the State in which the institution is
            located.

        ``(c) Postsecondary Vocational Institution.--
                ``(1) Principal criteria.--For the purpose of this section,
            the term `postsecondary vocational institution' means a school
            that--
                        ``(A) provides an eligible program of training to
                    prepare students for gainful employment in a recognized
                    occupation;
                        ``(B) meets the requirements of paragraphs (1), (2),
                    (4), and (5) of section 101(a); and
                        ``(C) has been in existence for at least 2 years.
                ``(2) Additional institutions.--The term `postsecondary
            vocational institution' also includes an educational institution
            in any State that, in lieu of the requirement in paragraph (1)
            of section 101(a), admits as regular students persons who are
            beyond the age of compulsory school attendance in the State in
            which the institution is located.

    ``SEC. 103. ADDITIONAL DEFINITIONS. <<NOTE: 20 USC 1003.>>

        ``In this Act:
                ``(1) Combination of institutions of higher education.--The
            term `combination of institutions of higher education' means a
            group of institutions of higher education that have entered into
            a cooperative arrangement for the purpose of carrying out a
            common objective, or a public or private nonprofit agency,
            organization, or institution designated or created by a group of
            institutions of higher education for the purpose of carrying out
            a common objective on the group's behalf.
                ``(2) Department.--The term `Department' means the
            Department of Education.
                ``(3) Disability.--The term `disability' has the same
            meaning given that term under section 3(2) of the Americans With
            Disabilities Act of 1990.
                ``(4) Elementary school.--The term `elementary school' has
            the same meaning given that term under section 14101 of the
            Elementary and Secondary Education Act of 1965.
                ``(5) Gifted and talented.--The term `gifted and talented'
            has the same meaning given that term under section 14101 of the
            Elementary and Secondary Education Act of 1965.
                ``(6) Local educational agency.--The term `local educational
            agency' has the same meaning given that term under section 14101
            of the Elementary and Secondary Education Act of 1965.
                ``(7) New borrower.--The term `new borrower' when used with
            respect to any date means an individual who on that date has no
            outstanding balance of principal or interest owing on any loan
            made, insured, or guaranteed under title IV.
                ``(8) Nonprofit.--The term `nonprofit' as applied to a
            school, agency, organization, or institution means a school,
            agency, organization, or institution owned and operated by one
            or more nonprofit corporations or associations, no part

    [[Page 112 STAT. 1590]]

            of the net earnings of which inures, or may lawfully inure, to
            the benefit of any private shareholder or individual.
                ``(9) School or department of divinity.--The term `school or
            department of divinity' means an institution, or a department or
            a branch of an institution, the program of instruction of which
            is designed for the education of students--
                        ``(A) to prepare the students to become ministers of
                    religion or to enter upon some other religious vocation
                    (or to provide continuing training for any such
                    vocation); or
                        ``(B) to prepare the students to teach theological
                    subjects.
                ``(10) Secondary school.--The term `secondary school' has
            the same meaning given that term under section 14101 of the
            Elementary and Secondary Education Act of 1965.
                ``(11) Secretary.--The term `Secretary' means the Secretary
            of Education.
                ``(12) Service-learning.--The term `service-learning' has
            the same meaning given that term under section 101(23) of the
            National and Community Service Act of 1990.
                ``(13) Special education teacher.--The term `special
            education teacher' means teachers who teach children with
            disabilities as defined in section 602 of the Individuals with
            Disabilities Education Act.
                ``(14) State educational agency.--The term `State
            educational agency' has the same meaning given that term under
            section 14101 of the Elementary and Secondary Education Act of
            1965.
                ``(15) State higher education agency.--The term `State
            higher education agency' means the officer or agency primarily
            responsible for the State supervision of higher education.
                ``(16) State; freely associated states.--
                        ``(A) State.--The term `State' includes, in addition
                    to the several States of the United States, the
                    Commonwealth of Puerto Rico, the District of Columbia,
                    Guam, American Samoa, the United States Virgin Islands,
                    the Commonwealth of the Northern Mariana Islands, and
                    the Freely Associated States.
                        ``(B) Freely associated states.--The term `Freely
                    Associated States' means the Republic of the Marshall
                    Islands, the Federated States of Micronesia, and the
                    Republic of Palau.

                     ``PART B--ADDITIONAL GENERAL PROVISIONS

    ``SEC. 111. ANTIDISCRIMINATION. <<NOTE: 20 USC 1011.>>

        ``(a) In General.--Institutions of higher education receiving
    Federal financial assistance may not use such financial assistance,
    directly or indirectly, to undertake any study or project or fulfill the
    terms of any contract containing an express or implied provision that
    any person or persons of a particular race, religion, sex, or national
    origin be barred from performing such study, project, or contract,
    except that nothing in this subsection shall be construed to prohibit an
    institution from conducting objective studies or projects concerning the
    nature, effects, or prevention of discrimination, or to have the
    institution's curriculum restricted on the subject of discrimination.

    [[Page 112 STAT. 1591]]

        ``(b) Limitations on Statutory Construction.--Nothing in this Act
    shall be construed to limit the rights or responsibilities of any
    individual under the Americans With Disabilities Act of 1990, the
    Rehabilitation Act of 1973, or any other law.

    ``SEC. 112. <<NOTE: 20 USC 1011a.>> PROTECTION OF STUDENT SPEECH AND
                ASSOCIATION RIGHTS.

        ``(a) Protection of Rights.--It is the sense of Congress that no
    student attending an institution of higher education on a full- or part-
    time basis should, on the basis of participation in protected speech or
    protected association, be excluded from participation in, be denied the
    benefits of, or be subjected to discrimination or official sanction
    under any education program, activity, or division of the institution
    directly or indirectly receiving financial assistance under this Act,
    whether or not such program, activity, or division is sponsored or
    officially sanctioned by the institution.
        ``(b) Construction.--Nothing in this section shall be construed--
                ``(1) to discourage the imposition of an official sanction
            on a student that has willfully participated in the disruption
            or attempted disruption of a lecture, class, speech,
            presentation, or performance made or scheduled to be made under
            the auspices of the institution of higher education; or
                ``(2) to prevent an institution of higher education from
            taking appropriate and effective action to prevent violations of
            State liquor laws, to discourage binge drinking and other
            alcohol abuse, to protect students from sexual harassment
            including assault and date rape, to prevent hazing, or to
            regulate unsanitary or unsafe conditions in any student
            residence.

        ``(c) Definitions.--For the purposes of this section:
                ``(1) Official sanction.--The term `official sanction'--
                        ``(A) means expulsion, suspension, probation,
                    censure, condemnation, reprimand, or any other
                    disciplinary, coercive, or adverse action taken by an
                    institution of higher education or administrative unit
                    of the institution; and
                        ``(B) includes an oral or written warning made by an
                    official of an institution of higher education acting in
                    the official capacity of the official.
                ``(2) Protected association.--The term `protected
            association' means the joining, assembling, and residing with
            others that is protected under the first and 14th amendments to
            the Constitution, or would be protected if the institution of
            higher education involved were subject to those amendments.
                ``(3) Protected speech.--The term `protected speech' means
            speech that is protected under the first and 14th amendments to
            the Constitution, or would be protected if the institution of
            higher education involved were subject to those amendments.

    ``SEC. 113. <<NOTE: 20 USC 1011b.>>  TREATMENT OF TERRITORIES AND
                TERRITORIAL STUDENT ASSISTANCE.

        ``(a) Waiver Authority.--The Secretary is required to waive the
    eligibility criteria of any postsecondary education program administered
    by the Department where such criteria do not take into account the
    unique circumstances in Guam, the United States Virgin Islands, American
    Samoa, the Commonwealth of the Northern Mariana Islands, and the Freely
    Associated States.

    [[Page 112 STAT. 1592]]

        ``(b) Eligibility.--Notwithstanding any other provision of law, an
    institution of higher education that is located in any of the Freely
    Associated States, rather than in another State, shall be eligible, if
    otherwise qualified, for assistance under chapter 1 of subpart 2 of part
    A of title IV. <<NOTE: Termination date.>> This subsection shall cease
    to be effective on September 30, 2004.

    ``SEC. 114. <<NOTE: 20 USC 1011c.>> NATIONAL ADVISORY COMMITTEE ON
                INSTITUTIONAL QUALITY AND INTEGRITY.

        ``(a) Establishment.--There is established in the Department a
    National Advisory Committee on Institutional Quality and Integrity
    (hereafter in this section referred to as the `Committee'), which shall
    be composed of 15 members appointed by the Secretary from among
    individuals who are representatives of, or knowledgeable concerning,
    education and training beyond secondary education, including
    representatives of all sectors and types of institutions of higher
    education (as defined in section 102), to assess the process of
    eligibility and certification of such institutions under title IV and
    the provision of financial aid under title IV.
        ``(b) Terms of Members.--Terms of office of each member of the
    Committee shall be 3 years, except that any member appointed to fill a
    vacancy occurring prior to the expiration of the term for which the
    member's predecessor was appointed shall be appointed for the remainder
    of such term.
        ``(c) Public Notice.--The Secretary shall--
                ``(1) <<NOTE: Federal Register,
            publication. Records.>> annually publish in the Federal Register
            a list containing the name of each member of the Committee and
            the date of the expiration of the term of office of the member;
            and
                ``(2) publicly solicit nominations for each vacant position
            or expiring term of office on the Committee.

        ``(d) Functions.--The Committee shall--
                ``(1) advise the Secretary with respect to establishment and
            enforcement of the standards of accrediting agencies or
            associations under subpart 2 of part H of title IV;
                ``(2) advise the Secretary with respect to the recognition
            of a specific accrediting agency or association;
                ``(3) advise the Secretary with respect to the preparation
            and publication of the list of nationally recognized accrediting
            agencies and associations;
                ``(4) develop and recommend to the Secretary standards and
            criteria for specific categories of vocational training
            institutions and institutions of higher education for which
            there are no recognized accrediting agencies, associations, or
            State agencies, in order to establish the eligibility of such
            institutions on an interim basis for participation in federally
            funded programs;
                ``(5) advise the Secretary with respect to the eligibility
            and certification process for institutions of higher education
            under title IV, together with recommendations for improvements
            in such process;
                ``(6) advise the Secretary with respect to the relationship
            between--
                        ``(A) accreditation of institutions of higher
                    education and the certification and eligibility of such
                    institutions; and
                        ``(B) State licensing responsibilities with respect
                    to such institutions; and

    [[Page 112 STAT. 1593]]

                ``(7) carry out such other advisory functions relating to
            accreditation and institutional eligibility as the Secretary may
            prescribe.

        ``(e) Meeting Procedures.--The Committee shall meet not less than
    twice each year at the call of the Chairperson. The date of, and agenda
    for, each meeting of the Committee shall be submitted in advance to the
    Secretary for approval. A representative of the Secretary shall be
    present at all meetings of the Committee.
        ``(f ) <<NOTE: Deadline. Records.>> Report.--Not later than November
    30 of each year, the Committee shall make an annual report through the
    Secretary to Congress. The annual report shall contain--
                ``(1) a list of the members of the Committee and their
            addresses;
                ``(2) a list of the functions of the Committee;
                ``(3) a list of dates and places of each meeting during the
            preceding fiscal year; and
                ``(4) a summary of the activities, findings and
            recommendations made by the Committee during the preceding
            fiscal year.

        ``(g) Termination.--The Committee shall cease to exist on September
    30, 2004.

    ``SEC. 115. STUDENT REPRESENTATION. <<NOTE: 20 USC 1011d.>>

        ``The Secretary shall, in appointing individuals to any commission,
    committee, board, panel, or other body in connection with the
    administration of this Act, include individuals who are, at the time of
    appointment, attending an institution of higher education.

    ``SEC. 116. FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS. <<NOTE: 20 USC
                1011e.>>

        ``Nothing in this Act or any other Federal law shall be construed to
    prohibit any institution of higher education from requiring a student
    who is a foreign national (and not admitted to permanent residence in
    the United States) to guarantee the future payment of tuition and fees
    to such institution by--
                ``(1) making advance payment of such tuition and fees;
                ``(2) making deposits in an escrow account administered by
            such institution for such payments; or
                ``(3) obtaining a bond or other insurance that such payments
            will be made.

    ``SEC. 117. DISCLOSURES OF FOREIGN GIFTS. <<NOTE: 20 USC 1011f.>>

        ``(a) <<NOTE: Deadline.>> Disclosure Report.--Whenever any
    institution is owned or controlled by a foreign source or receives a
    gift from or enters into a contract with a foreign source, the value of
    which is $250,000 or more, considered alone or in combination with all
    other gifts from or contracts with that foreign source within a calendar
    year, the institution shall file a disclosure report with the Secretary
    on January 31 or July 31, whichever is sooner.

        ``(b) Contents of Report.--Each report to the Secretary required by
    this section shall contain the following:
                ``(1) For gifts received from or contracts entered into with
            a foreign source other than a foreign government, the aggregate
            dollar amount of such gifts and contracts attributable to a
            particular country. The country to which a gift is attributable
            is the country of citizenship, or if unknown, the principal
            residence for a foreign source who is a natural person, and the

    [[Page 112 STAT. 1594]]

            country of incorporation, or if unknown, the principal place of
            business, for a foreign source which is a legal entity.
                ``(2) For gifts received from or contracts entered into with
            a foreign government, the aggregate amount of such gifts and
            contracts received from each foreign government.
                ``(3) In the case of an institution which is owned or
            controlled by a foreign source, the identity of the foreign
            source, the date on which the foreign source assumed ownership
            or control, and any changes in program or structure resulting
            from the change in ownership or control.

        ``(c) Additional Disclosures for Restricted and Conditional Gifts.--
    Notwithstanding the provisions of subsection (b), whenever any
    institution receives a restricted or conditional gift or contract from a
    foreign source, the institution shall disclose the following:
                ``(1) For such gifts received from or contracts entered into
            with a foreign source other than a foreign government, the
            amount, the date, and a description of such conditions or
            restrictions. The report shall also disclose the country of
            citizenship, or if unknown, the principal residence for a
            foreign source which is a natural person, and the country of
            incorporation, or if unknown, the principal place of business
            for a foreign source which is a legal entity.
                ``(2) For gifts received from or contracts entered into with
            a foreign government, the amount, the date, a description of
            such conditions or restrictions, and the name of the foreign
            government.

        ``(d) Relation to Other Reporting Requirements.--
                ``(1) State requirements.--If an institution described under
            subsection (a) is within a State which has enacted requirements
            for public disclosure of gifts from or contracts with a foreign
            source that are substantially similar to the requirements of
            this section, a copy of the disclosure report filed with the
            State may be filed with the Secretary in lieu of a report
            required under subsection (a). The State in which the
            institution is located shall provide to the Secretary such
            assurances as the Secretary may require to establish that the
            institution has met the requirements for public disclosure under
            State law if the State report is filed.
                ``(2) Use of other federal reports.--If an institution
            receives a gift from, or enters into a contract with, a foreign
            source, where any other department, agency, or bureau of the
            executive branch requires a report containing requirements
            substantially similar to those required under this section, a
            copy of the report may be filed with the Secretary in lieu of a
            report required under subsection (a).

        ``(e) Public Inspection.--All disclosure reports required by this
    section shall be public records open to inspection and copying during
    business hours.
        ``(f ) Enforcement.--
                ``(1) Court orders.--Whenever it appears that an institution
            has failed to comply with the requirements of this section,
            including any rule or regulation promulgated under this section,
            a civil action may be brought by the Attorney General, at the
            request of the Secretary, in an appropriate district court of
            the United States, or the appropriate United States court of any
            territory or other place subject to the jurisdiction of

    [[Page 112 STAT. 1595]]

            the United States, to request such court to compel compliance
            with the requirements of this section.
                ``(2) Costs.--For knowing or willful failure to comply with
            the requirements of this section, including any rule or
            regulation promulgated thereunder, an institution shall pay to
            the Treasury of the United States the full costs to the United
            States of obtaining compliance, including all associated costs
            of investigation and enforcement.

        ``(g) Regulations.--The Secretary may promulgate regulations to
    carry out this section.
        ``(h) Definitions.--For the purpose of this section--
                ``(1) the term `contract' means any agreement for the
            acquisition by purchase, lease, or barter of property or
            services by the foreign source, for the direct benefit or use of
            either of the parties;
                ``(2) the term `foreign source' means--
                        ``(A) a foreign government, including an agency of a
                    foreign government;
                        ``(B) a legal entity, governmental or otherwise,
                    created solely under the laws of a foreign state or
                    states;
                        ``(C) an individual who is not a citizen or a
                    national of the United States or a trust territory or
                    protectorate thereof; and
                        ``(D) an agent, including a subsidiary or affiliate
                    of a foreign legal entity, acting on behalf of a foreign
                    source;
                ``(3) the term `gift' means any gift of money or property;
                ``(4) the term `institution' means any institution, public
            or private, or, if a multicampus institution, any single campus
            of such institution, in any State, that--
                        ``(A) is legally authorized within such State to
                    provide a program of education beyond secondary school;
                        ``(B) provides a program for which the institution
                    awards a bachelor's degree (or provides not less than a
                    2-year program which is acceptable for full credit
                    toward such a degree) or more advanced degrees; and
                        ``(C) is accredited by a nationally recognized
                    accrediting agency or association and to which
                    institution Federal financial assistance is extended
                    (directly or indirectly through another entity or
                    person), or which institution receives support from the
                    extension of Federal financial assistance to any of the
                    institution's subunits; and
                ``(5) the term `restricted or conditional gift or contract'
            means any endowment, gift, grant, contract, award, present, or
            property of any kind which includes provisions regarding--
                        ``(A) the employment, assignment, or termination of
                    faculty;
                        ``(B) the establishment of departments, centers,
                    research or lecture programs, or new faculty positions;
                        ``(C) the selection or admission of students; or
                        ``(D) the award of grants, loans, scholarships,
                    fellowships, or other forms of financial aid restricted
                    to students of a specified country, religion, sex,
                    ethnic origin, or political opinion.

    ``SEC. 118. APPLICATION OF PEER REVIEW PROCESS. <<NOTE: 20 USC 1011g.>>

        ``All applications submitted under the provisions of this Act which
    require peer review shall be read by a panel of readers

    [[Page 112 STAT. 1596]]

    composed of individuals selected by the Secretary, which shall include
    outside readers who are not employees of the Federal Government. The
    Secretary shall ensure that no individual assigned under this section to
    review any application has any conflict of interest with regard to that
    application which might impair the impartiality with which that
    individual conducts the review under this section.

    ``SEC. 119. BINGE DRINKING ON COLLEGE CAMPUSES. <<NOTE: Collegiate
                Initiative To Reduce Binge Drinking and Illegal Alcohol
                Consumption. 20 USC 1011h.>>

        ``(a) Short Title.--This section may be cited as the `Collegiate
    Initiative To Reduce Binge Drinking and Illegal Alcohol Consumption'.
        ``(b) Sense of Congress.--It is the sense of Congress that, in an
    effort to change the culture of alcohol consumption on college campuses,
    all institutions of higher education should carry out the following:
                ``(1) The president of the institution should appoint a task
            force consisting of school administrators, faculty, students,
            Greek system representatives, and others to conduct a full
            examination of student and academic life at the institution. The
            task force should make recommendations for a broad range of
            policy and program changes that would serve to reduce alcohol
            and other drug-related problems. The institution should provide
            resources to assist the task force in promoting the campus
            policies and proposed environmental changes that have been
            identified.
                ``(2) The institution should provide maximum opportunities
            for students to live in an alcohol-free environment and to
            engage in stimulating, alcohol-free recreational and leisure
            activities.
                ``(3) The institution should enforce a `zero tolerance'
            policy on the illegal consumption of alcohol by students at the
            institution.
                ``(4) The institution should vigorously enforce the
            institution's code of disciplinary sanctions for those who
            violate campus alcohol policies. Students with alcohol or other
            drug-related problems should be referred for assistance,
            including on-campus counseling programs if appropriate.
                ``(5) The institution should adopt a policy to discourage
            alcoholic beverage-related sponsorship of on-campus activities.
            It should adopt policies limiting the advertisement and
            promotion of alcoholic beverages on campus.
                ``(6) The institution should work with the local community,
            including local businesses, in a `Town/Gown' alliance to
            encourage responsible policies toward alcohol consumption and to
            address illegal alcohol use by students.

    ``SEC. 120. DRUG AND ALCOHOL ABUSE PREVENTION. <<NOTE: 20 USC 1011i.>>

        ``(a) <<NOTE: Certification.>> Restriction on Eligibility.--
    Notwithstanding any other provision of law, no institution of higher
    education shall be eligible to receive funds or any other form of
    financial assistance under any Federal program, including participation
    in any federally funded or guaranteed student loan program, unless the
    institution certifies to the Secretary that the institution has adopted
    and has implemented a program to prevent the use of illicit drugs and
    the abuse of alcohol by students and employees that, at a minimum,
    includes--
                ``(1) the annual distribution to each student and employee
            of--

    [[Page 112 STAT. 1597]]

                        ``(A) standards of conduct that clearly prohibit, at
                    a minimum, the unlawful possession, use, or distribution
                    of illicit drugs and alcohol by students and employees
                    on the institution's property or as part of any of the
                    institution's activities;
                        ``(B) a description of the applicable legal
                    sanctions under local, State, or Federal law for the
                    unlawful possession or distribution of illicit drugs and
                    alcohol;
                        ``(C) a description of the health-risks associated
                    with the use of illicit drugs and the abuse of alcohol;
                        ``(D) a description of any drug or alcohol
                    counseling, treatment, or rehabilitation or re-entry
                    programs that are available to employees or students;
                    and
                        ``(E) a clear statement that the institution will
                    impose sanctions on students and employees (consistent
                    with local, State, and Federal law), and a description
                    of those sanctions, up to and including expulsion or
                    termination of employment and referral for prosecution,
                    for violations of the standards of conduct required by
                    subparagraph (A); and
                ``(2) a biennial review by the institution of the
            institution's program to--
                        ``(A) determine the program's effectiveness and
                    implement changes to the program if the changes are
                    needed; and
                        ``(B) ensure that the sanctions required by
                    paragraph (1)(E) are consistently enforced.

        ``(b) Information Availability.--Each institution of higher
    education that provides the certification required by subsection (a)
    shall, upon request, make available to the Secretary and to the public a
    copy of each item required by subsection (a)(1) as well as the results
    of the biennial review required by subsection (a)(2).
        ``(c) Regulations.--
                ``(1) In general.--The Secretary shall publish regulations
            to implement and enforce the provisions of this section,
            including regulations that provide for--
                        ``(A) the periodic review of a representative sample
                    of programs required by subsection (a); and
                        ``(B) a range of responses and sanctions for
                    institutions of higher education that fail to implement
                    their programs or to consistently enforce their
                    sanctions, including information and technical
                    assistance, the development of a compliance agreement,
                    and the termination of any form of Federal financial
                    assistance.
                ``(2) Rehabilitation program.--The sanctions required by
            subsection (a)(1)(E) may include the completion of an
            appropriate rehabilitation program.

        ``(d) Appeals.--Upon determination by the Secretary to terminate
    financial assistance to any institution of higher education under this
    section, the institution may file an appeal with an administrative law
    judge before the expiration of the 30-day period beginning on the date
    such institution is notified of the decision to terminate financial
    assistance under this section. Such judge shall hold a hearing with
    respect to such termination of assistance before the expiration of the
    45-day period beginning on the date that such appeal is filed. Such
    judge may extend such 45-day

    [[Page 112 STAT. 1598]]

    period upon a motion by the institution concerned. The decision of the
    judge with respect to such termination shall be considered to be a final
    agency action.
        ``(e) Alcohol and Drug Abuse Prevention Grants.--
                ``(1) Program authority.--The Secretary may make grants to
            institutions of higher education or consortia of such
            institutions, and enter into contracts with such institutions,
            consortia, and other organizations, to develop, implement,
            operate, improve, and disseminate programs of prevention, and
            education (including treatment-referral) to reduce and eliminate
            the illegal use of drugs and alcohol and the violence associated
            with such use. Such grants or contracts may also be used for the
            support of a higher education center for alcohol and drug abuse
            prevention that will provide training, technical assistance,
            evaluation, dissemination, and associated services and
            assistance to the higher education community as determined by
            the Secretary and institutions of higher education.
                ``(2) Awards.--Grants and contracts shall be awarded under
            paragraph (1) on a competitive basis.
                ``(3) Applications.--An institution of higher education, a
            consortium of such institutions, or another organization that
            desires to receive a grant or contract under paragraph (1) shall
            submit an application to the Secretary at such time, in such
            manner, and containing or accompanied by such information as the
            Secretary may reasonably require by regulation.
                ``(4) Additional requirements.--
                        ``(A) Participation.--In awarding grants and
                    contracts under this subsection the Secretary shall make
                    every effort to ensure--
                              ``(i) the equitable participation of private
                          and public institutions of higher education
                          (including community and junior colleges); and
                              ``(ii) the equitable geographic participation
                          of such institutions.
                        ``(B) Consideration.--In awarding grants and
                    contracts under this subsection the Secretary shall give
                    appropriate consideration to institutions of higher
                    education with limited enrollment.
                ``(5) Authorization of appropriations.--There are authorized
            to be appropriated to carry out this subsection $5,000,000 for
            fiscal year 1999 and such sums as may be necessary for each of
            the 4 succeeding fiscal years.

        ``(f ) National Recognition Awards.--
                ``(1) Purpose.--It is the purpose of this subsection to
            provide models of innovative and effective alcohol and drug
            abuse prevention programs in higher education and to focus
            national attention on exemplary alcohol and drug abuse
            prevention efforts.
                ``(2) Awards.--
                        ``(A) In general.--The Secretary shall make 5
                    National Recognition Awards for outstanding alcohol
                    prevention programs and 5 National Recognition Awards
                    for outstanding drug abuse prevention programs, on an
                    annual basis, to institutions of higher education that--

    [[Page 112 STAT. 1599]]

                              ``(i) have developed and implemented
                          innovative and effective alcohol prevention
                          programs or drug abuse prevention programs; and
                              ``(ii) with respect to an application for an
                          alcohol prevention program award, demonstrate in
                          the application submitted under paragraph (3) that
                          the institution has undertaken efforts designed to
                          change the culture of college drinking consistent
                          with the review criteria described in paragraph
                          (3)(C)(iii).
                        ``(B) <<NOTE: District of Columbia.>> Ceremony.--The
                    awards shall be made at a ceremony in Washington, D.C.
                        ``(C) <<NOTE: Publication.>> Document.--The
                    Secretary shall publish a document describing the
                    alcohol and drug abuse prevention programs of
                    institutions of higher education that receive the awards
                    under this subsection and disseminate the document
                    nationally to all public and private secondary school
                    guidance counselors for use by secondary school juniors
                    and seniors preparing to enter an institution of higher
                    education. <<NOTE: Deadline.>> The document shall be
                    disseminated not later than January 1 of each academic
                    year.
                        ``(D) Amount and use.--Each institution of higher
                    education selected to receive an award under this
                    subsection shall receive an award in the amount of
                    $50,000. Such award shall be used for the maintenance
                    and improvement of the institution's outstanding
                    prevention program for the academic year following the
                    academic year for which the award is made.
                ``(3) Application.--
                        ``(A) In general.--Each institution of higher
                    education desiring an award under this subsection shall
                    submit an application to the Secretary at such time, in
                    such manner, and accompanied by such information as the
                    Secretary may require. Each such application shall
                    contain--
                              ``(i) a clear description of the goals and
                          objectives of the prevention program of the
                          institution;
                              ``(ii) a description of program activities
                          that focus on alcohol or drug policy issues,
                          policy development, modification, or refinement,
                          policy dissemination and implementation, and
                          policy enforcement;
                              ``(iii) a description of activities that
                          encourage student and employee participation and
                          involvement in activity development and
                          implementation;
                              ``(iv) the objective criteria used to
                          determine the effectiveness of the methods used in
                          such programs and the means used to evaluate and
                          improve the programs' efforts;
                              ``(v) a description of special initiatives
                          used to reduce high-risk behavior or increase low-
                          risk behavior; and
                              ``(vi) a description of coordination and
                          networking efforts that exist in the community in
                          which the institution is located for purposes of
                          such programs.
                        ``(B) Application review.--The Secretary shall
                    appoint a committee to review applications submitted

    [[Page 112 STAT. 1600]]

                    under this paragraph. The committee may include
                    representatives of Federal departments or agencies the
                    programs of which include alcohol abuse prevention and
                    education efforts and drug abuse prevention and
                    education efforts, directors or heads (or their
                    representatives) of professional associations that focus
                    on alcohol and drug abuse prevention efforts, and non-
                    Federal scientists who have backgrounds in social
                    science evaluation and research methodology and in
                    education. Decisions of the committee shall be made
                    directly to the Secretary without review by any other
                    entity in the Department.
                        ``(C) Review criteria.--The committee described in
                    subparagraph (B) shall develop specific review criteria
                    for reviewing and evaluating applications submitted
                    under this paragraph. The review criteria shall
                    include--
                              ``(i) measures of the effectiveness of the
                          program of the institution, that includes changes
                          in the campus alcohol or other drug environment or
                          the climate and changes in alcohol or other drug
                          use before and after the initiation of the
                          program;
                              ``(ii) measures of program
                          institutionalization, including--
                                        ``(I) an assessment of needs of the
                                    institution;
                                        ``(II) the institution's alcohol and
                                    drug policies, staff and faculty
                                    development activities, drug prevention
                                    criteria, student, faculty, and campus
                                    community involvement; and
                                        ``(III) whether the program will be
                                    continued after the cessation of Federal
                                    funding; and
                              ``(iii) with respect to an application for an
                          alcohol prevention program award, criteria for
                          determining whether the institution has policies
                          in effect that--
                                        ``(I) prohibit alcoholic beverage
                                    sponsorship of athletic events, and
                                    prohibit alcoholic beverage advertising
                                    inside athletic facilities;
                                        ``(II) prohibit alcoholic beverage
                                    marketing on campus, which may include
                                    efforts to ban alcohol advertising in
                                    institutional publications or efforts to
                                    prohibit alcohol-related advertisements
                                    at campus events;
                                        ``(III) establish or expand upon
                                    alcohol-free living arrangements for all
                                    college students;
                                        ``(IV) establish partnerships with
                                    community members and organizations to
                                    further alcohol prevention efforts on
                                    campus and the areas surrounding campus;
                                    and
                                        ``(V) establish innovative
                                    communications programs involving
                                    students and faculty in an effort to
                                    educate students about alcohol-related
                                    risks.
                ``(4) Eligibility.--In order to be eligible to receive a
            National Recognition Award an institution of higher education
            shall--
                        ``(A) offer an associate or baccalaureate degree;
                        ``(B) have established an alcohol abuse prevention
                    and education program or a drug abuse prevention and
                    education program;

    [[Page 112 STAT. 1601]]

                        ``(C) nominate itself or be nominated by others,
                    such as professional associations or student
                    organizations, to receive the award; and
                        ``(D) not have received an award under this
                    subsection during the 5 academic years preceding the
                    academic year for which the determination is made.
                ``(5) Authorization of appropriations.--
                        ``(A) In general.--There is authorized to be
                    appropriated to carry out this subsection $750,000 for
                    fiscal year 1999.
                        ``(B) Availability.--Funds appropriated under
                    subparagraph (A) shall remain available until expended.

    ``SEC. 121. PRIOR RIGHTS AND OBLIGATIONS. <<NOTE: 20 USC 1011j.>>

        ``(a) Authorization of Appropriations.--
                ``(1) Pre-1987 parts c and d of title vii.--There are
            authorized to be appropriated such sums as may be necessary for
            fiscal year 1999 and for each of the 4 succeeding fiscal years
            to pay obligations incurred prior to 1987 under parts C and D of
            title VII, as such parts were in effect before the effective
            date of the Higher Education Amendments of 1992.
                ``(2) Post-1992 and pre-1998 part c of title vii.--There are
            authorized to be appropriated such sums as may be necessary for
            fiscal year 1999 and for each of the 4 succeeding fiscal years
            to pay obligations incurred prior to the date of enactment of
            the Higher Education Amendments of 1998 under part C of title
            VII, as such part was in effect during the period--
                        ``(A) after the effective date of the Higher
                    Education Amendments of 1992; and
                        ``(B) prior to the date of enactment of the Higher
                    Education Amendments of 1998.

        ``(b) Legal Responsibilities.--
                ``(1) Pre-1987 title vii.--All entities with continuing
            obligations incurred under parts A, B, C, and D of title VII, as
            such parts were in effect before the effective date of the
            Higher Education Amendments of 1992, shall be subject to the
            requirements of such part as in effect before the effective date
            of the Higher Education Amendments of 1992.
                ``(2) Post-1992 and pre-1998 part c of title vii.--All
            entities with continuing obligations incurred under part C of
            title VII, as such part was in effect during the period--
                        ``(A) after the effective date of the Higher
                    Education Amendments of 1992; and
                        ``(B) prior to the date of enactment of the Higher
                    Education Amendments of 1998,
            shall be subject to the requirements of such part as such part
            was in effect during such period.

    ``SEC. 122. RECOVERY OF PAYMENTS. <<NOTE: 20 USC 1011k.>>

        ``(a) Public Benefit.--Congress declares that, if a facility
    constructed with the aid of a grant under part A of title VII as such
    part A was in effect prior to the date of enactment of the Higher
    Education Amendments of 1998, or part B of such title as part B was in
    effect prior to the date of enactment of the Higher Education Amendments
    of 1992, is used as an academic facility for 20 years following
    completion of such construction, the public benefit accruing to the
    United States will equal in value

    [[Page 112 STAT. 1602]]

    the amount of the grant. The period of 20 years after completion of such
    construction shall therefore be deemed to be the period of Federal
    interest in such facility for the purposes of such title as so in
    effect.
        ``(b) Recovery Upon Cessation of Public Benefit.--If, within 20
    years after completion of construction of an academic facility which has
    been constructed, in part with a grant under part A of title VII as such
    part A was in effect prior to the date of enactment of the Higher
    Education Amendments of 1998, or part B of title VII as such part B was
    in effect prior to the date of enactment of the Higher Education
    Amendments of 1992--
                ``(1) the applicant under such parts as so in effect (or the
            applicant's successor in title or possession) ceases or fails to
            be a public or nonprofit institution; or
                ``(2) the facility ceases to be used as an academic
            facility, or the facility is used as a facility excluded from
            the term `academic facility' (as such term was defined under
            title VII, as so in effect), unless the Secretary determines
            that there is good cause for releasing the institution from its
            obligation,

    the United States shall be entitled to recover from such applicant (or
    successor) an amount which bears to the value of the facility at that
    time (or so much thereof as constituted an approved project or projects)
    the same ratio as the amount of Federal grant bore to the cost of the
    facility financed with the aid of such grant. The value shall be
    determined by agreement of the parties or by action brought in the
    United States district court for the district in which such facility is
    situated.
        ``(c) Prohibition on Use for Religion.--Notwithstanding the
    provisions of subsections (a) and (b), no project assisted with funds
    under title VII (as in effect prior to the date of enactment of the
    Higher Education Amendments of 1998) shall ever be used for religious
    worship or a sectarian activity or for a school or department of
    divinity.

                       ``PART C--COST OF HIGHER EDUCATION

    ``SEC. 131. <<NOTE: 20 USC 1015.>> 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;

    [[Page 112 STAT. 1603]]

                              ``(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) <<NOTE: Deadline. Reports.>> 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

    [[Page 112 STAT. 1604]]

                    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) <<NOTE: Deadline.>> 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. <<NOTE: Reports. Deadline.>> 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.

     ``PART D--ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL
                                   ASSISTANCE

    ``SEC. 141. <<NOTE: 20 USC 1018.>>  PERFORMANCE-BASED ORGANIZATION FOR
                THE DELIVERY OF FEDERAL STUDENT FINANCIAL ASSISTANCE.

        ``(a) Establishment and Purpose.--
                ``(1) Establishment.--There is established in the Department
            a Performance-Based Organization (hereafter referred to

    [[Page 112 STAT. 1605]]

            as the `PBO') which shall be a discrete management unit
            responsible for managing the operational functions supporting
            the programs authorized under title IV of this Act, as specified
            in subsection (b).
                ``(2) Purposes.--The purposes of the PBO are--
                        ``(A) to improve service to students and other
                    participants in the student financial assistance
                    programs authorized under title IV, including making
                    those programs more understandable to students and their
                    parents;
                        ``(B) to reduce the costs of administering those
                    programs;
                        ``(C) to increase the accountability of the
                    officials responsible for administering the operational
                    aspects of these programs;
                        ``(D) to provide greater flexibility in the
                    management of the operational functions of the Federal
                    student financial assistance programs;
                        ``(E) to integrate the information systems
                    supporting the Federal student financial assistance
                    programs;
                        ``(F) to implement an open, common, integrated
                    system for the delivery of student financial assistance
                    under title IV; and
                        ``(G) to develop and maintain a student financial
                    assistance system that contains complete, accurate, and
                    timely data to ensure program integrity.

        ``(b) General Authority.--
                ``(1) Authority of secretary.--Notwithstanding any other
            provision of this part, the Secretary shall maintain
            responsibility for the development and promulgation of policy
            and regulations relating to the programs of student financial
            assistance under title IV. In the exercise of its functions, the
            PBO shall be subject to the direction of the Secretary. The
            Secretary shall--
                        ``(A) request the advice of, and work in cooperation
                    with, the Chief Operating Officer in developing
                    regulations, policies, administrative guidance, or
                    procedures affecting the information systems
                    administered by the PBO, and other functions performed
                    by the PBO;
                        ``(B) request cost estimates from the Chief
                    Operating Officer for system changes required by
                    specific policies proposed by the Secretary; and
                        ``(C) assist the Chief Operating Officer in
                    identifying goals for the administration and
                    modernization of the delivery system for student
                    financial assistance under title IV.
                ``(2) PBO functions.--Subject to paragraph (1), the PBO
            shall be responsible for administration of the information and
            financial systems that support student financial assistance
            programs authorized under this title, excluding the development
            of policy relating to such programs but including the following:
                        ``(A) The administrative, accounting, and financial
                    management functions of the delivery system for Federal
                    student assistance, including--
                              ``(i) the collection, processing and
                          transmission of applicant data to students,
                          institutions and authorized third parties, as
                          provided for in section 483;

    [[Page 112 STAT. 1606]]

                              ``(ii) design and technical specifications for
                          software development and systems supporting the
                          delivery of student financial assistance under
                          title IV;
                              ``(iii) all software and hardware acquisitions
                          and all information technology contracts related
                          to the delivery and management of student
                          financial assistance under title IV;
                              ``(iv) all aspects of contracting for the
                          information and financial systems supporting
                          student financial assistance programs under this
                          title; and
                              ``(v) providing all customer service,
                          training, and user support related to systems that
                          support those programs.
                        ``(B) Annual development of a budget for the
                    operations and services of the PBO, in consultation with
                    the Secretary, and for consideration and inclusion in
                    the Department's annual budget submission.
                ``(3) Additional functions.--The Secretary may allocate to
            the PBO such additional functions as the Secretary and the Chief
            Operating Officer determine are necessary or appropriate to
            achieve the purposes of the PBO.
                ``(4) Independence.--Subject to paragraph (1), in carrying
            out its functions, the PBO shall exercise independent control of
            its budget allocations and expenditures, personnel decisions and
            processes, procurements, and other administrative and management
            functions.
                ``(5) Audits and review.--The PBO shall be subject to the
            usual and customary Federal audit procedures and to review by
            the Inspector General of the Department.
                ``(6) Changes.--
                        ``(A) In general.--The Secretary and the Chief
                    Operating Officer shall consult concerning the effects
                    of policy, market, or other changes on the ability of
                    the PBO to achieve the goals and objectives established
                    in the performance plan described in subsection (c).
                        ``(B) Revisions to agreement.--The Secretary and the
                    Chief Operating Officer may revise the annual
                    performance agreement described in subsection (d)(4) in
                    light of policy, market, or other changes that occur
                    after the Secretary and the Chief Operating Officer
                    enter into the agreement.

        ``(c) Performance Plan and Report.--
                ``(1) Performance plan.--
                        ``(A) In general.--Each year, the Secretary and
                    Chief Operating Officer shall agree on, and make
                    available to the public, a performance plan for the PBO
                    for the succeeding 5 years that establishes measurable
                    goals and objectives for the organization.
                        ``(B) Consultation.--In developing the 5-year
                    performance plan and any revision to the plan, the
                    Secretary and the Chief Operating Officer shall consult
                    with students, institutions of higher education,
                    Congress, lenders, the Advisory Committee on Student
                    Financial Assistance, and other interested parties not
                    less than 30 days prior to the implementation of the
                    performance plan or revision.
                        ``(C) Areas.--The plan shall include a concise
                    statement of the goals for a modernized system for the
                    delivery of student financial assistance under title IV
                    and identify

    [[Page 112 STAT. 1607]]

                    action steps necessary to achieve such goals. The plan
                    shall address the PBO's responsibilities in the
                    following areas:
                              ``(i) Improving service.--Improving service to
                          students and other participants in student
                          financial aid programs authorized under this
                          title, including making those programs more
                          understandable to students and their parents.
                              ``(ii) Reducing costs.--Reducing the costs of
                          administering those programs.
                              ``(iii) Improvement and integration of support
                          systems.--Improving and integrating the
                          information and delivery systems that support
                          those programs.
                              ``(iv) Delivery and information system.--
                          Developing an open, common, and integrated
                          delivery and information system for programs
                          authorized under this title.
                              ``(v) Other areas.--Any other areas identified
                          by the Secretary.
                ``(2) Annual report.--Each year, the Chief Operating
            Officer shall prepare and submit to Congress, through the
            Secretary, an annual report on the performance of the PBO,
            including an evaluation of the extent to which the PBO met the
            goals and objectives contained in the 5-year performance plan
            described in paragraph (1) for the preceding year. The annual
            report shall include the following:
                        ``(A) An independent financial audit of the
                    expenditures of both the PBO and programs administered
                    by the PBO.
                        ``(B) Financial and performance requirements
                    applicable to the PBO under the Chief Financial Officer
                    Act of 1990 and the Government Performance and Results
                    Act of 1993.
                        ``(C) The results achieved by the PBO during the
                    year relative to the goals established in the
                    organization's performance plan.
                        ``(D) The evaluation rating of the performance of
                    the Chief Operating Officer and senior managers under
                    subsections (d)(4) and (e)(2), including the amounts of
                    bonus compensation awarded to these individuals.
                        ``(E) Recommendations for legislative and regulatory
                    changes to improve service to students and their
                    families, and to improve program efficiency and
                    integrity.
                        ``(F) Other such information as the Director of the
                    Office of Management and Budget shall prescribe for
                    performance based organizations.
                ``(3) Consultation with stakeholders.--The Chief Operating
            Officer, in preparing the report described in paragraph (2),
            shall establish appropriate means to consult with borrowers,
            institutions, lenders, guaranty agencies, secondary markets, and
            others involved in the delivery system of student aid under this
            title--
                        ``(A) regarding the degree of satisfaction with the
                    delivery system; and
                        ``(B) to seek suggestions on means to improve the
                    delivery system.

        ``(d) Chief Operating Officer.--

    [[Page 112 STAT. 1608]]

                ``(1) Appointment.--The management of the PBO shall be
            vested in a Chief Operating Officer who shall be appointed by
            the Secretary to a term of not less than 3 and not more than 5
            years, and compensated without regard to chapters 33, 51, and 53
            of title 5, United States Code. <<NOTE: Deadline.>> The
            Secretary shall appoint the Chief Operating Officer within 6
            months after the date of enactment of the Higher Education
            Amendments of 1998. The appointment shall be made on the basis
            of demonstrated management ability and expertise in information
            technology, including experience with financial systems, and
            without regard to political affiliation or activity.
                ``(2) Reappointment.--The Secretary may reappoint the Chief
            Operating Officer to subsequent terms of not less than 3 and not
            more than 5 years, so long as the performance of the Chief
            Operating Officer, as set forth in the performance agreement
            described in paragraph (4), is satisfactory.
                ``(3) Removal.--The Chief Operating Officer may be removed
            by--
                        ``(A) the President; or
                        ``(B) the Secretary, for misconduct or failure to
                    meet performance goals set forth in the performance
                    agreement in paragraph (4).
            The President or Secretary shall communicate the reasons for any
            such removal to the appropriate committees of Congress.
                ``(4) Performance agreement.--
                        ``(A) In general.--Each year, the Secretary and the
                    Chief Operating Officer shall enter into an annual
                    performance agreement, that shall set forth measurable
                    organization and individual goals for the Chief
                    Operating Officer.
                        ``(B) <<NOTE: Public information.>> Transmittal.--
                    The final agreement, and any revision to the final
                    agreement, shall be transmitted to the Committee on
                    Education and the Workforce of the House of
                    Representatives and the Committee on Labor and Human
                    Resources of the Senate, and made publicly available.
                ``(5) Compensation.--
                        ``(A) In general.--The Chief Operating Officer is
                    authorized to be paid at an annual rate of basic pay not
                    to exceed the maximum rate of basic pay for the Senior
                    Executive Service under section 5382 of title 5, United
                    States Code, including any applicable locality-based
                    comparability payment that may be authorized under
                    section 5304(h)(2)(B) of such title. The compensation of
                    the Chief Operating Officer shall be considered for
                    purposes of section 207(c)(2)(A) of title 18, United
                    States Code, to be the equivalent of that described
                    under clause (ii) of section 207(c)(2)(A) of such title.
                        ``(B) Bonus.--In addition, the Chief Operating
                    Officer may receive a bonus in an amount that does not
                    exceed 50 percent of such annual rate of basic pay,
                    based upon the Secretary's evaluation of the Chief
                    Operating Officer's performance in relation to the goals
                    set forth in the performance agreement described in
                    paragraph (2).
                        ``(C) Payment.--Payment of a bonus under this
                    subparagraph (B) may be made to the Chief Operating
                    Officer only to the extent that such payment does not

    [[Page 112 STAT. 1609]]

                    cause the Chief Operating Officer's total aggregate
                    compensation in a calendar year to equal or exceed the
                    amount of the President's salary under section 102 of
                    title 3, United States Code.

        ``(e) Senior Management.--
                ``(1) Appointment.--
                        ``(A) In general.--The Chief Operating Officer may
                    appoint such senior managers as that officer determines
                    necessary without regard to the provisions of title 5,
                    United States Code, governing appointments in the
                    competitive service.
                        ``(B) Compensation.--The senior managers described
                    in subparagraph (A) may be paid without regard to the
                    provisions of chapter 51 and subchapter III of chapter
                    53 of such title relating to classification and General
                    Schedule pay rates.
                ``(2) Performance agreement.--Each year, the Chief Operating
            Officer and each senior manager appointed under this subsection
            shall enter into an annual performance agreement that sets forth
            measurable organization and individual goals. The agreement
            shall be subject to review and renegotiation at the end of each
            term.
                ``(3) Compensation.--
                        ``(A) In general.--A senior manager appointed under
                    this subsection may be paid at an annual rate of basic
                    pay of not more than the maximum rate of basic pay for
                    the Senior Executive Service under section 5382 of title
                    5, United States Code, including any applicable
                    locality-based comparability payment that may be
                    authorized under section 5304(h)(2)(C) of such title.
                    The compensation of a senior manager shall be considered
                    for purposes of section 207(c)(2)(A) of title 18, United
                    States Code, to be the equivalent of that described
                    under clause (ii) of section 207(c)(2)(A) of such title.
                        ``(B) Bonus.--In addition, a senior manager may
                    receive a bonus in an amount such that the manager's
                    total annual compensation does not exceed 125 percent of
                    the maximum rate of basic pay for the Senior Executive
                    Service, including any applicable locality-based
                    comparability payment, based upon the Chief Operating
                    Officer's evaluation of the manager's performance in
                    relation to the goals set forth in the performance
                    agreement described in paragraph (2).
                ``(4) Removal.--A senior manager shall be removable by the
            Chief Operating Officer, or by the Secretary if the position of
            Chief Operating Officer is vacant.

        ``(f ) Student Loan Ombudsman.--
                ``(1) Appointment.--The Chief Operating Officer, in
            consultation with the Secretary, shall appoint a Student Loan
            Ombudsman to provide timely assistance to borrowers of loans
            made, insured, or guaranteed under title IV by performing the
            functions described in paragraph (3).
                ``(2) Public information.--The Chief Operating Officer shall
            disseminate information about the availability and functions of
            the Ombudsman to borrowers and potential borrowers, as well as
            institutions of higher education, lenders, guaranty

    [[Page 112 STAT. 1610]]

            agencies, loan servicers, and other participants in those
            student loan programs.
                ``(3) <<NOTE: Regulations.>> Functions of ombudsman.--The
            Ombudsman shall--
                        ``(A) in accordance with regulations of the
                    Secretary, receive, review, and attempt to resolve
                    informally complaints from borrowers of loans described
                    in paragraph (1), including, as appropriate, attempts to
                    resolve such complaints within the Department of
                    Education and with institutions of higher education,
                    lenders, guaranty agencies, loan servicers, and other
                    participants in the loan programs described in paragraph
                    (1)(A); and
                        ``(B) <<NOTE: Records.>> compile and analyze data on
                    borrower complaints and make appropriate
                    recommendations.
                ``(4) Report.--Each year, the Ombudsman shall submit a
            report to the Chief Operating Officer, for inclusion in the
            annual report under subsection (c)(2), that describes the
            activities, and evaluates the effectiveness of the Ombudsman
            during the preceding year.

        ``(g) Personnel Flexibility.--
                ``(1) Personnel ceilings.--The PBO shall not be subject to
            any ceiling relating to the number or grade of employees.
                ``(2) Administrative flexibility.--The Chief Operating
            Officer shall work with the Office of Personnel Management to
            develop and implement personnel flexibilities in staffing,
            classification, and pay that meet the needs of the PBO, subject
            to compliance with title 5, United States Code.
                ``(3) Excepted service.--The Chief Operating Officer may
            appoint, without regard to the provisions of title 5, United
            States Code, governing appointments in the competitive service,
            not more than 25 technical and professional employees to
            administer the functions of the PBO. These employees may be paid
            without regard to the provisions of chapter 51 and subchapter
            III of chapter 53 of such title relating to classification and
            General Schedule pay rates.

        ``(h) Establishment of a Fair and Equitable System for Measuring
    Staff Performance.--The PBO shall establish an annual performance
    management system, subject to compliance with title 5, United States
    Code and consistent with applicable provisions of law and regulations,
    which strengthens the organizational effectiveness of the PBO by
    providing for establishing goals or objectives for individual, group, or
    organizational performance (or any combination thereof), consistent with
    the performance plan of the PBO and its performance planning procedures,
    including those established under the Government Performance and Results
    Act of 1993, and communicating such goals or objectives to employees.
        ``(i) <<NOTE: Deadline.>> Report.--The Secretary and the Chief
    Operating Officer, not later than 180 days after the date of enactment
    of the Higher Education Amendments of 1998, shall report to Congress on
    the proposed budget and sources of funding for the operation of the PBO.

        ``( j) Authorization of Appropriations.--The Secretary shall
    allocate from funds made available under section 458 such funds as are
    appropriate to the functions assumed by the PBO. In addition, there are
    authorized to be appropriated such sums as may be necessary to carry out
    the purposes of this part, including transition costs.

    [[Page 112 STAT. 1611]]

    ``SEC. 142. PROCUREMENT FLEXIBILITY. <<NOTE: 20 USC 1018a.>>

        ``(a) Procurement Authority.--Subject to the authority of the
    Secretary, the Chief Operating Officer of a PBO may exercise the
    authority of the Secretary to procure property and services in the
    performance of functions managed by the PBO. For the purposes of this
    section, the term `PBO' includes the Chief Operating Officer of the PBO
    and any employee of the PBO exercising procurement authority under the
    preceding sentence.
        ``(b) In General.--Except as provided in this section, the PBO shall
    abide by all applicable Federal procurement laws and regulations when
    procuring property and services. The PBO shall--
                ``(1) <<NOTE: Contracts.>> enter into contracts for
            information systems supporting the programs authorized under
            title IV to carry out the functions set forth in section
            141(b)(2); and
                ``(2) obtain the services of experts and consultants without
            regard to section 3109 of title 5, United States Code and set
            pay in accordance with such section.

        ``(c) Service Contracts.--
                ``(1) Performance-based servicing contracts.--The Chief
            Operating Officer shall, to the extent practicable, maximize the
            use of performance-based servicing contracts, consistent with
            guidelines for such contracts published by the Office of Federal
            Procurement Policy, to achieve cost savings and improve service.
                ``(2) Fee for service arrangements.--The Chief Operating
            Officer shall, when appropriate and consistent with the purposes
            of the PBO, acquire services related to the title IV delivery
            system from any entity that has the capability and capacity to
            meet the requirements for the system. The Chief Operating
            Officer is authorized to pay fees that are equivalent to those
            paid by other entities to an organization that provides an
            information system or service that meets the requirements of the
            PBO, as determined by the Chief Operating Officer.

        ``(d) Two-Phase Source-Selection Procedures.--
                ``(1) In general.--The PBO may use a two-phase process for
            selecting a source for a procurement of property or services.
                ``(2) First phase.--The procedures for the first phase of
            the process for a procurement are as follows:
                        ``(A) Publication of notice.--The contracting
                    officer for the procurement shall publish a notice of
                    the procurement in accordance with section 18 of the
                    Office of Federal Procurement Policy Act (41 U.S.C. 416)
                    and subsections (e), (f ), and (g) of section 8 of the
                    Small Business Act (15 U.S.C. 637), except that the
                    notice shall include only the following:
                              ``(i) A general description of the scope or
                          purpose of the procurement that provides
                          sufficient information on the scope or purpose for
                          sources to make informed business decisions
                          regarding whether to participate in the
                          procurement.
                              ``(ii) A description of the basis on which
                          potential sources are to be selected to submit
                          offers in the second phase.
                              ``(iii) A description of the information that
                          is to be required under subparagraph (B).
                              ``(iv) Any additional information that the
                          contracting officer determines appropriate.

    [[Page 112 STAT. 1612]]

                        ``(B) Information submitted by offerors.--Each
                    offeror for the procurement shall submit basic
                    information, such as information on the offeror's
                    qualifications, the proposed conceptual approach, costs
                    likely to be associated with the proposed conceptual
                    approach, and past performance of the offeror on Federal
                    Government contracts, together with any additional
                    information that is requested by the contracting
                    officer.
                        ``(C) Selection for second phase.--The contracting
                    officer shall select the offerors that are to be
                    eligible to participate in the second phase of the
                    process. The contracting officer shall limit the number
                    of the selected offerors to the number of sources that
                    the contracting officer determines is appropriate and in
                    the best interests of the Federal Government.
                ``(3) Second phase.--
                        ``(A) In general.--The contracting officer shall
                    conduct the second phase of the source selection process
                    in accordance with sections 303A and 303B of the Federal
                    Property and Administrative Services Act of 1949 (41
                    U.S.C. 253a and 253b).
                        ``(B) Eligible participants.--Only the sources
                    selected in the first phase of the process shall be
                    eligible to participate in the second phase.
                        ``(C) Single or multiple procurements.--The second
                    phase may include a single procurement or multiple
                    procurements within the scope, or for the purpose,
                    described in the notice pursuant to paragraph (2)(A).
                ``(4) Procedures considered competitive.--The procedures
            used for selecting a source for a procurement under this
            subsection shall be considered competitive procedures for all
            purposes.

        ``(e) Use of Simplified Procedures for Commercial Items.--Whenever
    the PBO anticipates that commercial items will be offered for a
    procurement, the PBO may use (consistent with the special rules for
    commercial items) the special simplified procedures for the procurement
    without regard to--
                ``(1) any dollar limitation otherwise applicable to the use
            of those procedures; and
                ``(2) the expiration of the authority to use special
            simplified procedures under section 4202(e) of the Clinger-Cohen
            Act of 1996 (110 Stat. 654; 10 U.S.C. 2304 note).

        ``(f ) Flexible Wait Periods and Deadlines for Submission of Offers
    of Noncommercial Items.--
                ``(1) Authority.--In carrying out a procurement, the PBO
            may--
                        ``(A) apply a shorter waiting period for the
                    issuance of a solicitation after the publication of a
                    notice under section 18 of the Office of Federal
                    Procurement Policy Act (41 U.S.C. 416) than is required
                    under subsection (a)(3)(A) of such section; and
                        ``(B) notwithstanding subsection (a)(3) of such
                    section, establish any deadline for the submission of
                    bids or proposals that affords potential offerors a
                    reasonable opportunity to respond to the solicitation.
                ``(2) Inapplicability to commercial items.--Paragraph (1)
            does not apply to a procurement of a commercial item.

    [[Page 112 STAT. 1613]]

                ``(3) Consistency with applicable international
            agreements.--If an international agreement is applicable to the
            procurement, any exercise of authority under paragraph (1) shall
            be consistent with the international agreement.

        ``(g) Modular Contracting.--
                ``(1) In general.--The PBO may satisfy the requirements of
            the PBO for a system incrementally by carrying out successive
            procurements of modules of the system. In doing so, the PBO may
            use procedures authorized under this subsection to procure any
            such module after the first module.
                ``(2) Utility requirement.--A module may not be procured for
            a system under this subsection unless the module is useful
            independently of the other modules or useful in combination with
            another module previously procured for the system.
                ``(3) Conditions for use of authority.--The PBO may use
            procedures authorized under paragraph (4) for the procurement of
            an additional module for a system if--
                        ``(A) competitive procedures were used for awarding
                    the contract for the procurement of the first module for
                    the system; and
                        ``(B) the solicitation for the first module
                    included--
                              ``(i) a general description of the entire
                          system that was sufficient to provide potential
                          offerors with reasonable notice of the general
                          scope of future modules;
                              ``(ii) other information sufficient for
                          potential offerors to make informed business
                          judgments regarding whether to submit offers for
                          the contract for the first module; and
                              ``(iii) a statement that procedures authorized
                          under this subsection could be used for awarding
                          subsequent contracts for the procurement of
                          additional modules for the system.
                ``(4) Procedures.--If the procurement of the first module
            for a system meets the requirements set forth in paragraph (3),
            the PBO may award a contract for the procurement of an
            additional module for the system using any of the following
            procedures:
                        ``(A) Sole source.--Award of the contract on a sole-
                    source basis to a contractor who was awarded a contract
                    for a module previously procured for the system under
                    competitive procedures or procedures authorized under
                    subparagraph (B).
                        ``(B) Adequate competition.--Award of the contract
                    on the basis of offers made by--
                              ``(i) a contractor who was awarded a contract
                          for a module previously procured for the system
                          after having been selected for award of the
                          contract under this subparagraph or other
                          competitive procedures; and
                              ``(ii) at least one other offeror that
                          submitted an offer for a module previously
                          procured for the system and is expected, on the
                          basis of the offer for the previously procured
                          module, to submit a competitive offer for the
                          additional module.
                        ``(C) Other.--Award of the contract under any other
                    procedure authorized by law.
                ``(5) Notice requirement.--

    [[Page 112 STAT. 1614]]

                        ``(A) Publication.--Not <<NOTE: Deadline.>>  less
                    than 30 days before issuing a solicitation for offers
                    for a contract for a module for a system under
                    procedures authorized under subparagraph (A) or (B) of
                    paragraph (4), the PBO shall publish in the Commerce
                    Business Daily a notice of the intent to use such
                    procedures to enter into the contract.
                        ``(B) Exception.--Publication of a notice is not
                    required under this paragraph with respect to a use of
                    procedures authorized under paragraph (4) if the
                    contractor referred to in that subparagraph (who is to
                    be solicited to submit an offer) has previously provided
                    a module for the system under a contract that contained
                    cost, schedule, and performance goals and the contractor
                    met those goals.
                        ``(C) Content of notice.--A notice published under
                    subparagraph (A) with respect to a use of procedures
                    described in paragraph (4) shall contain the information
                    required under section 18(b) of the Office of Federal
                    Procurement Policy Act (41 U.S.C. 416(b)), other than
                    paragraph (4) of such section, and shall invite the
                    submission of any assertion that the use of the
                    procedures for the procurement involved is not in the
                    best interest of the Federal Government together with
                    information supporting the assertion.
                ``(6) Documentation.--The basis for an award of a contract
            under this subsection shall be documented. However, a
            justification pursuant to section 303(f ) of the Federal
            Property and Administrative Services Act of 1949 (41 U.S.C.
            253(f )) or section 8(h) of the Small Business Act (15 U.S.C.
            637(h)) is not required.
                ``(7) Simplified source-selection procedures.--The PBO may
            award a contract under any other simplified procedures
            prescribed by the PBO for the selection of sources for the
            procurement of modules for a system, after the first module,
            that are not to be procured under a contract awarded on a sole-
            source basis.

        ``(h) Use of Simplified Procedures for Small Business Set-Asides for
    Services Other Than Commercial Items.--
                ``(1) Authority.--The PBO may use special simplified
            procedures for a procurement of services that are not commercial
            items if--
                        ``(A) the procurement is in an amount not greater
                    than $1,000,000;
                        ``(B) the procurement is conducted as a small
                    business set-aside pursuant to section 15(a) of the
                    Small Business Act (15 U.S.C. 644(a)); and
                        ``(C) the price charged for supplies associated with
                    the services procured are items of supply expected to be
                    less than 20 percent of the total contract price.
                ``(2) Inapplicability to certain procurements.--The
            authority set forth in paragraph (1) may not be used for--
                        ``(A) an award of a contract on a sole-source basis;
                    or
                        ``(B) a contract for construction.

        ``(i) Guidance for Use of Authority.--
                ``(1) Issuance by pbo.--The Chief Operating Officer of the
            PBO, in consultation with the Administrator for Federal

    [[Page 112 STAT. 1615]]

            Procurement Policy, shall issue guidance for the use by PBO
            personnel of the authority provided in this section.
                ``(2) Guidance from ofpp.--As part of the consultation
            required under paragraph (1), the Administrator for Federal
            Procurement Policy shall provide the PBO with guidance that is
            designed to ensure, to the maximum extent practicable, that the
            authority under this section is exercised by the PBO in a manner
            that is consistent with the exercise of the authority by the
            heads of the other performance-based organizations.
                ``(3) Compliance with ofpp guidance.--The head of the PBO
            shall ensure that the procurements of the PBO under this section
            are carried out in a manner that is consistent with the guidance
            provided for the PBO under paragraph (2).

        ``( j) Limitation on Multiagency Contracting.--No department or
    agency of the Federal Government may purchase property or services under
    contracts entered into or administered by a PBO under this section
    unless the purchase is approved in advance by the senior procurement
    official of that department or agency who is responsible for purchasing
    by the department or agency.
        ``(k) Laws Not Affected.--Nothing in this section shall be construed
    to waive laws for the enforcement of civil rights or for the
    establishment and enforcement of labor standards that are applicable to
    contracts of the Federal Government.
        ``(l) Definitions.--In this section:
                ``(1) Commercial item.--The term `commercial item' has the
            meaning given the term in section 4(12) of the Office of Federal
            Procurement Policy Act (41 U.S.C. 403(12)).
                ``(2) Competitive procedures.--The term `competitive
            procedures' has the meaning given the term in section 309(b) of
            the Federal Property and Administrative Services Act of 1949 (41
            U.S.C. 259(b)).
                ``(3) Sole-source basis.--The term `sole-source basis', with
            respect to an award of a contract, means that the contract is
            awarded to a source after soliciting an offer or offers from,
            and negotiating with, only that source.
                ``(4) Special rules for commercial items.--The term `special
            rules for commercial items' means the regulations set forth in
            the Federal Acquisition Regulation pursuant to section 303(g)(1)
            of the Federal Property and Administrative Services Act of 1949
            (41 U.S.C. 253(g)(1)) and section 31 of the Office of Federal
            Procurement Policy Act (41 U.S.C. 427).
                ``(5) Special simplified procedures.--The term `special
            simplified procedures' means the procedures applicable to
            purchases of property and services for amounts not greater than
            the simplified acquisition threshold that are set forth in the
            Federal Acquisition Regulation pursuant to section 303(g)(1)(B)
            of the Federal Property and Administrative Services Act of 1949
            (41 U.S.C. 253(g)(1)(A)) and section 31(a)(1) of the Office of
            Federal Procurement Policy Act (41 U.S.C. 427(a)(1)).

    ``SEC. 143. <<NOTE: 20 USC 1018b.>>  ADMINISTRATIVE SIMPLIFICATION OF
                STUDENT AID DELIVERY.

        ``(a) In General.--In order to improve the efficiency and
    effectiveness of the student aid delivery system, the Secretary and the
    Chief Operating Officer shall encourage and participate in the
    establishment of voluntary consensus standards and requirements

    [[Page 112 STAT. 1616]]

    for the electronic transmission of information necessary for the
    administration of programs under title IV.
        ``(b) Participation in Standard Setting Organizations.--
                ``(1) The Chief Operating Officer shall participate in the
            activities of standard setting organizations in carrying out the
            provisions of this section.
                ``(2) The Chief Operating Officer shall encourage higher
            education groups seeking to develop common forms, standards, and
            procedures in support of the delivery of Federal student
            financial assistance to conduct these activities within a
            standard setting organization.
                ``(3) The Chief Operating Officer may pay necessary dues and
            fees associated with participating in standard setting
            organizations pursuant to this subsection.

        ``(c) Adoption of Voluntary Consensus Standards.--Except with
    respect to the common financial reporting form under section 483(a), the
    Secretary shall consider adopting voluntary consensus standards agreed
    to by the organization described in subsection (b) for transactions
    required under title IV, and common data elements for such transactions,
    to enable information to be exchanged electronically between systems
    administered by the Department and among participants in the Federal
    student aid delivery system.
        ``(d) Use of Clearinghouses.--Nothing in this section shall restrict
    the ability of participating institutions and lenders from using a
    clearinghouse or servicer to comply with the standards for the exchange
    of information established under this section.
        ``(e) Data Security.--Any entity that maintains or transmits
    information under a transaction covered by this section shall maintain
    reasonable and appropriate administrative, technical, and physical
    safeguards--
                ``(1) to ensure the integrity and confidentiality of the
            information; and
                ``(2) to protect against any reasonably anticipated security
            threats, or unauthorized uses or disclosures of the information.

        ``(f ) Definitions.--
                ``(1) Clearinghouse.--The term `clearinghouse' means a
            public or private entity that processes or facilitates the
            processing of nonstandard data elements into data elements
            conforming to standards adopted under this section.
                ``(2) Standard setting organization.--The term `standard
            setting organization' means an organization that--
                        ``(A) is accredited by the American National
                    Standards Institute;
                        ``(B) develops standards for information
                    transactions, data elements, or any other standard that
                    is necessary to, or will facilitate, the implementation
                    of this section; and
                        ``(C) is open to the participation of the various
                    entities engaged in the delivery of Federal student
                    financial assistance.
                ``(3) Voluntary consensus standard.--The term `voluntary
            consensus standard' means a standard developed or used by a
            standard setting organization described in paragraph (2).''.

        (b) Repeal of Old General Provisions.--Title XII (20 U.S.C. 1141 et
    seq.) is repealed.

    [[Page 112 STAT. 1617]]

        (c) Repeal of Title IV Definition.--Section 481 (20 U.S.C. 1088) is
    amended--
                (1) by striking subsections (a), (b), and (c); and
                (2) by redesignating subsections (d) through (f ) as
            subsections (a) through (c), respectively.

    SEC. 102. CONFORMING AMENDMENTS.

        (a) Conforming Amendments Correcting References to Section 1201.--
                (1) Agriculture.--
                        (A) Student internship programs.--Section 922 of the
                    Federal Agriculture Improvement and Reform Act of 1996
                    (7 U.S.C. 2279c) is amended--
                              (i) in subsection (a)(1)(B)--
                                        (I) by striking ``1201'' and
                                    inserting ``101''; and
                                        (II) by striking ``(20 U.S.C.
                                    1141)''; and
                              (ii) in subsection (b)(1)--
                                        (I) by striking ``1201'' and
                                    inserting ``101''; and
                                        (II) by striking ``(20 U.S.C.
                                    1141)''.
                        (B) Agricultural sciences education.--Section 1417(
                    j)(1)(A) of the National Agricultural Research,
                    Extension, and Teaching Policy Act of 1977 (7 U.S.C.
                    3152( j)(1)(A)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                (2) Armed forces.--
                        (A) Science and mathematics education improvement
                    program.--Section 2193(c)(1) of title 10, United States
                    Code, is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (B) Support of science, mathematics, and engineering
                    education.--Section 2199(2) of title 10, United States
                    Code, is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (C) Allowable costs under defense contracts.--
                    Section 841(c)(2) of the National Defense Authorization
                    Act for fiscal year 1994 (10 U.S.C. 2324 note) is
                    amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (D) Environmental restoration institutional grants
                    for training dislocated defense workers and young
                    adults.--Section 1333(i)(3) of the National Defense
                    Authorization Act for fiscal year 1994 (10 U.S.C. 2701
                    note) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (E) Environmental education opportunities program.--
                    Section 1334(k)(3) of the National Defense Authorization
                    Act for fiscal year 1994 (10 U.S.C. 2701 note) is
                    amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (F) Environmental scholarship and fellowship
                    programs.--Section 4451(b)(1) of the National Defense

    [[Page 112 STAT. 1618]]

                    Authorization Act for 1993 (10 U.S.C. 2701 note) is
                    amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                (3) Application of antitrust laws to award of need-based
            educational aid.--Section 568(c)(3) of the Improving America's
            Schools Act of 1994 (15 U.S.C. 1 note) is amended--
                        (A) by striking ``1201(a)'' and inserting ``101'';
                    and
                        (B) by striking ``(20 U.S.C. 1141(a))''.
                (4) Omnibus parks and public lands management act of 1996.--
            Section 1007(c)(5) of the Omnibus Parks and Public Lands
            Management Act of 1996 (16 U.S.C. 698u-5) is amended by striking
            ``1201(a) of the Higher Education Act of 1965 (20 U.S.C.
            1141(a))'' and inserting ``101 of the Higher Education Act of
            1965''.
                (5) Restrictions on former officers, employees, and elected
            officials of the executive and legislative branches.--Section
            207( j)(2)(B) of title 18, United States Code, is amended by
            striking ``1201(a)'' and inserting ``101''.
                (6) Education.--
                        (A) Higher education amendments of 1992.--Section
                    1(c) of the Higher Education Amendments of 1992 (20
                    U.S.C. 1001 note) is amended by striking ``1201'' and
                    inserting ``101''.
                        (B) Treatment of branches.--Section 498( j)(2) of
                    the Higher Education Act of 1965 (20 U.S.C. 1099c(
                    j)(2)) is amended by striking ``1201(a)(2)'' and
                    inserting ``101(a)(2)''.
                        (C) Disclosure requirements.--Section
                    429(d)(2)(B)(ii) of the General Education Provisions Act
                    (20 U.S.C. 1228c(d)(2)(B)(ii)) is amended by striking
                    ``1201(a)'' and inserting ``101''.
                        (D) Harry s. truman scholarships.--Section 3(4) of
                    the Harry S. Truman Memorial Scholarship Act (20 U.S.C.
                    2002(4)) is amended by striking ``1201(a)'' and
                    inserting ``101''.
                        (E) Tech-prep education.--Section 347(2)(A) of the
                    Carl D. Perkins Vocational and Applied Technology
                    Education Act (20 U.S.C. 2394e(2)(A)) is amended by
                    striking ``1201(a)'' and inserting ``101''.
                        (F) Education for economic security.--Section 3(6)
                    of the Education for Economic Security Act (20 U.S.C.
                    3902(6)) is amended by striking ``1201(a)'' and
                    inserting ``101''.
                        (G) James madison memorial fellowships.--Section 815
                    of the James Madison Memorial Fellowship Act (20 U.S.C.
                    4514) is amended--
                              (i) in paragraph (3), by striking ``1201(a)''
                          and inserting ``101''; and
                              (ii) in paragraph (4), by striking ``1201(d)
                          of the Higher Education Act of 1965'' and
                          inserting ``14101 of the Elementary and Secondary
                          Education Act of 1965''.
                        (H) Barry goldwater scholarships.--Section 1403(4)
                    of the Barry Goldwater Scholarship and Excellence in
                    Education Act (20 U.S.C. 4702(4)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.

    [[Page 112 STAT. 1619]]

                        (I) Morris k. udall scholarships.--Section 4(6) of
                    the Morris K. Udall Scholarship and Excellence in
                    National Environmental and Native American Public Policy
                    Act of 1992 (20 U.S.C. 5602(6)) is amended by striking
                    ``1201(a)'' and inserting ``101''.
                        (J) Bilingual education, and language enhancement
                    and acquisition.--Section 7501(4) of the Elementary and
                    Secondary Education Act of 1965 (20 U.S.C. 7601(4)) is
                    amended by striking ``1201(a)'' and inserting ``101''.
                        (K) General definitions.--Section 14101(17) of the
                    Elementary and Secondary Education Act of 1965 (20
                    U.S.C. 8801(17)) is amended by striking ``1201(a)'' and
                    inserting ``101''.
                        (L) National education statistics.--Section
                    402(c)(3) of the National Education Statistics Act of
                    1994 (20 U.S.C. 9001(c)(3)) is amended by striking
                    ``1201(a)'' and inserting ``101''.
                (7) Foreign relations.--
                        (A) Environment and sustainable development exchange
                    program.--Section 240(d) of the Foreign Relations
                    Authorization Act, Fiscal Years 1994 and 1995 (22 U.S.C.
                    2452 note) is amended by striking ``1201(a)'' and
                    inserting ``101''.
                        (B) Samantha smith memorial exchange program.--
                    Section 112(a)(8) of the Mutual Educational and Cultural
                    Exchange Act of 1961 (22 U.S.C. 2460(a)(8)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (C) Soviet-eastern european training.--Section
                    803(1) of the Soviet-Eastern European Research and
                    Training Act of 1983 (22 U.S.C. 4502(1)) is amended by
                    striking ``1201(a)'' and inserting ``101''.
                        (D) Developing country scholarships.--Section 603(d)
                    of the Foreign Relations Authorization Act, Fiscal Years
                    1986 and 1987 (22 U.S.C. 4703(d)) is amended by striking
                    ``1201(a)'' and inserting ``101''.
                (8) Indians.--
                        (A) Snyder act.--The last paragraph of section 410
                    of the Act entitled ``An Act authorizing appropriations
                    and expenditures for the administration of Indian
                    Affairs, and for other purposes'', approved November 2,
                    1921 (25 U.S.C. 13) (commonly known as the Snyder Act)
                    is amended by striking ``1201'' and inserting ``101''.
                        (B) Tribally controlled community college
                    assistance.--Section 2(a)(5) of the Tribally Controlled
                    Community College Assistance Act (25 U.S.C. 1801(a)(5))
                    is amended by striking ``1201(a)'' and inserting
                    ``101''.
                        (C) Construction of new facilities.--Section
                    113(b)(2) of the Tribally Controlled Community College
                    Assistance Act (25 U.S.C. 1813(b)(2)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (D) American indian teacher training.--Section
                    1371(a)(1)(B) of the Higher Education Amendments of 1992
                    (25 U.S.C. 3371(a)(1)(B)) is amended by striking
                    ``1201(a)'' and inserting ``101''.
                (9) Labor.--

    [[Page 112 STAT. 1620]]

                        (A) Rehabilitation definitions.--Section 6(23) of
                    the Rehabilitation Act of 1973 (29 U.S.C. 705(23)) is
                    amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (B) Technology related assistance for individuals
                    with disabilities act of 1988.--Section 3(8) of the
                    Technology Related Assistance for Individuals with
                    Disabilities Act of 1988 (29 U.S.C. 2202(8)) is amended
                    by striking ``1201(a) of the Higher Education Act of
                    1965 (20 U.S.C. 1141(a))'' and inserting ``101 of the
                    Higher Education Act of 1965''.
                (10) Surface mining control.--Section 701(32) of the Surface
            Mining Control and Reclamation Act of 1977 (30 U.S.C. 1291(32))
            is amended by striking ``1201(a)'' and inserting ``101''.
                (11) Pollution prevention.--Section 112(a)(1) of the Federal
            Water Pollution Control Act (33 U.S.C. 1262(a)(1)) is amended by
            striking ``1201'' and inserting ``101''.
                (12) Postal service.--Section 3626(b)(3) of title 39, United
            States Code, is amended--
                        (A) by striking ``1201(a)'' and inserting ``101'';
                    and
                        (B) by striking ``(20 U.S.C. 1141(a))''.
                (13) Public health and welfare.--
                        (A) Public health service act.--Section 705(a)(2)(C)
                    of the Public Health Service Act (42 U.S.C.
                    292d(a)(2)(C)) is amended by striking ``section 481(a)''
                    and inserting ``section 102(a)''.
                        (B) Scientific and technical education.--Section
                    3(g) of the Scientific and Advanced-Technology Act of
                    1992 (42 U.S.C. 1862i(g)) is amended--
                              (i) in paragraph (2)--
                                        (I) by striking ``1201(a)'' and
                                    inserting ``101''; and
                                        (II) by striking ``(20 U.S.C.
                                    1141(a))''; and
                              (ii) in paragraph (3)--
                                        (I) by striking ``1201(a)'' and
                                    inserting ``101''; and
                                        (II) by striking ``(20 U.S.C.
                                    1141(a))''.
                        (C) Older americans.--Section 102(32) of the Older
                    Americans Act of 1965 (42 U.S.C. 3002(32)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (D) Justice system improvement.--Section 901(17) of
                    the Omnibus Crime Control and Safe Streets Act of 1968
                    (42 U.S.C. 3791(17)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (E) Energy technology commercialization services
                    program.--Section 362(f )(5)(A) of the Energy Policy and
                    Conservation Act (42 U.S.C. 6322(f )(5)(A)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (F) Environmental restoration and waste
                    management.--Section 3132(b)(1) of the National Defense
                    Authorization Act for Fiscal Years 1992 and 1993 (42
                    U.S.C. 7274e(b)(1)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.

    [[Page 112 STAT. 1621]]

                        (G) Head start.--Section 649(c)(3) of the Head Start
                    Act (42 U.S.C. 9844(c)(3)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (H) State dependent care development grants.--
                    Section 670G(5) of the Child Care and Development Block
                    Grant Act of 1990 (42 U.S.C. 9877(5)) is amended by
                    striking ``1201(a)'' and inserting ``101''.
                        (I) Instructional activities for low-income youth.--
                    The matter preceding subparagraph (A) of section
                    682(b)(1) of the Community Services Block Grant Act (42
                    U.S.C. 9910c(b)(1)) is amended by striking ``1201(a)''
                    and inserting ``101''.
                        (J) Drug abuse education.--Section 3601(7) of the
                    Anti-Drug Abuse Act of 1988 (42 U.S.C. 11851(7)) is
                    amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (K) National and community service.--Section 101(13)
                    of the National and Community Service Act of 1990 (42
                    U.S.C. 12511(13)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (L) Civilian community corps.--Section 166(6) of the
                    National and Community Service Act of 1990 (42 U.S.C.
                    12626(6)) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (M) Cranston-gonzalez national affordable housing
                    act.--Section 457(9) of the Cranston-Gonzalez National
                    Affordable Housing Act (42 U.S.C. 12899f(9)) is amended
                    by striking ``1201(a)'' and inserting ``101''.
                        (N) Community schools youth services and supervision
                    grant program.--The definition of public school in
                    section 30401(b) of the Community Schools Youth Services
                    and Supervision Grant Program Act of 1994 (42 U.S.C.
                    13791(b)) is amended--
                              (i) by striking ``1201'' each place the term
                          appears and inserting ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(i))''.
                        (O) Police corps.--The definition of institution of
                    higher education in section 200103 of the Police Corps
                    Act (42 U.S.C. 14092) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                        (P) Law enforcement scholarship program.--The
                    definition of institution of higher education in section
                    200202 of the Law Enforcement Scholarship and
                    Recruitment Act (42 U.S.C. 14111) is amended--
                              (i) by striking ``1201(a)'' and inserting
                          ``101''; and
                              (ii) by striking ``(20 U.S.C. 1141(a))''.
                (14) Telecommunications.--Section 223(h)(4) of the
            Telecommunications Act of 1934 (47 U.S.C. 223(h)(4)) is
            amended--
                        (A) by striking ``1201'' and inserting ``101''; and
                        (B) by striking ``(20 U.S.C. 1141)''.

    [[Page 112 STAT. 1622]]

                (15) War and national defense.--Section 808(3) of the David
            L. Boren National Security Education Act of 1991 (50 U.S.C.
            1908(3)) is amended--
                        (A) by striking ``1201(a)'' and inserting ``101'';
                    and
                        (B) by striking ``(20 U.S.C. 1141(a))''.

        (b) Internal Cross References.--The Act (20 U.S.C. 1001 et seq.) is
    amended--
                (1) in section 402A(c)(2) (20 U.S.C. 1070a-11(c)(2)), by
            striking ``1210'' and inserting ``118'';
                (2) in section 435(a) (20 U.S.C. 1085(a)), by striking
            ``section 481'' and inserting ``section 102'';
                (3) in section 485(f )(1)(I) (20 U.S.C. 1092(f )(1)(I)), by
            striking ``1213'' and inserting ``120'';
                (4) in section 487(d) (20 U.S.C. 1094(d)), by striking
            ``section 481'' and inserting ``section 102'';
                (5) in subsections ( j) and (k) of section 496 (20 U.S.C.
            1099b), by striking ``section 481'' each place the term appears
            and inserting ``section 102'';
                (6) in section 498(i) (20 U.S.C. 1099c) is amended by
            striking ``section 481'' and inserting ``section 102'';
                (7) in section 498( j) (20 U.S.C. 1099c( j))--
                        (A) in paragraph (1), by striking ``sections
                    481(b)(5) and 481(c)(3)'' and inserting ``sections
                    102(b)(1)(E) and 102(c)(1)(C)''; and
                        (B) in paragraph (2), by striking ``1201(a)(2)'' and
                    inserting ``101(a)(2)''; and
                (8) in section 631(a)(8) (20 U.S.C. 1132(a)(8))--
                        (A) by striking ``section 1201(a)'' each place the
                    term appears and inserting ``section 101''; and
                        (B) by striking ``of 1201(a)'' and inserting ``of
                    section 101''.

        (c) Additional Conforming Amendments Correcting
    References to Section 481.--
                (1) School-to-work opportunities act of  1994.--Section 4 of
            the School-to-Work Opportunities Act of 1994 (20 U.S.C. 6103) is
            amended--
                        (A) in paragraph (11)(B)(viii), by striking
                    ``section 481(b)'' and inserting ``section 102(b)''; and
                        (B) in paragraph (12), by striking ``section 481''
                    and inserting ``section 102''.
                (2) National and community service act of 1990.--
            Section 148(g) of the National and Community Service Act of 1990
            (42 U.S.C. 12604(g)) is amended by striking ``section 481(a) of
            the Higher Education Act of 1965 (20 U.S.C. 1088(a))'' and
            inserting ``section 102 of the Higher Education Act of 1965''.

        (d) Workforce Investment Act of 1998.--The Workforce Investment Act
    of 1998 is amended--
                (1) in section 101(35) (29 U.S.C. 2801(35)), by striking
            ``section 481 of the Higher Education Act of 1965 (20 U.S.C.
            1088)'' and inserting ``section 102 of the Higher Education Act
            of 1965''; and
                (2) in section 203(11) (20 U.S.C. 9202(11)), by striking
            ``section 1201 of the Higher Education Act of 1965 (20 U.S.C.
            1141)'' and inserting ``section 101 of the Higher Education Act
            of 1965''.

    [[Page 112 STAT. 1623]]

                            TITLE II--TEACHER QUALITY

    SEC. 201. TEACHER QUALITY ENHANCEMENT GRANTS.

        The Act is amended by inserting after title I (20 U.S.C. 1001 et
    seq.) the following:

         ``TITLE II--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND
                                  PARTNERSHIPS

    ``SEC. 201. PURPOSES; DEFINITIONS. <<NOTE: 20 USC 1021.>>

        ``(a) Purposes.--The purposes of this title are to--
                ``(1) improve student achievement;
                ``(2) improve the quality of the current and future teaching
            force by improving the preparation of prospective teachers and
            enhancing professional development activities;
                ``(3) hold institutions of higher education accountable for
            preparing teachers who have the necessary teaching skills and
            are highly competent in the academic content areas in which the
            teachers plan to teach, such as mathematics, science, English,
            foreign languages, history, economics, art, civics, Government,
            and geography, including training in the effective uses of
            technology in the classroom; and
                ``(4) recruit highly qualified individuals, including
            individuals from other occupations, into the teaching force.

        ``(b) Definitions.--In this title:
                ``(1) Arts and sciences.--The term `arts and sciences'
            means--
                        ``(A) when referring to an organizational unit of an
                    institution of higher education, any academic unit that
                    offers 1 or more academic majors in disciplines or
                    content areas corresponding to the academic subject
                    matter areas in which teachers provide instruction; and
                        ``(B) when referring to a specific academic subject
                    matter area, the disciplines or content areas in which
                    academic majors are offered by the arts and science
                    organizational unit.
                ``(2) High need local educational agency.--The term `high
            need local educational agency' means a local educational agency
            that serves an elementary school or secondary school located in
            an area in which there is--
                        ``(A) a high percentage of individuals from families
                    with incomes below the poverty line;
                        ``(B) a high percentage of secondary school teachers
                    not teaching in the content area in which the teachers
                    were trained to teach; or
                        ``(C) a high teacher turnover rate.
                ``(3) Poverty line.--The term `poverty line' means the
            poverty line (as defined by the Office of Management and Budget,
            and revised annually in accordance with section 673(2) of the
            Community Services Block Grant Act (42 U.S.C. 9902(2)))
            applicable to a family of the size involved.

    [[Page 112 STAT. 1624]]

    ``SEC. 202. STATE GRANTS. <<NOTE: 20 USC 1022.>>

        ``(a) In General.--From amounts made available under section 210(1)
    for a fiscal year, the Secretary is authorized to award grants under
    this section, on a competitive basis, to eligible States to enable the
    eligible States to carry out the activities described in subsection (d).
        ``(b) Eligible State.--
                ``(1) Definition.--In this title, the term `eligible State'
            means--
                        ``(A) the Governor of a State; or
                        ``(B) in the case of a State for which the
                    constitution or law of such State designates another
                    individual, entity, or agency in the State to be
                    responsible for teacher certification and preparation
                    activity, such individual, entity, or agency.
                ``(2) Consultation.--The Governor and the individual,
            entity, or agency designated under paragraph (1) shall consult
            with the Governor, State board of education, State educational
            agency, or State agency for higher education, as appropriate,
            with respect to the activities assisted under this section.
                ``(3) Construction.--Nothing in this subsection shall be
            construed to negate or supersede the legal authority under State
            law of any State agency, State entity, or State public official
            over programs that are under the jurisdiction of the agency,
            entity, or official.

        ``(c) Application.--To be eligible to receive a grant under this
    section, an eligible State shall, at the time of the initial grant
    application, submit an application to the Secretary that--
                ``(1) meets the requirement of this section;
                ``(2) includes a description of how the eligible State
            intends to use funds provided under this section; and
                ``(3) contains such other information and assurances as the
            Secretary may require.

        ``(d) Uses of Funds.--An eligible State that receives a grant under
    this section shall use the grant funds to reform teacher preparation
    requirements, and to ensure that current and future teachers possess the
    necessary teaching skills and academic content knowledge in the subject
    areas in which the teachers are assigned to teach, by carrying out 1 or
    more of the following activities:
                ``(1) Reforms.--Implementing reforms that hold institutions
            of higher education with teacher preparation programs
            accountable for preparing teachers who are highly competent in
            the academic content areas in which the teachers plan to teach,
            and possess strong teaching skills, which may include the use of
            rigorous subject matter competency tests and the requirement
            that a teacher have an academic major in the subject area, or
            related discipline, in which the teacher plans to teach.
                ``(2) Certification or licensure requirements.--Reforming
            teacher certification or licensure requirements to ensure that
            teachers have the necessary teaching skills and academic content
            knowledge in the subject areas in which teachers are assigned to
            teach.
                ``(3) Alternatives to traditional preparation for
            teaching.--Providing prospective teachers with alternatives to

    [[Page 112 STAT. 1625]]

            traditional preparation for teaching through programs at
            colleges of arts and sciences or at nonprofit educational
            organizations.
                ``(4) Alternative routes to state certification.--
            Carrying out programs that--
                        ``(A) include support during the initial teaching
                    experience; and
                        ``(B) establish, expand, or improve alternative
                    routes to State certification of teachers for highly
                    qualified individuals, including mid-career
                    professionals from other occupations, paraprofessionals,
                    former military personnel and recent college graduates
                    with records of academic distinction.
                ``(5) Recruitment; pay; removal.--Developing and
            implementing effective mechanisms to ensure that local
            educational agencies and schools are able to effectively recruit
            highly qualified teachers, to financially reward those teachers
            and principals whose students have made significant progress
            toward high academic performance, such as through performance-
            based compensation systems and access to ongoing professional
            development opportunities for teachers and administrators, and
            to expeditiously remove incompetent or unqualified teachers
            consistent with procedures to ensure due process for the
            teachers.
                ``(6) Social promotion.--Development and implementation of
            efforts to address the problem of social promotion and to
            prepare teachers to effectively address the issues raised by
            ending the practice of social promotion.
                ``(7) Recruitment.--Activities described in section 204(d).

    ``SEC. 203. PARTNERSHIP GRANTS. <<NOTE: 20 USC 1023.>>

        ``(a) Grants.--From amounts made available under section 210(2) for
    a fiscal year, the Secretary is authorized to award grants under this
    section, on a competitive basis, to eligible partnerships to enable the
    eligible partnerships to carry out the activities described in
    subsections (d) and (e).
        ``(b) Definitions.--
                ``(1) Eligible partnerships.--In this title, the term
            `eligible partnerships' means an entity that--
                        ``(A) shall include--
                              ``(i) a partner institution;
                              ``(ii) a school of arts and sciences; and
                              ``(iii) a high need local educational agency;
                          and
                        ``(B) may include a Governor, State educational
                    agency, the State board of education, the State agency
                    for higher education, an institution of higher education
                    not described in subparagraph (A), a public charter
                    school, a public or private elementary school or
                    secondary school, a public or private nonprofit
                    educational organization, a business, a teacher
                    organization, or a prekindergarten program.
                ``(2) Partner institution.--In this section, the term
            `partner institution' means a private independent or State-
            supported public institution of higher education, the teacher
            training program of which demonstrates that--
                        ``(A) graduates from the teacher training program
                    exhibit strong performance on State-determined
                    qualifying assessments for new teachers through--

    [[Page 112 STAT. 1626]]

                              ``(i) demonstrating that 80 percent or more of
                          the graduates of the program who intend to enter
                          the field of teaching have passed all of the
                          applicable State qualification assessments for new
                          teachers, which shall include an assessment of
                          each prospective teacher's subject matter
                          knowledge in the content area or areas in which
                          the teacher intends to teach; or
                              ``(ii) being ranked among the highest-
                          performing teacher preparation programs in the
                          State as determined by the State--
                                        ``(I) using criteria consistent with
                                    the requirements for the State report
                                    card under section 207(b); and
                                        ``(II) using the State report card
                                    on teacher preparation required under
                                    section 207(b), after the first
                                    publication of such report card and for
                                    every year thereafter; or
                        ``(B) the teacher training program requires all the
                    students of the program to participate in intensive
                    clinical experience, to meet high academic standards,
                    and--
                              ``(i) in the case of secondary school
                          candidates, to successfully complete an academic
                          major in the subject area in which the candidate
                          intends to teach or to demonstrate competence
                          through a high level of performance in relevant
                          content areas; and
                              ``(ii) in the case of elementary school
                          candidates, to successfully complete an academic
                          major in the arts and sciences or to demonstrate
                          competence through a high level of performance in
                          core academic subject areas.

        ``(c) Application.--Each eligible partnership desiring a grant under
    this section shall submit an application to the Secretary at such time,
    in such manner, and accompanied by such information as the Secretary may
    require. Each such application shall--
                ``(1) contain a needs assessment of all the partners with
            respect to teaching and learning and a description of how the
            partnership will coordinate with other teacher training or
            professional development programs, and how the activities of the
            partnership will be consistent with State, local, and other
            education reform activities that promote student achievement;
                ``(2) contain a resource assessment that describes the
            resources available to the partnership, the intended use of the
            grant funds, including a description of how the grant funds will
            be fairly distributed in accordance with subsection (f ), and
            the commitment of the resources of the partnership to the
            activities assisted under this title, including financial
            support, faculty participation, time commitments, and
            continuation of the activities when the grant ends; and
                ``(3) contain a description of--
                        ``(A) how the partnership will meet the purposes of
                    this title;
                        ``(B) how the partnership will carry out the
                    activities required under subsection (d) and any
                    permissible activities under subsection (e); and
                        ``(C) the partnership's evaluation plan pursuant to
                    section 206(b).

    [[Page 112 STAT. 1627]]

        ``(d) Required Uses of Funds.--An eligible partnership that receives
    a grant under this section shall use the grant funds to carry out the
    following activities:
                ``(1) Reforms.--Implementing reforms within teacher
            preparation programs to hold the programs accountable for
            preparing teachers who are highly competent in the academic
            content areas in which the teachers plan to teach, and for
            promoting strong teaching skills, including working with a
            school of arts and sciences and integrating reliable research-
            based teaching methods into the curriculum, which curriculum
            shall include programs designed to successfully integrate
            technology into teaching and learning.
                ``(2) Clinical experience and interaction.--Providing
            sustained and high quality preservice clinical experience
            including the mentoring of prospective teachers by veteran
            teachers, and substantially increasing interaction between
            faculty at institutions of higher education and new and
            experienced teachers, principals, and other administrators at
            elementary schools or secondary schools, and providing support,
            including preparation time, for such interaction.
                ``(3) Professional development.--Creating opportunities for
            enhanced and ongoing professional development that improves the
            academic content knowledge of teachers in the subject areas in
            which the teachers are certified to teach or in which the
            teachers are working toward certification to teach, and that
            promotes strong teaching skills.

        ``(e) Allowable Uses of Funds.--An eligible partnership that
    receives a grant under this section may use such funds to carry out the
    following activities:
                ``(1) Teacher preparation and parent involvement.--Preparing
            teachers to work with diverse student populations, including
            individuals with disabilities and limited English proficient
            individuals, and involving parents in the teacher preparation
            program reform process.
                ``(2) Dissemination and coordination.--Broadly disseminating
            information on effective practices used by the partnership, and
            coordinating with the activities of the Governor, State board of
            education, State higher education agency, and State educational
            agency, as appropriate.
                ``(3) Managerial and leadership skills.--Developing and
            implementing proven mechanisms to provide principals and
            superintendents with effective managerial and leadership skills
            that result in increased student achievement.
                ``(4) Teacher recruitment.--Activities described in section
            204(d).

        ``(f ) Special Rule.--No individual member of an eligible
    partnership shall retain more than 50 percent of the funds made
    available to the partnership under this section.
        ``(g) Construction.--Nothing in this section shall be construed to
    prohibit an eligible partnership from using grant funds to coordinate
    with the activities of more than one Governor, State board of education,
    State educational agency, local educational agency, or State agency for
    higher education.

    ``SEC. 204. TEACHER RECRUITMENT GRANTS. <<NOTE: 20 USC 1024.>>

        ``(a) Program Authorized.--From amounts made available under section
    210(3) for a fiscal year, the Secretary is authorized

    [[Page 112 STAT. 1628]]

    to award grants, on a competitive basis, to eligible applicants to
    enable the eligible applicants to carry out activities described in
    subsection (d).
        ``(b) Eligible Applicant Defined.--In this title, the term `eligible
    applicant' means--
                ``(1) an eligible State described in section 202(b); or
                ``(2) an eligible partnership described in section 203(b).

        ``(c) Application.--Any eligible applicant desiring to receive a
    grant under this section shall submit an application to the Secretary at
    such time, in such form, and containing such information as the
    Secretary may require, including--
                ``(1) a description of the assessment that the eligible
            applicant, and the other entities with whom the eligible
            applicant will carry out the grant activities, have undertaken
            to determine the most critical needs of the participating high-
            need local educational agencies;
                ``(2) a description of the activities the eligible applicant
            will carry out with the grant; and
                ``(3) a description of the eligible applicant's plan for
            continuing the activities carried out with the grant, once
            Federal funding ceases.

        ``(d) Uses of Funds.--Each eligible applicant receiving a grant
    under this section shall use the grant funds--
                ``(1)(A) to award scholarships to help students pay the
            costs of tuition, room, board, and other expenses of completing
            a teacher preparation program;
                ``(B) to provide support services, if needed to enable
            scholarship recipients to complete postsecondary education
            programs; and
                ``(C) for followup services provided to former scholarship
            recipients during the recipients first 3 years of teaching; or
                ``(2) to develop and implement effective mechanisms to
            ensure that high need local educational agencies and schools are
            able to effectively recruit highly qualified teachers.

        ``(e) Service Requirements.--The Secretary shall establish such
    requirements as the Secretary finds necessary to ensure that recipients
    of scholarships under this section who complete teacher education
    programs subsequently teach in a high-need local educational agency, for
    a period of time equivalent to the period for which the recipients
    receive scholarship assistance, or repay the amount of the scholarship.
    The Secretary shall use any such repayments to carry out additional
    activities under this section.

    ``SEC. 205. ADMINISTRATIVE PROVISIONS. <<NOTE: 20 USC 1025.>>

        ``(a) Duration; One-Time Awards; Payments.--
                ``(1) Duration.--
                        ``(A) Eligible states and eligible applicants.--
                    Grants awarded to eligible States and eligible
                    applicants under this title shall be awarded for a
                    period not to exceed 3 years.
                        ``(B) Eligible partnerships.--Grants awarded to
                    eligible partnerships under this title shall be awarded
                    for a period of 5 years.
                ``(2) One-time award.--An eligible State and an eligible
            partnership may receive a grant under each of sections 202, 203,
            and 204 only once.

    [[Page 112 STAT. 1629]]

                ``(3) Payments.--The Secretary shall make annual payments of
            grant funds awarded under this part.

        ``(b) Peer Review.--
                ``(1) Panel.--The Secretary shall provide the applications
            submitted under this title to a peer review panel for
            evaluation. With respect to each application, the peer review
            panel shall initially recommend the application for funding or
            for disapproval.
                ``(2) Priority.--In recommending applications to the
            Secretary for funding under this title, the panel shall--
                        ``(A) with respect to grants under section 202, give
                    priority to eligible States serving States that--
                              ``(i) have initiatives to reform State teacher
                          certification requirements that are designed to
                          ensure that current and future teachers possess
                          the necessary teaching skills and academic content
                          knowledge in the subject areas in which the
                          teachers are certified or licensed to teach;
                              ``(ii) include innovative reforms to hold
                          institutions of higher education with teacher
                          preparation programs accountable for preparing
                          teachers who are highly competent in the academic
                          content area in which the teachers plan to teach
                          and have strong teaching skills; or
                              ``(iii) involve the development of innovative
                          efforts aimed at reducing the shortage of highly
                          qualified teachers in high poverty urban and rural
                          areas;
                        ``(B) with respect to grants under section 203--
                              ``(i) give priority to applications from
                          eligible partnerships that involve businesses; and
                              ``(ii) take into consideration--
                                        ``(I) providing an equitable
                                    geographic distribution of the grants
                                    throughout the United States; and
                                        ``(II) the potential of the proposed
                                    activities for creating improvement and
                                    positive change.
                ``(3) Secretarial selection.--The Secretary shall determine,
            based on the peer review process, which application shall
            receive funding and the amounts of the grants. In determining
            grant amounts, the Secretary shall take into account the total
            amount of funds available for all grants under this title and
            the types of activities proposed to be carried out.

        ``(c) Matching Requirements.--
                ``(1) State grants.--Each eligible State receiving a grant
            under section 202 or 204 shall provide, from non-Federal
            sources, an amount equal to 50 percent of the amount of the
            grant (in cash or in kind) to carry out the activities supported
            by the grant.
                ``(2) Partnership grants.--Each eligible partnership
            receiving a grant under section 203 or 204 shall provide, from
            non-Federal sources (in cash or in kind), an amount equal to 25
            percent of the grant for the first year of the grant, 35 percent
            of the grant for the second year of the grant, and 50 percent of
            the grant for each succeeding year of the grant.

        ``(d) Limitation on Administrative Expenses.--An eligible State or
    eligible partnership that receives a grant under this title may not use
    more than 2 percent of the grant funds for purposes of administering the
    grant.

    [[Page 112 STAT. 1630]]

        ``(e) Teacher Qualifications Provided to Parents Upon Request.--Any
    local educational agency or school that benefits from the activities
    assisted under this title shall make available, upon request and in an
    understandable and uniform format, to any parent of a student attending
    any school served by the local educational agency, information regarding
    the qualification of the student's classroom teacher with regard to the
    subject matter in which the teacher provides instruction. The local
    educational agency shall inform parents that the parents are entitled to
    receive the information upon request.

    ``SEC. 206. ACCOUNTABILITY AND EVALUATION. <<NOTE: 20 USC 1026.>>

        ``(a) State Grant Accountability Report.--An eligible State that
    receives a grant under section 202 shall submit an annual accountability
    report to the Secretary, the Committee on Labor and Human Resources of
    the Senate, and the Committee on Education and the Workforce of the
    House of Representatives. Such report shall include a description of the
    degree to which the eligible State, in using funds provided under such
    section, has made substantial progress in meeting the following goals:
                ``(1) Student achievement.--Increasing student achievement
            for all students as defined by the eligible State.
                ``(2) Raising standards.--Raising the State academic
            standards required to enter the teaching profession, including,
            where appropriate, through the use of incentives to incorporate
            the requirement of an academic major in the subject, or related
            discipline, in which the teacher plans to teach.
                ``(3) Initial certification or licensure.--Increasing
            success in the pass rate for initial State teacher certification
            or licensure, or increasing the numbers of highly qualified
            individuals being certified or licensed as teachers through
            alternative programs.
                ``(4) Core academic subjects.--
                        ``(A) Secondary school classes.--Increasing the
                    percentage of secondary school classes taught in core
                    academic subject areas by teachers--
                              ``(i) with academic majors in those areas or
                          in a related field;
                              ``(ii) who can demonstrate a high level of
                          competence through rigorous academic subject area
                          tests; or
                              ``(iii) who can demonstrate competence through
                          a high level of performance in relevant content
                          areas.
                        ``(B) Elementary school classes.--Increasing the
                    percentage of elementary school classes taught by
                    teachers--
                              ``(i) with academic majors in the arts and
                          sciences; or
                              ``(ii) who can demonstrate competence through
                          a high level of performance in core academic
                          subjects.
                ``(5) Decreasing teacher shortages.--Decreasing shortages of
            qualified teachers in poor urban and rural areas.
                ``(6) Increasing opportunities for professional
            development.--Increasing opportunities for enhanced and ongoing
            professional development that improves the academic content
            knowledge of teachers in the subject areas in which the teachers
            are certified or licensed to teach or in which the teachers

    [[Page 112 STAT. 1631]]

            are working toward certification or licensure to teach, and that
            promotes strong teaching skills.
                ``(7) Technology integration.--Increasing the number of
            teachers prepared to integrate technology in the classroom.

        ``(b) Eligible Partnership Evaluation.--Each eligible partnership
    receiving a grant under section 203 shall establish and include in the
    application submitted under section 203(c), an evaluation plan that
    includes strong performance objectives. The plan shall include
    objectives and measures for--
                ``(1) increased student achievement for all students as
            measured by the partnership;
                ``(2) increased teacher retention in the first 3 years of a
            teacher's career;
                ``(3) increased success in the pass rate for initial State
            certification or licensure of teachers; and
                ``(4) increased percentage of secondary school classes
            taught in core academic subject areas by teachers--
                        ``(A) with academic majors in the areas or in a
                    related field; and
                        ``(B) who can demonstrate a high level of competence
                    through rigorous academic subject area tests or who can
                    demonstrate competence through a high level of
                    performance in relevant content areas;
                ``(5) increasing the percentage of elementary school classes
            taught by teachers with academic majors in the arts and sciences
            or who demonstrate competence through a high level of
            performance in core academic subject areas; and
                ``(6) increasing the number of teachers trained in
            technology.

        ``(c) Revocation of Grant.--
                ``(1) Report.--Each eligible State or eligible partnership
            receiving a grant under this title shall report annually on the
            progress of the eligible State or eligible partnership toward
            meeting the purposes of this title and the goals, objectives,
            and measures described in subsections (a) and (b).
                ``(2) Revocation.--
                        ``(A) Eligible states and eligible applicants.--If
                    the Secretary determines that an eligible State or
                    eligible applicant is not making substantial progress in
                    meeting the purposes, goals, objectives, and measures,
                    as appropriate, by the end of the second year of a grant
                    under this title, then the grant payment shall not be
                    made for the third year of the grant.
                        ``(B) Eligible partnerships.--If the Secretary
                    determines that an eligible partnership is not making
                    substantial progress in meeting the purposes, goals,
                    objectives, and measures, as appropriate, by the end of
                    the third year of a grant under this title, then the
                    grant payments shall not be made for any succeeding year
                    of the grant.

        ``(d) Evaluation and Dissemination.--The Secretary shall evaluate
    the activities funded under this title and report the Secretary's
    findings regarding the activities to the Committee on Labor and Human
    Resources of the Senate and the Committee on Education and the Workforce
    of the House of Representatives. The Secretary shall broadly disseminate
    successful practices developed by eligible States and eligible
    partnerships under this title, and

    [[Page 112 STAT. 1632]]

    shall broadly disseminate information regarding such practices that were
    found to be ineffective.

    ``SEC. 207. <<NOTE: 20 USC 1027.>>  ACCOUNTABILITY FOR PROGRAMS THAT
                PREPARE TEACHERS.

        ``(a) <<NOTE: Deadline.>> Development of Definitions and Reporting
    Methods.--Within 9 months of the date of enactment of the Higher
    Education Amendments of 1998, the Commissioner of the National Center
    for Education Statistics, in consultation with States and institutions
    of higher education, shall develop key definitions for terms, and
    uniform reporting methods (including the key definitions for the
    consistent reporting of pass rates), related to the performance of
    elementary school and secondary school teacher preparation programs.

        ``(b) State Report Card on the Quality of Teacher Preparation.--Each
    State that receives funds under this Act shall provide to the Secretary,
    within 2 years of the date of enactment of the Higher Education
    Amendments of 1998, and annually thereafter, in a uniform and
    comprehensible manner that conforms with the definitions and methods
    established in subsection (a), a State report card on the quality of
    teacher preparation in the State, which shall include at least the
    following:
                ``(1) A description of the teacher certification and
            licensure assessments, and any other certification and licensure
            requirements, used by the State.
                ``(2) The standards and criteria that prospective teachers
            must meet in order to attain initial teacher certification or
            licensure and to be certified or licensed to teach particular
            subjects or in particular grades within the State.
                ``(3) A description of the extent to which the assessments
            and requirements described in paragraph (1) are aligned with the
            State's standards and assessments for students.
                ``(4) The percentage of teaching candidates who passed each
            of the assessments used by the State for teacher certification
            and licensure, and the passing score on each assessment that
            determines whether a candidate has passed that assessment.
                ``(5) The percentage of teaching candidates who passed each
            of the assessments used by the State for teacher certification
            and licensure, disaggregated and ranked, by the teacher
            preparation program in that State from which the teacher
            candidate received the candidate's most recent degree, which
            shall be made available widely and publicly.
                ``(6) Information on the extent to which teachers in the
            State are given waivers of State certification or licensure
            requirements, including the proportion of such teachers
            distributed across high- and low-poverty school districts and
            across subject areas.
                ``(7) A description of each State's alternative routes to
            teacher certification, if any, and the percentage of teachers
            certified through alternative certification routes who pass
            State teacher certification or licensure assessments.
                ``(8) For each State, a description of proposed criteria for
            assessing the performance of teacher preparation programs within
            institutions of higher education in the State, including
            indicators of teacher candidate knowledge and skills.

    [[Page 112 STAT. 1633]]

                ``(9) Information on the extent to which teachers or
            prospective teachers in each State are required to take
            examinations or other assessments of their subject matter
            knowledge in the area or areas in which the teachers provide
            instruction, the standards established for passing any such
            assessments, and the extent to which teachers or prospective
            teachers are required to receive a passing score on such
            assessments in order to teach in specific subject areas or grade
            levels.

        ``(c) Initial Report.--
                ``(1) <<NOTE: Deadline.>> In general.--Each State that
            receives funds under this Act, not later than 6 months of the
            date of enactment of the Higher Education Amendments of 1998 and
            in a uniform and comprehensible manner, shall submit to the
            Secretary the information described in paragraphs (1), (5), and
            (6) of subsection (b). <<NOTE: Records.>> Such information shall
            be compiled by the Secretary and submitted 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 9 months after the date of enactment of the Higher
            Education Amendments of 1998.
                ``(2) Construction.--Nothing in this subsection shall be
            construed to require a State to gather information that is not
            in the possession of the State or the teacher preparation
            programs in the State, or readily available to the State or
            teacher preparation programs.

        ``(d) Report of the Secretary on the Quality of Teacher
    Preparation.--
                ``(1) <<NOTE: Publication. Public information.>> Report
            card.--The Secretary shall provide to Congress, and publish and
            make widely available, a report card on teacher qualifications
            and preparation in the United States, including all the
            information reported in paragraphs (1) through (9) of subsection
            (b). Such report shall identify States for which eligible States
            and eligible partnerships received a grant under this title.
            Such report shall be so provided, published and made available
            not later than 2 years 6 months after the date of enactment of
            the Higher Education Amendments of 1998 and annually thereafter.
                ``(2) Report to congress.--The Secretary shall report to
            Congress--
                        ``(A) a comparison of States' efforts to improve
                    teaching quality; and
                        ``(B) regarding the national mean and median scores
                    on any standardized test that is used in more than 1
                    State for teacher certification or licensure.
                ``(3) <<NOTE: Records. Publication.>> Special rule.--In the
            case of teacher preparation programs with fewer than 10
            graduates taking any single initial teacher certification or
            licensure assessment during an academic year, the Secretary
            shall collect and publish information with respect to an average
            pass rate on State certification or licensure assessments taken
            over a 3-year period.

        ``(e) <<NOTE: Records. Publication.>> Coordination.--The Secretary,
    to the extent practicable, shall coordinate the information collected
    and published under this title among States for individuals who took
    State teacher certification or licensure assessments in a State other
    than the State in which the individual received the individual's most
    recent degree.

        ``(f ) Institutional Report Cards on the Quality of Teacher
    Preparation.--

    [[Page 112 STAT. 1634]]

                ``(1) <<NOTE: Deadline. Reports. Public
            information.>> Report card.--Each institution of higher
            education that conducts a teacher preparation program that
            enrolls students receiving Federal assistance under this Act,
            not later than 18 months after the date of enactment of the
            Higher Education Amendments of 1998 and annually thereafter,
            shall report to the State and the general public, in a uniform
            and comprehensible manner that conforms with the definitions and
            methods established under subsection (a), the following
            information:
                        ``(A) Pass rate.--(i) For the most recent year for
                    which the information is available, the pass rate of the
                    institution's graduates on the teacher certification or
                    licensure assessments of the State in which the
                    institution is located, but only for those students who
                    took those assessments within 3 years of completing the
                    program.
                        ``(ii) A comparison of the program's pass rate with
                    the average pass rate for programs in the State.
                        ``(iii) In the case of teacher preparation programs
                    with fewer than 10 graduates taking any single initial
                    teacher certification or licensure assessment during an
                    academic year, the institution shall collect and publish
                    information with respect to an average pass rate on
                    State certification or licensure assessments taken over
                    a 3-year period.
                        ``(B) Program information.--The number of students
                    in the program, the average number of hours of
                    supervised practice teaching required for those in the
                    program, and the faculty-student ratio in supervised
                    practice teaching.
                        ``(C) Statement.--In States that approve or accredit
                    teacher education programs, a statement of whether the
                    institution's program is so approved or accredited.
                        ``(D) Designation as low-performing.--Whether the
                    program has been designated as low-performing by the
                    State under section 208(a).
                ``(2) Requirement.--The information described in paragraph
            (1) shall be reported through publications such as school
            catalogs and promotional materials sent to potential applicants,
            secondary school guidance counselors, and prospective employers
            of the institution's program graduates.
                ``(3) Fines.--In addition to the actions authorized in
            section 487(c), the Secretary may impose a fine not to exceed
            $25,000 on an institution of higher education for failure to
            provide the information described in this subsection in a timely
            or accurate manner.

    ``SEC. 208. STATE FUNCTIONS. <<NOTE: 20 USC 1028.>>

        ``(a) <<NOTE: Deadline. Procedures.>> .State Assessment.--In order
    to receive funds under this Act, a State, not later than 2 years after
    the date of enactment of the Higher Education Amendments of 1998, shall
    have in place a procedure to identify, and assist, through the provision
    of technical assistance, low-performing programs of teacher preparation
    within institutions of higher education. <<NOTE: Records.>> Such State
    shall provide the Secretary an annual list of such low-performing
    institutions that includes an identification of those institutions at-
    risk of being placed on such list. Such levels of performance shall be
    determined solely by the State and may include criteria based upon
    information collected pursuant to this title. Such assessment shall be
    described in the report under section 207(b).

    [[Page 112 STAT. 1635]]

        ``(b) Termination of Eligibility.--Any institution of higher
    education that offers a program of teacher preparation in which the
    State has withdrawn the State's approval or terminated the State's
    financial support due to the low performance of the institution's
    teacher preparation program based upon the State assessment described in
    subsection (a)--
                ``(1) shall be ineligible for any funding for professional
            development activities awarded by the Department of Education;
            and
                ``(2) shall not be permitted to accept or enroll any student
            that receives aid under title IV of this Act in the
            institution's teacher preparation program.

        ``(c) Negotiated Rulemaking.--If the Secretary develops any
    regulations implementing subsection (b)(2), the Secretary shall submit
    such proposed regulations to a negotiated rulemaking process, which
    shall include representatives of States, institutions of higher
    education, and educational and student organizations.

    ``SEC. 209. GENERAL PROVISIONS. <<NOTE: 20 USC 1029.>>

        ``(a) Methods.--In complying with sections 207 and 208, the
    Secretary shall ensure that States and institutions of higher education
    use fair and equitable methods in reporting and that the reporting
    methods protect the privacy of individuals.
        ``(b) Special Rule.--For each State in which there are no State
    certification or licensure assessments, or for States that do not set
    minimum performance levels on those assessments--
                ``(1) the Secretary shall, to the extent practicable,
            collect data comparable to the data required under this title
            from States, local educational agencies, institutions of higher
            education, or other entities that administer such assessments to
            teachers or prospective teachers; and
                ``(2) notwithstanding any other provision of this title, the
            Secretary shall use such data to carry out requirements of this
            title related to assessments or pass rates.

        ``(c) Limitations.--
                ``(1) Federal control prohibited.--Nothing in this title
            shall be construed to permit, allow, encourage, or authorize any
            Federal control over any aspect of any private, religious, or
            home school, whether or not a home school is treated as a
            private school or home school under State law. This section
            shall not be construed to prohibit private, religious, or home
            schools from participation in programs or services under this
            title.
                ``(2) No change in state control encouraged or required.--
            Nothing in this title shall be construed to encourage or require
            any change in a State's treatment of any private, religious, or
            home school, whether or not a home school is treated as a
            private school or home school under State law.
                ``(3) National system of teacher certification prohibited.--
            Nothing in this title shall be construed to permit, allow,
            encourage, or authorize the Secretary to establish or support
            any national system of teacher certification.

    ``SEC. 210. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1030.>>

        ``There are authorized to be appropriated to carry out this title
    $300,000,000 for fiscal year 1999 and such sums as may be necessary for
    each of the 4 succeeding fiscal years, of which--

    [[Page 112 STAT. 1636]]

                ``(1) 45 percent shall be available for each fiscal year to
            award grants under section 202;
                ``(2) 45 percent shall be available for each fiscal year to
            award grants under section 203; and
                ``(3) 10 percent shall be available for each fiscal year to
            award grants under section 204.''.

                          TITLE III--INSTITUTIONAL AID

    SEC. 301. TRANSFERS AND REDESIGNATIONS.

        (a) In General.--The Higher Education Act of 1965 is
    amended--
                (1) by redesignating part D of title III (20 U.S.C. 1066 et
            seq.) as part F of title III;
                (2) <<NOTE: 20 USC 1066 et seq., 1068 et seq.>> by
            redesignating sections 351, 352, 353, 354, 356, 357, 358, and
            360 (20 U.S.C. 1066, 1067, 1068, 1069, 1069b, 1069c, 1069d, and
            1069f) as sections 391, 392, 393, 394, 395, 396, 397, and 399,
            respectively;
                (3) <<NOTE: 20 USC 1132 et seq., 1066 et seq.>> by
            transferring part B of title VII (20 U.S.C. 1132c et seq.) to
            title III to follow part C of title III (20 U.S.C. 1065 et
            seq.), and redesignating such part B as part D;
                (4) <<NOTE: 20 USC 1132 et seq., 1066 et seq.>> by
            redesignating sections 721 through 728 (20 U.S.C. 1132c and
            1132c-7) as sections 341 through 348, respectively;
                (5) <<NOTE: 20 USC 1135b et seq., 1067a et seq.>> by
            transferring subparts 1 and 3 of part B of title X (20 U.S.C.
            1135b et seq. and 1135d et seq.) to title III to follow part D
            of title III (as redesignated by paragraph (3)), and
            redesignating such subpart 3 as subpart 2;
                (6) by inserting after part D of title III (as redesignated
            by paragraph (3)) the following:

        ``PART E--MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM'';

                (7) <<NOTE: 20 USC 1135b et seq., 1067a et seq.>> by
            redesignating sections 1021 through 1023 (20 U.S.C. 1135b and
            1135b-2), and sections 1041, 1042, 1043, 1044, 1046, and 1047
            (20 U.S.C. 1135d, 1135d-1, 1135d-2, 1135d-3, 1135d-5, and 1135d-
            6) as sections 351 through 353, and sections 361, 362, 363, 364,
            365, and 366, respectively; and
                (8) by repealing section 366 <<NOTE: 20 USC 1067l.>> (as
            redesignated by paragraph (7)) (20 U.S.C. 1135d-6).

        (b) Conforming Amendments.--Section 361 <<NOTE: 20 USC 1067g.>> (as
    redesignated by subsection (a)(7)) (20 U.S.C. 1135d) is amended--
                (1) in paragraph (1), by inserting ``and'' after the
            semicolon;
                (2) in paragraph (2), by striking ``; and'' and inserting a
            period; and
                (3) by striking paragraph (3).

        (c) Cross References.--Title III (20 U.S.C. 1051 et seq.) is
    amended--
                (1) in section 311(b) (20 U.S.C. 1057(b)), by striking
            ``360(a)(1)'' and inserting ``399(a)(1)'';
                (2) in section 312 (20 U.S.C. 1058)--
                        (A) in subsection (b)(1)(B), by striking ``352(b)''
                    and inserting ``392(b)''; and
                        (B) in subsection (c)(2), by striking ``352(a)'' and

                    inserting ``392(a)'';

    [[Page 112 STAT. 1637]]

                (3) in section 313(b) (20 U.S.C. 1059(b)), by striking
            ``354(a)(1)'' and inserting ``394(a)(1)'';
                (4) in section 342 <<NOTE: 20 USC 1066a.>> (as redesignated
            by subsection (a)(4)) (20 U.S.C. 1132c-1)--
                        (A) in paragraph (3), by striking ``723(b)'' and
                    inserting ``343(b)'';
                        (B) in paragraph (4), by striking ``723'' and
                    inserting ``343'';
                        (C) in the matter preceding subparagraph (A) of
                    paragraph (5), by striking ``724(b)'' and inserting
                    ``344(b)'';
                        (D) in paragraph (8), by striking ``725(1)'' and
                    inserting ``345(1)''; and
                        (E) in paragraph (9), by striking ``727'' and
                    inserting ``347'';
                (5) in section 343 <<NOTE: 20 USC 1066b.>> (as redesignated
            by subsection (a)(4)) (20 U.S.C. 1132c-2)--
                        (A) in subsection (a), by striking ``724'' and
                    inserting ``344''; and
                        (B) in subsection (b)--
                              (i) in the matter preceding paragraph (1), by
                          striking ``725(1) and 726'' and inserting ``345(1)
                          and 346'';
                              (ii) in paragraph (10), by striking ``724''
                          and inserting ``344''; and
                              (iii) in subsection (d), by striking
                          ``723(c)(1)'' and inserting ``343(c)(1)'';
                (6) in section 345(2) <<NOTE: 20 USC 1066d.>> (as
            redesignated by subsection (a)(4)) (20 U.S.C. 1132c-4(2)), by
            striking ``723'' and inserting ``343'';
                (7) in section 348 <<NOTE: 20 USC 1066g.>> (as redesignated
            by subsection (a)(4)) (20 U.S.C. 1132c-7), by striking
            ``725(1)'' and inserting ``345(1)'';
                (8) in section 353(a) <<NOTE: 20 USC 1067c.>> (as
            redesignated by subsection (a)(7)) (20 U.S.C. 1135b-2(a))--
                        (A) in paragraph (1), by striking ``1046(6)'' and
                    inserting ``365(6)'';
                        (B) in paragraph (2), by striking ``1046(7)'' and
                    inserting ``365(7)'';
                        (C) in paragraph (3), by striking ``1046(8)'' and
                    inserting ``365(8)''; and
                        (D) in paragraph (4), by striking ``1046(9)'' and
                    inserting ``365(9)'';
                (9) in section 361(1) <<NOTE: 20 USC 1067g.>> (as
            redesignated by subsection (a)(7)) (20 U.S.C. 1135d(1)), by
            striking ``1046(3)'' and inserting ``365(3)'';
                (10) in section 362(a) <<NOTE: 20 USC 1067h.>> (as
            redesignated by subsection (a)(7)) (20 U.S.C. 1135d-1(a))--
                        (A) in the matter preceding paragraph (1), by
                    striking ``1041'' and inserting ``361''; and
                        (B) in paragraph (1), by striking ``1021(b)'' and
                    inserting ``351(b)''; and
                (11) in section 391(b)(6) <<NOTE: 20 USC 1068.>> (as
            redesignated by subsection (a)(2)), by striking ``357'' and
            inserting ``396''.

    SEC. 302. FINDINGS.

        Section 301(a) (20 U.S.C. 1051(a)) is amended--
                (1) by redesignating paragraphs (3) through (7) as
            paragraphs (4) through (8), respectively; and
                (2) by inserting after paragraph (2) the following:

    [[Page 112 STAT. 1638]]

                ``(3) in order to be competitive and provide a high-quality
            education for all, institutions of higher education should
            improve their technological capacity and make effective use of
            technology;''.

    SEC. 303. STRENGTHENING INSTITUTIONS.

        (a) Grants.--Section 311 (20 U.S.C. 1057) is amended by
    adding at the end the following:
        ``(c) Authorized Activities.--Grants awarded under this
    section shall be used for 1 or more of the following activities:
                ``(1) Purchase, rental, or lease of scientific or laboratory
            equipment for educational purposes, including instructional and
            research purposes.
                ``(2) Construction, maintenance, renovation, and improvement
            in classrooms, libraries, laboratories, and other instructional
            facilities, including the integration of computer technology
            into institutional facilities to create smart buildings.
                ``(3) Support of faculty exchanges, faculty development, and
            faculty fellowships to assist in attaining advanced degrees in
            the field of instruction of the faculty.
                ``(4) Development and improvement of academic programs.
                ``(5) Purchase of library books, periodicals, and other
            educational materials, including telecommunications program
            material.
                ``(6) Tutoring, counseling, and student service programs
            designed to improve academic success.
                ``(7) Funds management, administrative management, and
            acquisition of equipment for use in strengthening funds
            management.
                ``(8) Joint use of facilities, such as laboratories and
            libraries.
                ``(9) Establishing or improving a development office to
            strengthen or improve contributions from alumni and the private
            sector.
                ``(10) Establishing or improving an endowment fund.
                ``(11) Creating or improving facilities for Internet or
            other distance learning academic instruction capabilities,
            including purchase or rental of telecommunications technology
            equipment or services.
                ``(12) Other activities proposed in the application
            submitted pursuant to subsection (c) that--
                        ``(A) contribute to carrying out the purposes of the
                    program assisted under this part; and
                        ``(B) are approved by the Secretary as part of the
                    review and acceptance of such application.

        ``(d) Endowment Fund.--
                ``(1) In general.--An eligible institution may use not more
            than 20 percent of the grant funds provided under this part to
            establish or increase an endowment fund at such institution.
                ``(2) Matching requirement.--In order to be eligible to use
            grant funds in accordance with paragraph (1), the eligible
            institution shall provide matching funds from non-Federal
            sources, in an amount equal to or greater than the Federal funds
            used in accordance with paragraph (1), for the establishment or
            increase of the endowment fund.
                ``(3) <<NOTE: Applicability.>> Comparability.--The
            provisions of part C, regarding the establishment or increase of
            an endowment fund, that

    [[Page 112 STAT. 1639]]

            the Secretary determines are not inconsistent with this
            subsection, shall apply to funds used under paragraph (1).''.

        (b) Endowment Fund Definition.--Section 312 (as amended by section
    301(c)(2)) (20 U.S.C. 1058) is amended--
                (1) by redesignating subsections (c) through (f ) as
            subsections (d) through (g), respectively; and
                (2) by inserting after subsection (b) the following:

        ``(c) Endowment Fund.--For the purpose of this part, the term
    `endowment fund' means a fund that--
                ``(1) is established by State law, by an institution of
            higher education, or by a foundation that is exempt from Federal
            income taxation;
                ``(2) is maintained for the purpose of generating income for
            the support of the institution; and
                ``(3) does not include real estate.''.

        (c) Duration of Grant.--Section 313 (20 U.S.C. 1059) is amended--
                (1) in subsection (b), by inserting ``subsection (c) and a
            grant under'' before ``section 394(a)(1)''; and
                (2) by adding at the end the following:

        ``(d) Wait-Out-Period.--Each eligible institution that received a
    grant under this part for a 5-year period shall not be eligible to
    receive an additional grant under this part until 2 years after the date
    on which the 5-year grant period terminates.''.
        (d) Applications.--Title III is amended by striking section 314 (20
    U.S.C. 1059a) and inserting the following:

    ``SEC. 314. APPLICATIONS. <<NOTE: 20 USC 1059a.>>

        ``Each eligible institution desiring to receive assistance under
    this part shall submit an application in accordance with the
    requirements of section 391.''.
        (e) American Indian Tribally Controlled Colleges and Universities.--
    Section 316 (20 U.S.C. 1059c) is amended to read as follows:

    ``SEC. 316. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND
                UNIVERSITIES.

        ``(a) Program Authorized.--The Secretary shall provide grants and
    related assistance to Indian Tribal Colleges and Universities to enable
    such institutions to improve and expand their capacity to serve Indian
    students.
        ``(b) Definitions.--In this section:
                ``(1) Indian.--The term `Indian' has the meaning given the
            term in section 2 of the Tribally Controlled College or
            University Assistance Act of 1978.
                ``(2) Indian tribe.--The term `Indian tribe' has the meaning
            given the term in section 2 of the Tribally Controlled College
            or University Assistance Act of 1978.
                ``(3) Tribal college or university.--The term `Tribal
            College or University' has the meaning give the term `tribally
            controlled college or university' in section 2 of the Tribally
            Controlled College or University Assistance Act of 1978, and
            includes an institution listed in the Equity in Educational Land
            Grant Status Act of 1994.
                ``(4) Institution of higher education.--The term
            `institution of higher education' means an institution of higher
            education as defined in section 101(a), except that paragraph
            (2) of such section shall not apply.

    [[Page 112 STAT. 1640]]

        ``(c) Authorized Activities.--
                ``(1) In general.--Grants awarded under this section shall
            be used by Tribal Colleges or Universities to assist such
            institutions to plan, develop, undertake, and carry out
            activities to improve and expand such institutions' capacity to
            serve Indian students.
                ``(2) Examples of authorized activities.--The activities
            described in paragraph (1) may include--
                        ``(A) purchase, rental, or lease of scientific or
                    laboratory equipment for educational purposes, including
                    instructional and research purposes;
                        ``(B) construction, maintenance, renovation, and
                    improvement in classrooms, libraries, laboratories, and
                    other instructional facilities, including purchase or
                    rental of telecommunications technology equipment or
                    services;
                        ``(C) support of faculty exchanges, faculty
                    development, and faculty fellowships to assist in
                    attaining advanced degrees in the faculty's field of
                    instruction;
                        ``(D) academic instruction in disciplines in which
                    Indians are underrepresented;
                        ``(E) purchase of library books, periodicals, and
                    other educational materials, including
                    telecommunications program material;
                        ``(F) tutoring, counseling, and student service
                    programs designed to improve academic success;
                        ``(G) funds management, administrative management,
                    and acquisition of equipment for use in strengthening
                    funds management;
                        ``(H) joint use of facilities, such as laboratories
                    and libraries;
                        ``(I) establishing or improving a development office
                    to strengthen or improve contributions from alumni and
                    the private sector;
                        ``(J) establishing or enhancing a program of teacher
                    education designed to qualify students to teach in
                    elementary schools or secondary schools, with a
                    particular emphasis on teaching Indian children and
                    youth, that shall include, as part of such program,
                    preparation for teacher certification;
                        ``(K) establishing community outreach programs that
                    encourage Indian elementary school and secondary school
                    students to develop the academic skills and the interest
                    to pursue postsecondary education; and
                        ``(L) other activities proposed in the application
                    submitted pursuant to subsection (d) that--
                              ``(i) contribute to carrying out the
                          activities described in subparagraphs (A) through
                          (K); and
                              ``(ii) are approved by the Secretary as part
                          of the review and acceptance of such application.
                ``(3) Endowment fund.--
                        ``(A) In general.--A Tribal College or University
                    may use not more than 20 percent of the grant funds
                    provided under this section to establish or increase an
                    endowment fund at the institution.
                        ``(B) Matching requirement.--In order to be eligible
                    to use grant funds in accordance with subparagraph (A),
                    the Tribal College or University shall provide matching

    [[Page 112 STAT. 1641]]

                    funds, in an amount equal to the Federal funds used in
                    accordance with subparagraph (A), for the establishment
                    or increase of the endowment fund.
                        ``(C) <<NOTE: Applicability.>> Comparability.--The
                    provisions of part C regarding the establishment or
                    increase of an endowment fund, that the Secretary
                    determines are not inconsistent with this paragraph,
                    shall apply to funds used under subparagraph (A).

        ``(d) Application Process.--
                ``(1) Institutional eligibility.--To be eligible to receive
            assistance under this section, a Tribal College or University
            shall be an eligible institution under section 312(b).
                ``(2) Application.--Any Tribal College or University
            desiring to receive assistance under this section shall submit
            an application to the Secretary at such time, and in such
            manner, as the Secretary may by regulation reasonably require.
            Each such application shall include--
                        ``(A) a 5-year plan for improving the assistance
                    provided by the Tribal College or University to Indian
                    students, increasing the rates at which Indian secondary
                    school students enroll in higher education, and
                    increasing overall postsecondary retention rates for
                    Indian students; and
                        ``(B) such enrollment data and other information and
                    assurances as the Secretary may require to demonstrate
                    compliance with paragraph (1).
                ``(3) Special rule.--For the purposes of this part, no
            Tribal College or University that is eligible for and receives
            funds under this section may concurrently receive other funds
            under this part or part B.''.

        (f ) Alaska Native and Native Hawaiian-Serving Institutions.--Part A
    of title III (20 U.S.C. 1057 et seq.) is amended by adding at the end
    the following:

    ``SEC. 317. <<NOTE: 20 USC 1059d.>>  ALASKA NATIVE AND NATIVE HAWAIIAN-
                SERVING INSTITUTIONS.

        ``(a) Program Authorized.--The Secretary shall provide grants and
    related assistance to Alaska Native-serving institutions and Native
    Hawaiian-serving institutions to enable such institutions to improve and
    expand their capacity to serve Alaska Natives and Native Hawaiians.
        ``(b) Definitions.--For the purpose of this section--
                ``(1) the term `Alaska Native' has the meaning given the
            term in section 9308 of the Elementary and Secondary Education
            Act of 1965;
                ``(2) the term `Alaska Native-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 20 percent
                    Alaska Native students;
                ``(3) the term `Native Hawaiian' has the meaning given the
            term in section 9212 of the Elementary and Secondary Education
            Act of 1965; and
                ``(4) the term `Native Hawaiian-serving institution' means
            an institution of higher education which--
                        ``(A) is an eligible institution under section
                    312(b); and

    [[Page 112 STAT. 1642]]

                        ``(B) at the time of application, has an enrollment
                    of undergraduate students that is at least 10 percent
                    Native Hawaiian students.

        ``(c) Authorized Activities.--
                ``(1) Types of activities authorized.--Grants awarded under
            this section shall be used by Alaska Native-serving institutions
            and Native Hawaiian-serving institutions to assist such
            institutions to plan, develop, undertake, and carry out
            activities to improve and expand such institutions' capacity to
            serve Alaska Natives or Native Hawaiians.
                ``(2) Examples of authorized activities.--Such programs may
            include--
                        ``(A) purchase, rental, or lease of scientific or
                    laboratory equipment for educational purposes, including
                    instructional and research purposes;
                        ``(B) renovation and improvement in classroom,
                    library, laboratory, and other instructional facilities;
                        ``(C) support of faculty exchanges, and faculty
                    development and faculty fellowships to assist in
                    attaining advanced degrees in the faculty's field of
                    instruction;
                        ``(D) curriculum development and academic
                    instruction;
                        ``(E) purchase of library books, periodicals,
                    microfilm, and other educational materials;
                        ``(F) funds and administrative management, and
                    acquisition of equipment for use in strengthening funds
                    management;
                        ``(G) joint use of facilities such as laboratories
                    and libraries; and
                        ``(H) academic tutoring and counseling programs and
                    student support services.

        ``(d) Application Process.--
                ``(1) Institutional eligibility.--Each Alaska Native-serving
            institution and Native Hawaiian-serving institution desiring to
            receive assistance under this section shall submit to the
            Secretary such enrollment data as may be necessary to
            demonstrate that the institution is an Alaska Native-serving
            institution or a Native Hawaiian-serving institution as defined
            in subsection (b), along with such other information and data as
            the Secretary may by regulation require.
                ``(2) Applications.--Any institution which is determined by
            the Secretary to be an Alaska Native-serving institution or a
            Native Hawaiian-serving institution may submit an application
            for assistance under this section to the Secretary. Such
            application shall include--
                        ``(A) a 5-year plan for improving the assistance
                    provided by the Alaska Native-serving institution or the
                    Native Hawaiian-serving institution to Alaska Native or
                    Native Hawaiian students; and
                        ``(B) such other information and assurance as the
                    Secretary may require.

        ``(e) Special Rule.--For the purposes of this section, no Alaska
    Native-serving institution or Native Hawaiian-serving institution which
    is eligible for and receives funds under this section may concurrently
    receive other funds under this part or part B.''.

    SEC. 304. STRENGTHENING HBCU's.

        (a) Grants.--Section 323 (20 U.S.C. 1062) is amended--

    [[Page 112 STAT. 1643]]

                (1) by redesignating subsection (b) as subsection (c);
                (2) by inserting after subsection (a) the following:

        ``(b) Endowment Fund.--
                ``(1) In general.--An institution may use not more than 20
            percent of the grant funds provided under this part to establish
            or increase an endowment fund at the institution.
                ``(2) Matching requirement.--In order to be eligible to use
            grant funds in accordance with paragraph (1), the eligible
            institution shall provide matching funds from non-Federal
            sources, in an amount equal to or greater than the Federal funds
            used in accordance with paragraph (1), for the establishment or
            increase of the endowment fund.
                ``(3) <<NOTE: Applicability.>> Comparability.--The
            provisions of part C regarding the establishment or increase of
            an endowment fund, that the Secretary determines are not
            inconsistent with this subsection, shall apply to funds used
            under paragraph (1).''; and
                (3) in subsection (c) (as redesignated by paragraph (1)), by
            striking paragraph (3).

        (b) Professional or Graduate Institutions.--
                (1) General authorization.--Section 326(a) (20 U.S.C.
            1063b(a)) is amended--
                        (A) in subsection (a)--
                              (i) in paragraph (1), by inserting ``in
                          mathematics, engineering, or the physical or
                          natural sciences'' after ``graduate education
                          opportunities''; and
                              (ii) in paragraph (2)--
                                        (I) by striking ``$500,000'' and
                                    inserting ``$1,000,000''; and
                                        (II) by striking ``except that'' and
                                    all that follows and inserting the
                                    following: ``, except that no
                                    institution shall be required to match
                                    any portion of the first $1,000,000 of
                                    the institution's award from the
                                    Secretary. After funds are made
                                    available to each eligible institution
                                    under the funding rules described in
                                    subsection (f ), the Secretary shall
                                    distribute, on a pro rata basis, any
                                    amounts which were not so made available
                                    (by reason of the failure of an
                                    institution to comply with the matching
                                    requirements of this paragraph) among
                                    the institutions that have complied with
                                    such matching requirement.''; and
                        (B) in subsection (d)(2), by striking ``$500,000''
                    and inserting ``$1,000,000''.
                (2) Use of funds.--Section 326(c) (20 U.S.C. 1063b(c)) is
            amended by striking paragraphs (1) through (3) and inserting the
            following:
                ``(1) purchase, rental or lease of scientific or laboratory
            equipment for educational purposes, including instructional and
            research purposes;
                ``(2) construction, maintenance, renovation, and improvement
            in classroom, library, laboratory, and other instructional
            facilities, including purchase or rental of telecommunications
            technology equipment or services;
                ``(3) purchase of library books, periodicals, technical and
            other scientific journals, microfilm, microfiche, and other
            educational materials, including telecommunications program
            materials;

    [[Page 112 STAT. 1644]]

                ``(4) scholarships, fellowships, and other financial
            assistance for needy graduate and professional students to
            permit the enrollment of the students in and completion of the
            doctoral degree in medicine, dentistry, pharmacy, veterinary
            medicine, law, and the doctorate degree in the physical or
            natural sciences, engineering, mathematics, or other scientific
            disciplines in which African Americans are underrepresented;
                ``(5) establish or improve a development office to
            strengthen and increase contributions from alumni and the
            private sector;
                ``(6) assist in the establishment or maintenance of an
            institutional endowment to facilitate financial independence
            pursuant to section 331; and
                ``(7) funds and administrative management, and the
            acquisition of equipment, including software, for use in
            strengthening funds management and management information
            systems.''.
                (3) Eligibility.--Section 326(e) (20 U.S.C. 1063b(e)) is
            amended--
                        (A) in paragraph (1)--
                              (i) by striking ``include--'' and inserting
                          ``are the following'';
                              (ii) by inserting ``and other qualified
                          graduate programs'' before the semicolon at the
                          end of subparagraphs (E) through (J);
                              (iii) by striking ``and'' at the end of
                          subparagraph (O); and
                              (iv) in subparagraph (P)--
                                        (I) by inserting ``University''
                                    after ``State''; and
                                        (II) by striking the period and
                                    inserting a semicolon; and
                                        (III) by adding at the end the
                                    following:
                        ``(Q) Norfolk State University qualified graduate
                    programs; and
                        ``(R) Tennessee State University qualified graduate
                    programs.'';
                        (B) by striking paragraphs (2) and (3) and inserting
                    the following:
                ``(2) Qualified graduate program.--(A) For the purposes of
            this section, the term `qualified graduate program' means a
            graduate or professional program that provides a program of
            instruction in the physical or natural sciences, engineering,
            mathematics, or other scientific discipline in which African
            Americans are underrepresented and has students enrolled in such
            program at the time of application for a grant under this
            section.
                ``(B) Notwithstanding the enrollment requirement contained
            in subparagraph (A), an institution may use an amount equal to
            not more than 10 percent of the institution's grant under this
            section for the development of a new qualified graduate program.
                ``(3) Special rule.--Institutions that were awarded grants
            under this section prior to October 1, 1998, shall continue to
            receive such grants, subject to the availability of appropriated
            funds, regardless of the eligibility of the institutions
            described in subparagraphs (Q) and (R) of paragraph (1).''; and
                        (C) by adding at the end the following:

    [[Page 112 STAT. 1645]]

                ``(5) Institutional choice.--The president or chancellor of
            the institution may decide which graduate or professional school
            or qualified graduate program will receive funds under the grant
            in any 1 fiscal year, if the allocation of funds among the
            schools or programs is delineated in the application for funds
            submitted to the Secretary under this section.''.
                (4) Funding rule.--Section 326(f ) (20 U.S.C. 1063b(f )) is
            amended--
                        (A) by striking ``Of the amount appropriated'' and
                    inserting ``Subject to subsection (g), of the amount
                    appropriated'';
                        (B) in paragraph (1)--
                              (i) by striking ``$12,000,000'' and inserting
                          ``$26,600,000''; and
                              (ii) by striking ``(A) through (E)'' and
                          inserting ``(A) through (P)'';
                        (C) by striking paragraph (2) and inserting the
                    following:
                ``(2) any amount in excess of $26,600,000, but not in excess
            of $28,600,000, shall be available for the purpose of making
            grants to institutions or programs described in subparagraphs
            (Q) and (R) of subsection (e)(1); and
                ``(3) any amount in excess of $28,600,000, shall be made
            available to each of the institutions or programs identified in
            subparagraphs (A) through (R) pursuant to a formula developed by
            the Secretary that uses the following elements:
                        ``(A) The ability of the institution to match
                    Federal funds with non-Federal funds.
                        ``(B) The number of students enrolled in the
                    programs for which the eligible institution received
                    funding under this section in the previous year.
                        ``(C) The average cost of education per student, for
                    all full-time graduate or professional students (or the
                    equivalent) enrolled in the eligible professional or
                    graduate school, or for doctoral students enrolled in
                    the qualified graduate programs.
                        ``(D) The number of students in the previous year
                    who received their first professional or doctoral degree
                    from the programs for which the eligible institution
                    received funding under this section in the previous
                    year.
                        ``(E) The contribution, on a percent basis, of the
                    programs for which the institution is eligible to
                    receive funds under this section to the total number of
                    African Americans receiving graduate or professional
                    degrees in the professions or disciplines related to the
                    programs for the previous year.''.
                (5) Hold harmless rule.--Section 326 is further amended by
            adding at the end the following new subsection:

        ``(g) Hold Harmless Rule.--Notwithstanding paragraphs (2) and (3) of
    subsection (f ), no institution or qualified program identified in
    subsection (e)(1) that received a grant for fiscal year 1998 and that is
    eligible to receive a grant in a subsequent fiscal year shall receive a
    grant amount in any such subsequent fiscal year that is less than the
    grant amount received for fiscal year 1998, unless the amount
    appropriated is not sufficient to provide such

    [[Page 112 STAT. 1646]]

    grant amounts to all such institutions and programs, or the institution
    cannot provide sufficient matching funds to meet the requirements of
    this section.''.

    SEC. 305. ENDOWMENT CHALLENGE GRANTS.

        Section 331(b) (20 U.S.C. 1065(b)) is amended--
                (1) in paragraph (1), by striking ``360'' and inserting
            ``399''; and
                (2) in paragraph (2), by striking subparagraphs (B) and (C)
            and inserting the following:

        ``(B) The Secretary may make a grant under this part to an eligible
    institution in any fiscal year if the institution--
                ``(i) applies for a grant in an amount not exceeding
            $500,000; and
                ``(ii) has deposited in the eligible institution's endowment
            fund established under this section an amount which is equal to
            \1/2\ of the amount of such grant.

        ``(C) An eligible institution of higher education that is awarded a
    grant under subparagraph (B) shall not be eligible to receive an
    additional grant under subparagraph (B) until 10 years after the date on
    which the grant period terminates.''.

    SEC. 306. HBCU CAPITAL FINANCING.

        (a) Definition.--Section 342(5) <<NOTE: 20 USC 1066a.>> (as
    redesignated by section 301(a)(4)) (20 U.S.C. 1132c-1(5)) is amended--
                (1) by redesignating subparagraphs (B), (C), and (D) as
            subparagraphs (C), (G), and (H), respectively;
                (2) by inserting after subparagraph (A) the following:
                        ``(B) a facility for the administration of an
                    educational program, or a student center or student
                    union, except that not more than 5 percent of the loan
                    proceeds provided under this part may be used for the
                    facility, center or union if the facility, center or
                    union is owned, leased, managed, or operated by a
                    private business, that, in return for such use, makes a
                    payment to the eligible institution;'';
                (3) in subparagraph (C) (as redesignated by paragraph (1)),
            insert ``technology,'' after ``instructional equipment'';
                (4) by inserting after subparagraph (C) (as redesignated by
            paragraph (1)) the following:
                        ``(D) a maintenance, storage, or utility facility
                    that is essential to the operation of a facility, a
                    library, a dormitory, equipment, instrumentation, a
                    fixture, real property or an interest therein, described
                    in this paragraph;
                        ``(E) a facility designed to provide primarily
                    outpatient health care for students or faculty;
                        ``(F) physical infrastructure essential to support
                    the projects authorized under this paragraph, including
                    roads, sewer and drainage systems, and water, power,
                    lighting, telecommunications, and other utilities;'';
                    and
                (5) in subparagraph (H) (as redesignated by paragraph (2)),
            by striking ``(C)'' and inserting ``(G)''.

        (b) Responsibilities.--Section 343 <<NOTE: 20 USC 1066b.>> (as
    redesignated by section 301(a)(4)) (20 U.S.C. 1132c-2) is amended--
                (1) in subsection (b)(8) (as redesignated by section
            301(a)(4)) (20 U.S.C. 1132c-2(b)(8)), by striking ``10 percent''
            each place the term appears and inserting ``5 percent''; and
                (2) by adding at the end the following:

    [[Page 112 STAT. 1647]]

        ``(e) Notwithstanding any other provision of law, a qualified bond
    guaranteed under this part may be sold to any party that offers terms
    that the Secretary determines are in the best interest of the eligible
    institution.''.
        (c) Technical Assistance.--Section 345 <<NOTE: 20 USC 1066d.>> (as
    redesignated by section 301(a)(4)) (20 U.S.C. 1132c-4) is amended--
                (1) in paragraph (5), by striking ``and'' after the
            semicolon;
                (2) in paragraph (6), by striking the period and inserting
            ``; and''; and
                (3) by adding at the end the following:
                ``(7) may, directly or by grant or contract, provide
            technical assistance to eligible institutions to prepare the
            institutions to qualify, apply for, and maintain a capital
            improvement loan, including a loan under this part.''.

        (d) Prohibition.--Section 346 <<NOTE: 20 USC 1066e.>> (as
    redesignated by section 301(a)(4)) (20 U.S.C. 1132c-5) is repealed.

        (e) Advisory Board.--Section 347 <<NOTE: 20 USC 1066f.>> (as
    redesignated by section 301(a)(4)) (20 U.S.C. 1132c-6) is amended--
                (1) in subsection (b)--
                        (A) in subparagraph (D), by inserting ``, or the
                    president's designee.'' after the period; and
                        (B) in subparagraph (E), by inserting ``, or the
                    designee of the Association'' before the period; and
                (2) by striking subsection (c).

    SEC. 307. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT
                PROGRAM.

        (a) Minority Science and Engineering Improvement
    Program Findings.--Subpart 1 of part E of title III (as redesignated by
    paragraphs (6) and (7) of section 301) (20 U.S.C. 1135b et seq.) is
    amended by inserting after the subpart heading the following:

    ``SEC. 350. FINDINGS. <<NOTE: 20 USC 1067.>>

        ``Congress makes the following findings:
                ``(1) It is incumbent on the Federal Government to support
            the technological and economic competitiveness of the United
            States by improving and expanding the scientific and
            technological capacity of the United States. More and better
            prepared scientists, engineers, and technical experts are needed
            to improve and expand such capacity.
                ``(2) As the Nation's population becomes more diverse, it is
            important that the educational and training needs of all
            Americans are met. Underrepresentation of minorities in science
            and technological fields diminishes our Nation's competitiveness
            by impairing the quantity of well prepared scientists,
            engineers, and technical experts in these fields.
                ``(3) Despite significant limitations in resources, minority
            institutions provide an important educational opportunity for
            minority students, particularly in science and engineering
            fields. Aid to minority institutions is a good way to address
            the underrepresentation of minorities in science and
            technological fields.
                ``(4) There is a strong Federal interest in improving
            science and engineering programs at minority institutions as
            such programs lag behind in program offerings and in student
            enrollment compared to such programs at other institutions of
            higher education.''.

    [[Page 112 STAT. 1648]]

        (b) Eligibility for Grants.--Section 361 (as redesignated by section
    301(a)(7)) (20 U.S.C. 1135d) is amended to read as follows:

    ``SEC. 361. ELIGIBILITY FOR GRANTS. <<NOTE: 20 USC 1067g.>>

        ``Eligibility to receive grants under this part is limited to--
                ``(1) public and private nonprofit institutions of higher
            education that--
                        ``(A) award baccalaureate degrees; and
                        ``(B) are minority institutions;
                ``(2) public or private nonprofit institutions of higher
            education that--
                        ``(A) award associate degrees; and
                        ``(B) are minority institutions that--
                              ``(i) have a curriculum that includes science
                          or engineering subjects; and
                              ``(ii) enter into a partnership with public or
                          private nonprofit institutions of higher education
                          that award baccalaureate degrees in science and
                          engineering;
                ``(3) nonprofit science-oriented organizations, professional
            scientific societies, and institutions of higher education that
            award baccalaureate degrees, that--
                        ``(A) provide a needed service to a group of
                    minority institutions; or
                        ``(B) provide in-service training for project
                    directors, scientists, and engineers from minority
                    institutions; or
                ``(4) consortia of organizations, that provide needed
            services to one or more minority institutions, the membership of
            which may include--
                        ``(A) institutions of higher education which have a
                    curriculum in science or engineering;
                        ``(B) institutions of higher education that have a
                    graduate or professional program in science or
                    engineering;
                        ``(C) research laboratories of, or under contract
                    with, the Department of Energy;
                        ``(D) private organizations that have science or
                    engineering facilities; or
                        ``(E) quasi-governmental entities that have a
                    significant scientific or engineering mission.''.

        (c) Definitions.--Section 365(4) <<NOTE: 20 USC 1067k.>> (as
    redesignated by section 301(a)(7)) (20 U.S.C. 1135d-5(4)) is amended by
    inserting ``behavioral,'' after ``physical,''.

        (d) Conforming amendments.--The heading for subpart 1 of part E of
    title III (as redesignated by paragraphs (6) and (7) of section 301(a))
    is amended by inserting ``and Engineering'' before ``Improvement
    Program''.

    SEC. 308. GENERAL PROVISIONS.

        (a) Applications for Assistance.--Subsection (a) of section
    391(a) <<NOTE: 20 USC 1068.>> (as redesignated by section 301(a)(2)) (20
    U.S.C. 1066(a)) is amended to read as follows:

        ``(a) Applications.--
                ``(1) Applications required.--Any institution which is
            eligible for assistance under this title shall submit to the
            Secretary an application for assistance at such time, in such
            form, and containing such information, as may be necessary to
            enable the Secretary to evaluate the institution's need for the
            assistance. Subject to the availability of appropriations to
            carry out

    [[Page 112 STAT. 1649]]

            this title, the Secretary may approve an application for
            assistance under this title only if the Secretary determines
            that--
                        ``(A) the application meets the requirements of
                    subsection (b);
                        ``(B) the applicant is eligible for assistance in
                    accordance with the part of this title under which the
                    assistance is sought; and
                        ``(C) the applicant's performance goals are
                    sufficiently rigorous as to meet the purposes of this
                    title and the performance objectives and indicators for
                    this title established by the Secretary pursuant to the
                    Government Performance and Results Act of 1993 and the
                    amendments made by such Act.
                ``(2) Preliminary applications.--In carrying out paragraph
            (1), the Secretary may develop a preliminary application for use
            by eligible institutions applying under part A prior to the
            submission of the principal application.''.

        (b) Applications.--Paragraph (1) of section 391(b) <<NOTE: 20 USC
    1068.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1066(b)) is
    amended by inserting ``, D or E'' after ``part C''.

        (c) Contents of Applications.--Section 391(b)(6) (as redesignated by
    section 301(a)(2)) is amended by inserting before the semicolon the
    following: ``, except that for purposes of section 316, paragraphs (2)
    and (3) of section 396 shall not apply''.
        (d) Waivers.--Section 392(a) <<NOTE: 20 USC 1068a.>> (as
    redesignated by section 301(a)(2)) (20 U.S.C. 1067(a)) is amended--
                (1) by striking ``or'' at the end of paragraph (5);
                (2) by redesignating paragraph (6) as paragraph (7); and
                (3) by inserting after paragraph (5) the following new
            paragraph:
                ``(6) that is a tribally controlled college or university as
            defined in section 2 of the Tribally Controlled College or
            University Assistance Act of 1978; or''.

        (e) Application Review Process.--Section 393(a) <<NOTE: 20 USC
    1068b.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1068(a)) is
    amended--
                (1) in paragraph (2), by striking ``Native American colleges
            and universities'' and inserting ``Tribal Colleges and
            Universities''; and
                (2) by adding at the end the following:

        ``(d) Exclusion.--The provisions of this section shall not apply to
    applications submitted under part D.''.
        (f ) Waivers.--Paragraph (2) of section 395(b) <<NOTE: 20 USC
    1068d.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1069b(b)) is
    amended by striking ``title IV, VII, or VIII'' and inserting ``part D or
    title IV''.

        (g) Continuation Awards.--Part F of title III is amended by
    inserting after section 397 (as redesignated by section 301(a)(2)) (20
    U.S.C. 1069d) the following:

    ``SEC. 398. CONTINUATION AWARDS. <<NOTE: 20 USC 1068g.>>

        ``The Secretary shall make continuation awards under this title for
    the second and succeeding years of a grant only after determining that
    the recipient is making satisfactory progress in carrying out the
    grant.''.
        (h) Authorization of Appropriations.--Section 399(a) <<NOTE: 20 USC
    1068h.>> (as redesignated by section 301(a)(2)) (20 U.S.C. 1069f) is
    amended--
                (1) in paragraph (1)--

    [[Page 112 STAT. 1650]]

                        (A) in subparagraph (A), by striking ``1993'' and
                    inserting ``1999'';
                        (B) in subparagraph (B)--
                              (i) in clause (i), by striking ``$45,000,000
                          for fiscal year 1993'' and inserting ``$10,000,000
                          for fiscal year 1999'';
                              (ii) by striking clause (ii); and
                              (iii) by striking ``(B)(i) There'' and
                          inserting ``(B) There''; and
                        (C) by adding at the end the following:
                ``(C) There are authorized to be appropriated to carry out
            section 317, $5,000,000 for fiscal year 1999 and such sums as
            may be necessary for each of the 4 succeeding fiscal years.'';
                (2) in paragraph (2)--
                        (A) in subparagraph (A), by striking ``1993'' and
                    inserting ``1999''; and
                        (B) in subparagraph (B), by striking ``$20,000,000
                    for fiscal year 1993'' and inserting ``$35,000,000 for
                    fiscal year 1999'';
                (3) in paragraph (3), by striking ``$50,000,000 for fiscal
            year 1993'' and inserting ``$10,000,000 for fiscal year 1999'';
                (4) by adding at the end the following:
                ``(4) Part d.--(A) There are authorized to be appropriated
            to carry out part D (other than section 345(7), but including
            section 347), $110,000 for fiscal year 1999, and such sums as
            may be necessary for each of the 4 succeeding fiscal years.
                ``(B) There are authorized to be appropriated to carry out
            section 345(7), such sums as may be necessary for fiscal year
            1999 and each of the 4 succeeding fiscal years.
                ``(5) Part e.--There are authorized to be appropriated to
            carry out part E, $10,000,000 for fiscal year 1999, and such
            sums as may be necessary for each of the 4 succeeding fiscal
            years.''; and
                (5) by striking subsections (c), (d), and (e).

                          TITLE IV--STUDENT ASSISTANCE

                           PART A--GRANTS TO STUDENTS

    SEC. 401. FEDERAL PELL GRANTS.

        (a) Extension of Authority.--Section 401(a)(1) (20 U.S.C.
    1070a(a)(1)) is amended--
                (1) in the first sentence, by striking ``The Secretary
            shall, during the period beginning July 1, 1972, and ending
            September 30, 1998,'' and inserting ``For each fiscal year
            through fiscal year 2004, the Secretary shall''; and
                (2) <<NOTE: Federal Register, publication.>> in the second
            sentence, by inserting ``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,'' after ``pay eligible students''.

        (b) Amount of Grant.--Paragraph (2)(A) of section 401(b) 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) $4,500 for academic year 1999-2000;

    [[Page 112 STAT. 1651]]

                ``(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.''.
        (c) Relation of Maximum Grant to Tuition and Expenses.--Paragraph
    (3) of section 401(b) <<NOTE: 20 USC 1070a.>> is amended to read as
    follows:

        ``(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.''.
        (d) Regulations for Multiple Awards.--Section 401(b)(6) is amended--
                (1) by redesignating subparagraphs (A) and (B) as clauses
            (i) and (ii), respectively;
                (2) by inserting ``(A)'' after the paragraph designation;
            and
                (3) by adding at the end the following:

        ``(B) <<NOTE: Regulations.>> The Secretary shall promulgate
    regulations implementing this paragraph.''.

        (e) Time Limit To Receive Grants.--Section 401(c) is amended by
    adding at the end the following:
        ``(4) Notwithstanding paragraph (1), the Secretary may allow, on a
    case-by-case basis, a student to receive a basic grant if the student--
                ``(A) is carrying at least one-half the normal full-time
            work load for the course of study the student is pursuing, as
            determined by the institution of higher education; and
                ``(B) is enrolled or accepted for enrollment in a
            postbaccalaureate program that does not lead to a graduate
            degree, and in courses required by a State in order for the
            student to receive a professional certification or licensing
            credential that is required for employment as a teacher in an
            elementary school or secondary school in that State,

    except that this paragraph shall not apply to a student who is enrolled
    in an institution of higher education that offers a baccalaureate degree
    in education.''.
        (f ) Institutional Ineligibility Based on Default Rates.--Section
    401 is amended by adding at the end the following:
        ``( j) Institutional Ineligibility Based on Default Rates.--
                ``(1) In general.--No institution of higher education shall
            be an eligible institution for purposes of this subpart if such
            institution of higher education is ineligible to participate in
            a loan program under part B or D as a result of a final default
            rate determination made by the Secretary under part

    [[Page 112 STAT. 1652]]

            B or D after the final publication of cohort default rates for
            fiscal year 1996 or a succeeding fiscal year.
                ``(2) <<NOTE: Regulations.>> Sanctions subject to appeal
            opportunity.--No institution may be subject to the terms of this
            subsection unless the institution has had the opportunity to
            appeal the institution's default rate determination under
            regulations issued by the Secretary for the loan program
            authorized under part B or D, as applicable. This subsection
            shall not apply to an institution that was not participating in
            the loan program authorized under part B or D on the date of
            enactment of the Higher Education Amendments of 1998, unless the
            institution subsequently participates in the loan programs.''.

        (g) Conforming Amendments.--
                (1) Section 400(a)(1) (20 U.S.C. 1070(a)(1)) is amended by
            striking ``basic educational opportunity grants'' and inserting
            ``Federal Pell Grants''.
                (2) The heading of subpart 1 of part A of title IV (20
            U.S.C. 1070a et seq.) is amended to read as follows:

                       ``Subpart 1--Federal Pell Grants''.

                (3) Section 401 is amended-- <<NOTE: 20 USC 1070a.>>
                        (A) in the heading of the section, by striking
                    ``basic educational opportunity'' and inserting
                    ``federal pell'';
                        (B) in subsection (a)(3), by striking ``Basic
                    grants'' and inserting ``Grants'';
                        (C) by striking ``basic grant'' each place the term
                    appears and inserting ``Federal Pell Grant''; and
                        (D) by striking ``basic grants'' each place the term
                    appears and inserting ``Federal Pell Grants''.
                (4) Section 401(f )(3) is amended by striking ``Education
            and Labor'' and inserting ``Education and the Workforce''.
                (5) Section 452(c) (20 U.S.C. 1087b(c)) is amended by
            striking ``basic grants'' and inserting ``Federal Pell Grants''.
                (6) Subsections ( j)(2) and (k)(3) of section 455 (20 U.S.C.
            1087e) are each amended by striking ``basic grants'' and
            inserting ``Federal Pell Grants''.

    SEC. 402. FEDERAL TRIO PROGRAMS.

        (a) Program Authority; Authorization of Appropriations.--
                (1) Duration of grants.--Section 402A(b)(2) (20 U.S.C.
            1070a-11(b)(2)) is amended--
                        (A) by striking ``and'' at the end of subparagraph
                    (A);
                        (B) by striking the period at the end of
                    subparagraph (B) and inserting ``; and''; and
                        (C) by inserting after subparagraph (B) the
                    following new subparagraph:
                        ``(C) grants under section 402H shall be awarded for
                    a period determined by the Secretary.''.
                (2) Minimum grants.--Section 402A(b)(3) is amended to read
            as follows:
                ``(3) Minimum grants.--Unless the institution or agency
            requests a smaller amount, individual grants under this chapter
            shall be no less than--
                        ``(A) $170,000 for programs authorized by sections
                    402D and 402G;

    [[Page 112 STAT. 1653]]

                        ``(B) $180,000 for programs authorized by sections
                    402B and 402F; and
                        ``(C) $190,000 for programs authorized by sections
                    402C and 402E.''.
                (3) Procedures for awarding grants and contracts.--
            Subsection (c) of section 402A is amended <<NOTE: 20 USC 1070a-
            11.>> to read as follows:

        ``(c) Procedures for Awarding Grants and Contracts.--
                ``(1) Application requirements.--An eligible entity that
            desires to receive a grant or contract under this chapter shall
            submit an application to the Secretary in such manner and form,
            and containing such information and assurances, as the Secretary
            may reasonably require.
                ``(2) Prior experience.--In making grants under this
            chapter, the Secretary shall consider each applicant's prior
            experience of service delivery under the particular program for
            which funds are sought. The level of consideration given the
            factor of prior experience shall not vary from the level of
            consideration given such factor during fiscal years 1994 through
            1997, except that grants made under section 402H shall not be
            given prior experience consideration.
                ``(3) <<NOTE: Grants. Contracts.>>  Order of awards; program
            fraud.--(A) Except with respect to grants made under sections
            402G and 402H and as provided in subparagraph (B), the Secretary
            shall award grants and contracts under this chapter in the order
            of the scores received by the application for such grant or
            contract in the peer review process required under paragraph (4)
            and adjusted for prior experience in accordance with paragraph
            (2) of this subsection.
                ``(B) The Secretary is not required to provide assistance to
            a program otherwise eligible for assistance under this chapter,
            if the Secretary has determined that such program has involved
            the fraudulent use of funds under this chapter.
                ``(4) Peer review process.--(A) The Secretary shall ensure
            that, to the extent practicable, members of groups
            underrepresented in higher education, including African
            Americans, Hispanics, Native Americans, Alaska Natives, Asian
            Americans, and Native American Pacific Islanders (including
            Native Hawaiians), are represented as readers of applications
            submitted under this chapter. The Secretary shall also ensure
            that persons from urban and rural backgrounds are represented as
            readers.
                ``(B) The Secretary shall ensure that each application
            submitted under this chapter is read by at least three readers
            who are not employees of the Federal Government (other than as
            readers of applications).
                ``(5) Number of applications for grants and contracts.--The
            Secretary shall not limit the number of applications submitted
            by an entity under any program authorized under this chapter if
            the additional applications describe programs serving different
            populations or campuses.
                ``(6) Coordination with other programs for disadvantaged
            students.--The Secretary shall encourage coordination of
            programs assisted under this chapter with other programs for
            disadvantaged students operated by the sponsoring institution or
            agency, regardless of the funding source of such programs. The
            Secretary shall not limit an entity's eligibility to receive
            funds under this chapter because such entity sponsors

    [[Page 112 STAT. 1654]]

            a program similar to the program to be assisted under this
            chapter, regardless of the funding source of such program. The
            Secretary shall permit the Director of a program receiving funds
            under this chapter to administer one or more additional programs
            for disadvantaged students operated by the sponsoring
            institution or agency, regardless of the funding sources of such
            programs.
                ``(7)  Application status.--The Secretary shall inform each
            entity operating programs under this chapter regarding the
            status of their application for continued funding at least 8
            months prior to the expiration of the grant or contract. The
            Secretary, in the case of an entity that is continuing to
            operate a successful program under this chapter, shall ensure
            that the start-up date for a new grant or contract for such
            program immediately follows the termination of the preceding
            grant or contract so that no interruption of funding occurs for
            such successful reapplicants. The Secretary shall inform each
            entity requesting assistance under this chapter for a new
            program regarding the status of their application at least 8
            months prior to the proposed startup date of such program.''.
                (4) Authorization of appropriations.--Section 402A(f ) is
            amended <<NOTE: 20 USC 1070a-11.>> by striking ``$650,000,000
            for fiscal year 1993'' and inserting ``$700,000,000 for fiscal
            year 1999''.
                (5) Waiver.--Section 402A(g) is amended by adding at the end
            the following:
                ``(4) Waiver.--The Secretary may waive the service
            requirements in subparagraph (A) or (B) of paragraph (3) if the
            Secretary determines the application of the service requirements
            to a veteran will defeat the purpose of a program under this
            chapter.''.

        (b) Talent Search.--Section 402B(b) (20 U.S.C. 1070a-12(b)) is
    amended--
                (1) by striking paragraph (4) and inserting the following:
                ``(4) guidance on and assistance in secondary school
            reentry, entry to general educational development (GED)
            programs, other alternative education programs for secondary
            school dropouts, or postsecondary education;'';
                (2) in paragraph (5), by inserting ``, or activities
            designed to acquaint individuals from disadvantaged backgrounds
            with careers in which the individuals are particularly
            underrepresented'' before the semicolon;
                (3) in paragraph (8), by striking ``parents'' and inserting
            ``families''; and
                (4) in paragraph (9), by inserting ``or counselors'' after
            ``teachers''.

        (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is amended--
                (1) in subsection (b)--
                        (A) in paragraph (2), by striking ``personal
                    counseling'' and inserting ``counseling and workshops'';
                        (B) in paragraph (9)--
                              (i) by inserting ``or counselors'' after
                          ``teachers''; and
                              (ii) by striking ``and'' after the semicolon;
                        (C) by redesignating paragraph (10) as paragraph
                    (12);
                        (D) by inserting after paragraph (9) the following:

    [[Page 112 STAT. 1655]]

                ``(10) work-study positions where youth participating in the
            project are exposed to careers requiring a postsecondary degree;
                ``(11) special services to enable veterans to make the
            transition to postsecondary education; and''; and
                        (E) in paragraph (12) (as redesignated by
                    subparagraph (C)), by striking ``(9)'' and inserting
                    ``(11)''; and
                (2) in subsection (e), by striking ``and not in excess of
            $40 per month during the remaining period of the year.'' and
            inserting ``except that youth participating in a work-study
            position under subsection (b)(10) may be paid a stipend of $300
            per month during June, July, and August. Youths participating in
            a project proposed to be carried out under any application may
            be paid stipends not in excess of $40 per month during the
            remaining period of the year.''.

        (d) Student Support Services.--Paragraph (6) of section 402D(c) (20
    U.S.C. 1070a-14(c)(6)) is amended to read as follows:
                ``(6) consider, in addition to such other criteria as the
            Secretary may prescribe, the institution's effort, and where
            applicable past history, in--
                        ``(A) providing sufficient financial assistance to
                    meet the full financial need of each student in the
                    project; and
                        ``(B) maintaining the loan burden of each such
                    student at a manageable level.''.

        (e) Postbaccalaureate Achievement Program.--Section 402E(e)(1) (20
    U.S.C. 1070a-15(e)(1)) is amended by striking ``$2,400'' and inserting
    ``$2,800''.
        (f ) Staff Development Activities.--Section 402G (20 U.S.C. 1070a-
    17) is amended--
                (1) in subsection (a), by inserting ``participating in,''
            after ``leadership personnel employed in,''; and
                (2) in subsection (b), by inserting after paragraph (3) the
            following new paragraph:
                ``(4) The use of appropriate educational technology in the
            operation of projects assisted under this chapter.''.

        (g) Evaluation and Dissemination.--Section 402H (20 U.S.C. 1070a-18)
    is amended to read as follows:

    ``SEC. 402H. EVALUATIONS AND GRANTS FOR PROJECT IMPROVEMENT AND
                DISSEMINATION PARTNERSHIP PROJECTS.

        ``(a) Evaluations.--
                ``(1) In general.--For the purpose of improving the
            effectiveness of the programs and projects assisted under this
            chapter, the Secretary may make grants to or enter into
            contracts with institutions of higher education and other public
            and private institutions and organizations to evaluate the
            effectiveness of the programs and projects assisted under this
            chapter.
                ``(2) Practices.--The evaluations described in paragraph (1)
            shall identify institutional, community, and program or project
            practices that are particularly effective in enhancing the
            access of low-income individuals and first-generation college
            students to postsecondary education, the preparation of the
            individuals and students for postsecondary education, and the
            success of the individuals and students in postsecondary
            education. Such evaluations shall also investigate the
            effectiveness of alternative and innovative methods within
            Federal TRIO

    [[Page 112 STAT. 1656]]

            programs of increasing access to, and retention of, students in
            postsecondary education.

        ``(b) Grants.--The Secretary may award grants to institutions of
    higher education or other private and public institutions and
    organizations, that are carrying out a program or project assisted under
    this chapter prior to the date of enactment of the Higher Education
    Amendments of 1998, to enable the institutions and organizations to
    expand and leverage the success of such programs or projects by working
    in partnership with other institutions, community-based organizations,
    or combinations of such institutions and organizations, that are not
    receiving assistance under this chapter and are serving low-income
    students and first generation college students, in order to--
                ``(1) disseminate and replicate best practices of programs
            or projects assisted under this chapter; and
                ``(2) provide technical assistance regarding programs and
            projects assisted under this chapter.

        ``(c) Results.--In order to improve overall program or project
    effectiveness, the results of evaluations and grants described in this
    section shall be disseminated by the Secretary to similar programs or
    projects assisted under this subpart, as well as other individuals
    concerned with postsecondary access for and retention of low-income
    individuals and first-generation college students.''.

    SEC. 403. GEAR UP PROGRAM.

        Chapter 2 of subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et
    seq.) is amended to read as follows:

      ``CHAPTER 2--GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE
                                    PROGRAMS

    ``SEC. 404A. <<NOTE: 20 USC 1070a-21.>> EARLY INTERVENTION AND COLLEGE
                AWARENESS PROGRAM AUTHORIZED.

        ``(a) Program Authorized.--The Secretary is authorized, in
    accordance with the requirements of this chapter, to establish a program
    that--
                ``(1) encourages eligible entities to provide or maintain a
            guarantee to eligible low-income students who obtain a secondary
            school diploma (or its recognized equivalent), of the financial
            assistance necessary to permit the students to attend an
            institution of higher education; and
                ``(2) supports eligible entities in providing--
                        ``(A) additional counseling, mentoring, academic
                    support, outreach, and supportive services to elementary
                    school, middle school, and secondary school students who
                    are at risk of dropping out of school; and
                        ``(B) information to students and their parents
                    about the advantages of obtaining a postsecondary
                    education and the college financing options for the
                    students and their parents.

        ``(b) Awards.--
                ``(1) In general.--From funds appropriated under section
            404H for each fiscal year, the Secretary shall make awards

    [[Page 112 STAT. 1657]]

            to eligible entities described in paragraphs (1) and (2) of
            subsection (c) to enable the entities to carry out the program
            authorized under subsection (a).
                ``(2) Priority.--In making awards to eligible entities
            described in paragraph (c)(1), the Secretary shall--
                        ``(A) give priority to eligible entities that--
                              ``(i) on the day before the date of enactment
                          of the Higher Education Amendments of 1998,
                          carried out successful educational opportunity
                          programs under this chapter (as this chapter was
                          in effect on such day); and
                              ``(ii) have a prior, demonstrated commitment
                          to early intervention leading to college access
                          through collaboration and replication of
                          successful strategies;
                        ``(B) ensure that students served under this chapter
                    on the day before the date of enactment of the Higher
                    Education Amendments of 1998 continue to receive
                    assistance through the completion of secondary school.

        ``(c) Definition of Eligible Entity.--For the purposes of this
    chapter, the term `eligible entity' means--
                ``(1) a State; or
                ``(2) a partnership consisting of--
                        ``(A) one or more local educational agencies acting
                    on behalf of--
                              ``(i) one or more elementary schools or
                          secondary schools; and
                              ``(ii) the secondary schools that students
                          from the schools described in clause (i) would
                          normally attend;
                        ``(B) one or more degree granting institutions of
                    higher education; and
                        ``(C) at least two community organizations or
                    entities, such as businesses, professional associations,
                    community-based organizations, philanthropic
                    organizations, State agencies, institutions or agencies
                    sponsoring programs authorized under subpart 4, or other
                    public or private agencies or organizations.

    ``SEC. 404B. REQUIREMENTS. <<NOTE: 20 USC 1070a-22.>>

        ``(a) Funding Rules.--
                ``(1) Continuation awards.--From the amount appropriated
            under section 404H for a fiscal year, the Secretary shall
            continue to award grants to States under this chapter (as this
            chapter was in effect on the day before the date of enactment of
            the Higher Education Amendments of 1998) in accordance with the
            terms and conditions of such grants.
                ``(2) Distribution.--From the amount appropriated under
            section 404H that remains after making continuation awards under
            paragraph (1) for a fiscal year, the Secretary shall--
                        ``(A) make available--
                              ``(i) not less than 33 percent of the amount
                          to eligible entities described in section
                          404A(c)(1); and
                              ``(ii) not less than 33 percent of the amount
                          to eligible entities described in section
                          404A(c)(2); and
                        ``(B) award the remainder of the amount to eligible
                    entities described in paragraph (1) or (2) of section
                    404A(c).
                ``(3) Special rule.--The Secretary shall annually reevaluate
            the distribution of funds described in paragraph

    [[Page 112 STAT. 1658]]

            (2)(B) based on number, quality, and promise of the applications
            and adjust the distribution accordingly.''.

        ``(b) Limitation.--Each eligible entity described in section
    404A(c)(1), and each eligible entity described in section 404A(c)(2)
    that conducts a scholarship component under section 404E, shall use not
    less than 25 percent and not more than 50 percent of grant funds
    received under this chapter for the early intervention component of an
    eligible entity's program under this chapter, except that the Secretary
    may waive the 50 percent limitation if the eligible entity demonstrates
    that the eligible entity has another means of providing the students
    with financial assistance that is described in the plan submitted under
    section 404C.
        ``(c) Coordination.--Each eligible entity shall ensure that the
    activities assisted under this chapter are, to the extent practicable,
    coordinated with, and complement and enhance--
                ``(1) services under this chapter provided by other eligible
            entities serving the same school district or State; and
                ``(2) related services under other Federal or non-Federal
            programs.

        ``(d) Designation of Fiscal Agent.--An eligible entity described in
    section 404A(c)(2) shall designate an institution of higher education or
    a local educational agency as the fiscal agent for the eligible entity.
        ``(e) Coordinators.--An eligible entity described in section
    404A(c)(2) shall have a full-time program coordinator or a part-time
    program coordinator, whose primary responsibility is a project under
    section 404C.
        ``(f ) Displacement.--An eligible entity described in 404A(c)(2)
    shall ensure that the activities assisted under this chapter will not
    displace an employee or eliminate a position at a school assisted under
    this chapter, including a partial displacement such as a reduction in
    hours, wages or employment benefits.
        ``(g) Cohort Approach.--
                ``(1) In general.--The Secretary shall require that eligible
            entities described in section 404A(c)(2)--
                        ``(A) provide services under this chapter to at
                    least one grade level of students, beginning not later
                    than 7th grade, in a participating school that has a 7th
                    grade and in which at least 50 percent of the students
                    enrolled are eligible for free or reduced-price lunch
                    under the National School Lunch Act (or, if an eligible
                    entity determines that it would promote the
                    effectiveness of a program, an entire grade level of
                    students, beginning not later than the 7th grade, who
                    reside in public housing as defined in section 3(b)(1)
                    of the United States Housing Act of 1937); and
                        ``(B) ensure that the services are provided through
                    the 12th grade to students in the participating grade
                    level.
                ``(2) Coordination requirement.--In order for the Secretary
            to require the cohort approach described in paragraph (1), the
            Secretary shall, where applicable, ensure that the cohort
            approach is done in coordination and collaboration with existing
            early intervention programs and does not duplicate the services
            already provided to a school or community.

    ``SEC. 404C. ELIGIBLE ENTITY PLANS. <<NOTE: 20 USC 1070a-23.>>

        ``(a) Plan Required for Eligibility.--

    [[Page 112 STAT. 1659]]

                ``(1) In general.--In order for an eligible entity to
            qualify for a grant under this chapter, the eligible entity
            shall submit to the Secretary a plan for carrying out the
            program under this chapter. Such plan shall provide for the
            conduct of a scholarship component if required or undertaken
            pursuant to section 404E and an early intervention component
            required pursuant to section 404D.
                ``(2) Contents.--Each plan submitted pursuant to paragraph
            (1) shall be in such form, contain or be accompanied by such
            information or assurances, and be submitted at such time as the
            Secretary may require by regulation. Each such plan shall--
                        ``(A) describe the activities for which assistance
                    under this chapter is sought; and
                        ``(B) provide such additional assurances as the
                    Secretary determines necessary to ensure compliance with
                    the requirements of this chapter.

        ``(b) Matching Requirement.--
                ``(1) In general.--The Secretary shall not approve a plan
            submitted under subsection (a) unless such plan--
                        ``(A) provides that the eligible entity will
                    provide, from State, local, institutional, or private
                    funds, not less than 50 percent of the cost of the
                    program, which matching funds may be provided in cash or
                    in kind;
                        ``(B) specifies the methods by which matching funds
                    will be paid; and
                        ``(C) includes provisions designed to ensure that
                    funds provided under this chapter shall supplement and
                    not supplant funds expended for existing programs.
                ``(2) Special rule.--Notwithstanding the matching
            requirement described in paragraph (1)(A), the Secretary may by
            regulation modify the percentage requirement described in
            paragraph (1)(A) for eligible entities described in section
            404A(c)(2).

        ``(c) Methods for Complying With Matching Requirement.--An eligible
    entity may count toward the matching requirement described in subsection
    (b)(1)(A)--
                ``(1) the amount of the financial assistance paid to
            students from State, local, institutional, or private funds
            under this chapter;
                ``(2) the amount of tuition, fees, room or board waived or
            reduced for recipients of financial assistance under this
            chapter; and
                ``(3) the amount expended on documented, targeted, long-term
            mentoring and counseling provided by volunteers or paid staff of
            nonschool organizations, including businesses, religious
            organizations, community groups, postsecondary educational
            institutions, nonprofit and philanthropic organizations, and
            other organizations.

        ``(d) Peer Review Panels.--The Secretary shall convene peer review
    panels to assist in making determinations regarding the awarding of
    grants under this chapter.

    ``SEC. 404D. EARLY INTERVENTION. <<NOTE: 20 USC 1070a-24.>>

        ``(a) Services.--
                ``(1) In general.--In order to receive a grant under this
            chapter, an eligible entity shall demonstrate to the
            satisfaction of the Secretary, in the plan submitted under
            section 404C,

    [[Page 112 STAT. 1660]]

            that the eligible entity will provide comprehensive mentoring,
            counseling, outreach, and supportive services to students
            participating in programs under this chapter. Such counseling
            shall include--
                        ``(A) financial aid counseling and information
                    regarding the opportunities for financial assistance
                    under this title; and
                        ``(B) activities or information regarding--
                              ``(i) fostering and improving parent
                          involvement in promoting the advantages of a
                          college education, academic admission
                          requirements, and the need to take college
                          preparation courses;
                              ``(ii) college admissions and achievement
                          tests; and
                              ``(iii) college application procedures.
                        ``(2) Methods.--The eligible entity shall
                    demonstrate in such plan, pursuant to regulations of the
                    Secretary, the methods by which the eligible entity will
                    target services on priority students described in
                    subsection (c), if applicable.

        ``(b) Uses of Funds.--
                ``(1) <<NOTE: Regulations.>> In general.--The Secretary
            shall, by regulation, establish criteria for determining whether
            comprehensive mentoring, counseling, outreach, and supportive
            services programs may be used to meet the requirements of
            subsection (a).
                ``(2) Permissible activities.--Examples of activities that
            meet the requirements of subsection (a) include the following:
                        ``(A) Providing eligible students in preschool
                    through grade 12 with a continuing system of mentoring
                    and advising that--
                              ``(i) is coordinated with the Federal and
                          State community service initiatives; and
                              ``(ii) may include such support services as
                          after school and summer tutoring, assistance in
                          obtaining summer jobs, career mentoring, and
                          academic counseling.
                        ``(B) Requiring each student to enter into an
                    agreement under which the student agrees to achieve
                    certain academic milestones, such as completing a
                    prescribed set of courses and maintaining satisfactory
                    progress described in section 484(c), in exchange for
                    receiving tuition assistance for a period of time to be
                    established by each eligible entity.
                        ``(C) Activities designed to ensure secondary school
                    completion and college enrollment of at-risk children,
                    such as identification of at-risk children, after school
                    and summer tutoring, assistance in obtaining summer
                    jobs, academic counseling, volunteer and parent
                    involvement, providing former or current scholarship
                    recipients as mentor or peer counselors, skills
                    assessment, providing access to rigorous core courses
                    that reflect challenging academic standards, personal
                    counseling, family counseling and home visits, staff
                    development, and programs and activities described in
                    this subparagraph that are specially designed for
                    students of limited English proficiency.
                        ``(D) Summer programs for individuals who are in
                    their sophomore or junior years of secondary school or
                    are planning to attend an institution of higher
                    education in the succeeding academic year that--

    [[Page 112 STAT. 1661]]

                              ``(i) are carried out at an institution of
                          higher education that has programs of academic
                          year supportive services for disadvantaged
                          students through projects authorized under section
                          402D or through comparable projects funded by the
                          State or other sources;
                              ``(ii) provide for the participation of the
                          individuals who are eligible for assistance under
                          section 402D or who are eligible for comparable
                          programs funded by the State;
                              ``(iii)(I) provide summer instruction in
                          remedial, developmental or supportive courses;
                              ``(II) provide such summer services as
                          counseling, tutoring, or orientation; and
                              ``(III) provide financial assistance to the
                          individuals to cover the individuals' summer costs
                          for books, supplies, living costs, and personal
                          expenses; and
                              ``(iv) provide the individuals with financial
                          assistance during each academic year the
                          individuals are enrolled at the participating
                          institution after the summer program.
                        ``(E) Requiring eligible students to meet other
                    standards or requirements as the State determines
                    necessary to meet the purposes of this section.

        ``(c) Priority Students.--For eligible entities not using a cohort
    approach, the eligible entity shall treat as priority students any
    student in preschool through grade 12 who is eligible--
                ``(1) to be counted under section 1124(c) of the Elementary
            and Secondary Education Act of 1965;
                ``(2) for free or reduced price meals under the National
            School Lunch Act; or
                ``(3) for assistance pursuant to part A of title IV of the
            Social Security Act.

        ``(d) Allowable Providers.--In the case of eligible entities
    described in section 404A(c)(1), the activities required by this section
    may be provided by service providers such as community-based
    organizations, schools, institutions of higher education, public and
    private agencies, nonprofit and philanthropic organizations, businesses,
    institutions and agencies sponsoring programs authorized under subpart
    4, and other organizations the State deems appropriate.

    ``SEC. 404E. SCHOLARSHIP COMPONENT. <<NOTE: 20 USC 1070a-25.>>

        ``(a) In General.--
                ``(1) States.--In order to receive a grant under this
            chapter, an eligible entity described in section 404A(c)(1)
            shall establish or maintain a financial assistance program that
            awards scholarships to students in accordance with the
            requirements of this section. The Secretary shall encourage the
            eligible entity to ensure that a scholarship provided pursuant
            to this section is available to an eligible student for use at
            any institution of higher education.
                ``(2) Partnerships.--An eligible entity described in section
            404A(c)(2) may award scholarships to eligible students in
            accordance with the requirements of this section.

        ``(b) Grant Amounts.--The maximum amount of a scholarship that an
    eligible student shall be eligible to receive under this section shall
    be established by the eligible entity. The minimum

    [[Page 112 STAT. 1662]]

    amount of the scholarship for each fiscal year shall not be less than
    the lesser of--
                ``(1) <<NOTE: Regulations.>> 75 percent of the average cost
            of attendance for an in-State student, in a 4-year program of
            instruction, at public institutions of higher education in such
            State, as determined in accordance with regulations prescribed
            by the Secretary; or
                ``(2) the maximum Federal Pell Grant funded under section
            401 for such fiscal year.

        ``(c) Relation to Other Assistance.--Scholarships provided under
    this section shall not be considered for the purpose of awarding Federal
    grant assistance under this title, except that in no case shall the
    total amount of student financial assistance awarded to a student under
    this title exceed such student's total cost of attendance.
        ``(d) Eligible Students.--A student eligible for assistance under
    this section is a student who--
                ``(1) is less than 22 years old at time of first scholarship
            award under this section;
                ``(2) receives a secondary school diploma or its recognized
            equivalent on or after January 1, 1993;
                ``(3) is enrolled or accepted for enrollment in a program of
            undergraduate instruction at an institution of higher education
            that is located within the State's boundaries, except that, at
            the State's option, an eligible entity may offer scholarship
            program portability for recipients who attend institutions of
            higher education outside such State; and
                ``(4) who participated in the early intervention component
            required under section 404D.

        ``(e) Priority.--The Secretary shall ensure that each eligible
    entity places a priority on awarding scholarships to students who will
    receive a Federal Pell Grant for the academic year for which the
    scholarship is awarded under this section.
        ``(f ) Special Rule.--An eligible entity may consider students who
    have successfully participated in programs funded under chapter 1 to
    have met the requirements of subsection (d)(4).

    ``SEC. 404F. 21ST CENTURY SCHOLAR CERTIFICATES. <<NOTE: 20 USC 1070a-
                26.>>

        ``(a) Authority.--The Secretary, using funds appropriated under
    section 404H that do not exceed $200,000 for a fiscal year--
                ``(1) shall ensure that certificates, to be known as 21st
            Century Scholar Certificates, are provided to all students
            participating in programs under this chapter; and
                ``(2) may, as practicable, ensure that such certificates are
            provided to all students in grades 6 through 12 who attend
            schools at which at least 50 percent of the students enrolled
            are eligible for a free or reduced price lunch under the
            National School Lunch Act.

        ``(b) Information Required.--A 21st Century Scholar Certificate
    shall be personalized for each student and indicate the amount of
    Federal financial aid for college which a student may be eligible to
    receive.

    ``SEC. 404G. EVALUATION AND REPORT. <<NOTE: 20 USC 1070a-27.>>

        ``(a) Evaluation.--Each eligible entity receiving a grant under this
    chapter shall biennially evaluate the activities assisted under

    [[Page 112 STAT. 1663]]

    this chapter in accordance with the standards described in subsection
    (b) and shall submit to the Secretary a copy of such evaluation. The
    evaluation shall permit service providers to track eligible student
    progress during the period such students are participating in the
    activities and shall be consistent with the standards developed by the
    Secretary pursuant to subsection (b).
        ``(b) Evaluation Standards.--The Secretary shall prescribe standards
    for the evaluation described in subsection (a). Such standards shall--
                ``(1) provide for input from eligible entities and service
            providers; and
                ``(2) ensure that data protocols and procedures are
            consistent and uniform.

        ``(c) Federal Evaluation.--In order to evaluate and improve the
    impact of the activities assisted under this chapter, the Secretary
    shall, from not more than 0.75 percent of the funds appropriated under
    section 404H for a fiscal year, award one or more grants, contracts, or
    cooperative agreements to or with public and private institutions and
    organizations, to enable the institutions and organizations to evaluate
    the effectiveness of the program and, as appropriate, disseminate the
    results of the evaluation.
        ``(d) Report.--The Secretary shall biennially report to Congress
    regarding the activities assisted under this chapter and the evaluations
    conducted pursuant to this section.

    ``SEC. 404H. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070a-
                28.>>

        ``There are authorized to be appropriated to carry out this chapter
    $200,000,000 for fiscal year 1999 and such sums as may be necessary for
    each of the 4 succeeding fiscal years.''.

    SEC. 404. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

        Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 1070a-31 et
    seq.) is amended to read as follows:

            ``CHAPTER 3--ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS

    ``SEC. 406A. SCHOLARSHIPS AUTHORIZED. <<NOTE: 20 USC 1070a-31.>>

        ``The Secretary is authorized to award scholarships to students who
    graduate from secondary school after May 1, 2000, to enable the students
    to pay the cost of attendance at an institution of higher education
    during the students first 2 academic years of undergraduate education,
    if the students--
                ``(1) are eligible to receive Federal Pell Grants for the
            year in which the scholarships are awarded; and
                ``(2) demonstrate academic achievement by graduating in the
            top 10 percent of their secondary school graduating class.

    ``SEC. 406B. SCHOLARSHIP PROGRAM REQUIREMENTS. <<NOTE: 20 USC 1070a-
                32.>>

        ``(a) Amount of Award.--
                ``(1) In general.--Except as provided in paragraph (2), the
            amount of a scholarship awarded under this chapter for any
            academic year shall be equal to 100 percent of the amount of the
            Federal Pell Grant for which the recipient is eligible for the
            academic year.
                ``(2) Adjustment for insufficient appropriations.--If, after
            the Secretary determines the total number of eligible applicants
            for an academic year in accordance with section

    [[Page 112 STAT. 1664]]

            406C, funds available to carry out this chapter for the academic
            year are insufficient to fully fund all awards under this
            chapter for the academic year, the amount of the scholarship
            paid to each student under this chapter shall be reduced
            proportionately.

        ``(b) Assistance Not To Exceed Cost of Attendance.--A scholarship
    awarded under this chapter to any student, in combination with the
    Federal Pell Grant assistance and other student financial assistance
    available to such student, may not exceed the student's cost of
    attendance.

    ``SEC. 406C. ELIGIBILITY OF SCHOLARS. <<NOTE: 20 USC 1070a-33.>>

        ``(a) Procedures Established by Regulation.--The Secretary shall
    establish by regulation procedures for the determination of eligibility
    of students for the scholarships awarded under this chapter. Such
    procedures shall include measures to prevent any secondary school from
    certifying more than 10 percent of the school's students for eligibility
    under this section.
        ``(b) Coordination.--In prescribing procedures under subsection (a),
    the Secretary shall ensure that the determination of eligibility and the
    amount of the scholarship is determined in a timely and accurate manner
    consistent with the requirements of section 482 and the submission of
    the financial aid form required by section 483. For such purposes, the
    Secretary may provide that, for the first academic year of a student's 2
    academic years of eligibility under this chapter, class rank may be
    determined prior to graduation from secondary school, at such time and
    in such manner as the Secretary may specify in regulations prescribed
    under this chapter.

    ``SEC. 406D. STUDENT REQUIREMENTS. <<NOTE: 20 USC 1070a-34.>>

        ``(a) In General.--Each eligible student desiring a scholarship
    under this chapter shall submit an application to the Secretary at such
    time, in such manner, and containing such information as the Secretary
    may reasonably require.
        ``(b) Continuing Eligibility.--In order for a student to continue to
    be eligible to receive a scholarship under this chapter for the second
    year of undergraduate education, the eligible student shall maintain
    eligibility to receive a Federal Pell Grant for that year, including
    fulfilling the requirements for satisfactory progress described in
    section 484(c).

    ``SEC. 407E. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070a-
                35.>>

        ``There are authorized to be appropriated to carry out this chapter
    $200,000,000 for fiscal year 1999 and such sums as may be necessary for
    each of the 4 succeeding fiscal years.''.

    SEC. 405. REPEALS.

        Chapters 4 through 8 of subpart 2 of part A of title IV (20 U.S.C.
    1070a-41 et seq. and 1070a-81 et seq.) <<NOTE: 20 USC 1070a-41 et seq.,
    1070a-51 et seq., 1070a-61, 1070a-71, 1070a-81.>> are repealed.

    SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

        (a) Authorization of Appropriations.--Section 413A(b)(1) (20 U.S.C.
    1070b(b)(1)) is amended by striking ``1993'' and inserting ``1999''.

    [[Page 112 STAT. 1665]]

        (b) Use of Funds for Less-Than-Full-Time Students.--Subsection (d)
    of section 413C (20 U.S.C. 1070b-2) is amended to read as follows:
        ``(d) Use of Funds for Less-Than-Full-Time Students.--If the
    institution's allocation under this subpart is directly or indirectly
    based in part on the financial need demonstrated by students who are
    independent students or attending the institution on less than a full-
    time basis, then a reasonable proportion of the allocation shall be made
    available to such students.''.
        (c) Allocation of Funds.--
                (1) Updating the base period.--Section 413D(a) (20 U.S.C.
            1070b-3(a)) is amended--
                        (A) in paragraph (1), by striking ``received and
                    used under this part for fiscal year 1985'' and
                    inserting ``received under subsections (a) and (b) of
                    this section for fiscal year 1999 (as such subsections
                    were in effect with respect to allocations for such
                    fiscal year)'';
                        (B) in paragraph (2)--
                              (i) in subparagraphs (A) and (B), by striking
                          ``1985'' each place the term appears and inserting
                          ``1999''; and
                              (ii) in subparagraph (C)(i), by striking
                          ``1986'' and inserting ``2000''.
                (2) Elimination of pro rata share.--Section 413D is further
            amended--
                        (A) by striking subsection (b);
                        (B) in subsection (c)(1), by striking ``three-
                    quarters of the remainder'' and inserting ``the
                    remainder'';
                        (C) in subsection (c)(2)(A)(i), by striking
                    ``subsection (d)'' and inserting ``subsection (c)''; and
                        (D) by redesignating subsections (c), (d), (e), and
                    (f ) as subsections (b), (c), (d), and (e),
                    respectively.
                (3) <<NOTE: Applicability. 20 USC 1070b-3 note.>> Effective
            Date.--The amendments made by this subsection shall apply with
            respect to allocations of amounts appropriated pursuant to
            section 413A(b) of the Higher Education Act of 1965 for fiscal
            year 2000 or any succeeding fiscal year.

        (d) Carryover and Carryback Authority.--Subpart 3 of part A of title
    IV (20 U.S.C. 1070b et seq.) is amended by adding at the end the
    following:

    ``SEC. 413E. CARRYOVER AND CARRYBACK AUTHORITY. <<NOTE: 20 USC 1070b-
                4.>>

        ``(a) Carryover Authority.--Of the sums made available to an
    eligible institution under this subpart for a fiscal year, not more than
    10 percent may, at the discretion of the institution, remain available
    for expenditure during the succeeding fiscal year to carry out the
    program under this subpart.
        ``(b) Carryback Authority.--
                ``(1) In general.--Of the sums made available to an eligible
            institution under this subpart for a fiscal year, not more than
            10 percent may, at the discretion of the institution, be used by
            the institution for expenditure for the fiscal year preceding
            the fiscal year for which the sums were appropriated.
                ``(2) Use of carried-back funds.--An eligible institution
            may make grants to students after the end of the academic year,
            but prior to the beginning of the succeeding fiscal year, from
            such succeeding fiscal year's appropriations.''.

    [[Page 112 STAT. 1666]]

    SEC. 407. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM.

        (a) Amendment to Subpart Heading.--
                (1) In general.--The heading for subpart 4 of part A of
            title IV (20 U.S.C. 1070c et seq.) is amended to read as
            follows:

      ``Subpart 4--Leveraging Educational Assistance Partnership Program''.

                (2) Conforming amendments.--Subpart 4 of part A of title IV
            (20 U.S.C. 1070c et seq.) is amended--
                        (A) in section 415B(b) (20 U.S.C. 1070c-1(b)), by
                    striking ``State student grant incentive'' and inserting
                    ``leveraging educational assistance partnership''; and
                        (B) in the heading for section 415C (20 U.S.C.
                    1070c-2), by striking ``state student incentive grant''
                    and inserting ``leveraging educational assistance
                    partnership''.

        (b) Authorization of Appropriations.--Section 415A(b) (20 U.S.C.
    1070c(b)) is amended--
                (1) in paragraph (1), by striking ``1993'' and inserting
            ``1999'';
                (2) by redesignating paragraph (2) as paragraph (3); and
                (3) by inserting after paragraph (1) the following:
                ``(2) Reservation.--For any fiscal year for which the amount
            appropriated under paragraph (1) exceeds $30,000,000, the excess
            shall be available to carry out section 415E.''.

        (c) Special Leveraging Educational Assistance Partnership Program.--
    Subpart 4 of part A of title IV (20 U.S.C. 1070c et seq.) is amended--
                (1) by redesignating section 415E <<NOTE: 20 USC 1070c-
            4.>> as 415F; and
                (2) by inserting after section 415D the following:

    ``SEC. 415E. <<NOTE: 20 USC 1070c-3a.>> SPECIAL LEVERAGING EDUCATIONAL
                ASSISTANCE PARTNERSHIP PROGRAM.

        ``(a) In General.--From amounts reserved under section 415A(b)(2)
    for each fiscal year, the Secretary shall--
                ``(1) make allotments among States in the same manner as the
            Secretary makes allotments among States under section 415B; and
                ``(2) award grants to States, from allotments under
            paragraph (1), to enable the States to pay the Federal share of
            the cost of the authorized activities described in subsection
            (c).

        ``(b) Applicability Rule.--The provisions of this subpart which are
    not inconsistent with this section shall apply to the program authorized
    by this section.
        ``(c) Authorized Activities.--Each State receiving a grant under
    this section may use the grant funds for--
                ``(1) increasing the dollar amount of grants awarded under
            section 415B to eligible students who demonstrate financial
            need;
                ``(2) carrying out transition programs from secondary school
            to postsecondary education for eligible students who demonstrate
            financial need;

    [[Page 112 STAT. 1667]]

                ``(3) carrying out a financial aid program for eligible
            students who demonstrate financial need and wish to enter
            careers in information technology, or other fields of study
            determined by the State to be critical to the State's workforce
            needs;
                ``(4) making funds available for community service work-
            study activities for eligible students who demonstrate financial
            need;
                ``(5) creating a postsecondary scholarship program for
            eligible students who demonstrate financial need and wish to
            enter teaching;
                ``(6) creating a scholarship program for eligible students
            who demonstrate financial need and wish to enter a program of
            study leading to a degree in mathematics, computer science, or
            engineering;
                ``(7) carrying out early intervention programs, mentoring
            programs, and career education programs for eligible students
            who demonstrate financial need; and
                ``(8) awarding merit or academic scholarships to eligible
            students who demonstrate financial need.

        ``(d) Maintenance of Effort Requirement.--Each State receiving a
    grant under this section for a fiscal year shall provide the Secretary
    an assurance that the aggregate amount expended per student or the
    aggregate expenditures by the State, from funds derived from non-Federal
    sources, for the authorized activities described in subsection (c) for
    the preceding fiscal year were not less than the amount expended per
    student or the aggregate expenditures by the State for the activities
    for the second preceding fiscal year.
        ``(e) Federal Share.--The Federal share of the cost of the
    authorized activities described in subsection (c) for any fiscal year
    shall be not more than 33\1/3\ percent.''.
        (c) Technical and Conforming Amendments.--
                (1) Purpose.--Subsection (a) of section 415A (20 U.S.C.
            1070c(a)) is amended to read as follows:

        ``(a) Purpose of Subpart.--It is the purpose of this subpart to make
    incentive grants available to States to assist States in--
                ``(1) providing grants to--
                        ``(A) eligible students attending institutions of
                    higher education or participating in programs of study
                    abroad that are approved for credit by institutions of
                    higher education at which such students are enrolled;
                    and
                        ``(B) eligible students for campus-based community
                    service work-study; and
                ``(2) carrying out the activities described in section
            415F.''.
                (2) Allotment.--Section 415B(a)(1) (20 U.S.C. 1070c-1(a)(1))
            is amended by inserting ``and not reserved under section
            415A(b)(2)'' after ``415A(b)(1)''.

    SEC. 408. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN
                MIGRANT AND SEASONAL FARMWORK.

        (a) Coordination.--Section 418A(d) (20 U.S.C. 1070d-2(d)) is amended
    by inserting after ``contains assurances'' the following: ``that the
    grant recipient will coordinate the project, to the extent feasible,
    with other local, State, and Federal programs to maximize the resources
    available for migrant students, and''.

    [[Page 112 STAT. 1668]]

        (b) <<NOTE: 20 USC 1070d-2.>> Authorization of Appropriations.--
    Section 418A(g) is amended by striking ``1993'' each place the term
    appears and inserting ``1999''.

        (c) Data Collection.--Section 418A is amended--
                (1) by redesignating subsection (g) (as amended by
            subsection (b)) as subsection (h); and
                (2) by inserting after subsection (f ) the following:

        ``(g) Data Collection.--The National Center for Education Statistics
    shall collect postsecondary education data on migrant students.''.
        (d) Technical Amendment.--Section 418A(e) is amended by striking
    ``authorized by subpart 4 of this part in accordance with section
    417A(b)(2)'' and inserting ``in accordance with section 402A(c)(1)''.

    SEC. 409. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

        (a) FAS Eligibility.--Section 419D (20 U.S.C. 1070d-34) is amended
    by adding at the end thereof the following:
        ``(e) FAS Eligibility.--
                ``(1) Fiscal years 2000 through 2004.--Notwithstanding any
            other provision of this subpart, in the case of students from
            the Freely Associated States who may be selected to receive a
            scholarship under this subpart for the first time for any of the
            fiscal years 2000 through 2004--
                        ``(A) there shall be 10 scholarships in the
                    aggregate awarded to such students for each of the
                    fiscal years 2000 through 2004; and
                        ``(B) the Pacific Regional Educational Laboratory
                    shall administer the program under this subpart in the
                    case of scholarships for students in the Freely
                    Associated States.
                ``(2) Termination of eligibility.--A student from the Freely
            Associated States shall not be eligible to receive a scholarship
            under this subpart after September 30, 2004.''.

        (b) Authorization of Appropriations.--Section 419K (20 U.S.C. 1070d-
    41) is amended by striking ``$10,000,000 for fiscal year 1993'' and
    inserting ``$45,000,000 for fiscal year 1999''.

    SEC. 410. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

        Part A of title IV (20 U.S.C. 1070 et seq.) is amended by inserting
    after subpart 6 (20 U.S.C. 1070d-31 et seq.) the following:

             ``Subpart 7--Child Care Access Means Parents in School

    ``SEC. 419N. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL. <<NOTE: 20 USC
                1070e.>>

        ``(a) Purpose.--The purpose of this section is to support the
    participation of low-income parents in postsecondary education through
    the provision of campus-based child care services.
        ``(b) Program Authorized.--
                ``(1) Authority.--The Secretary may award grants to
            institutions of higher education to assist the institutions in
            providing campus-based child care services to low-income
            students.
                ``(2) Amount of grants.--
                        ``(A) In general.--The amount of a grant awarded to
                    an institution of higher education under this section
                    for a fiscal year shall not exceed 1 percent of the
                    total

    [[Page 112 STAT. 1669]]

                    amount of all Federal Pell Grant funds awarded to
                    students enrolled at the institution of higher education
                    for the preceding fiscal year.
                        ``(B) Minimum.--A grant under this section shall be
                    awarded in an amount that is not less than $10,000.
                ``(3) Duration; renewal; and payments.--
                        ``(A) Duration.--The Secretary shall award a grant
                    under this section for a period of 4 years.
                        ``(B) Payments.--Subject to subsection (e)(2), the
                    Secretary shall make annual grant payments under this
                    section.
                ``(4) Eligible institutions.--An institution of higher
            education shall be eligible to receive a grant under this
            section for a fiscal year if the total amount of all Federal
            Pell Grant funds awarded to students enrolled at the institution
            of higher education for the preceding fiscal year equals or
            exceeds $350,000.
                ``(5) Use of funds.--Grant funds under this section shall be
            used by an institution of higher education to support or
            establish a campus-based child care program primarily serving
            the needs of low-income students enrolled at the institution of
            higher education. Grant funds under this section may be used to
            provide before and after school services to the extent necessary
            to enable low-income students enrolled at the institution of
            higher education to pursue postsecondary education.
                ``(6) Construction.--Nothing in this section shall be
            construed to prohibit an institution of higher education that
            receives grant funds under this section from serving the child
            care needs of the community served by the institution.
                ``(7) Definition of low-income student.--For the purpose of
            this section, the term ``low-income student'' means a student
            who is eligible to receive a Federal Pell Grant for the fiscal
            year for which the determination is made.

        ``(c) Applications.--An institution of higher education desiring a
    grant under this section shall submit an application to the Secretary at
    such time, in such manner, and accompanied by such information as the
    Secretary may require. Each application shall--
                ``(1) demonstrate that the institution is an eligible
            institution described in subsection (b)(4);
                ``(2) specify the amount of funds requested;
                ``(3) demonstrate the need of low-income students at the
            institution for campus-based child care services by including in
            the application--
                        ``(A) information regarding student demographics;
                        ``(B) an assessment of child care capacity on or
                    near campus;
                        ``(C) information regarding the existence of waiting
                    lists for existing child care;
                        ``(D) information regarding additional needs created
                    by concentrations of poverty or by geographic isolation;
                    and
                        ``(E) other relevant data;
                ``(4) contain a description of the activities to be
            assisted, including whether the grant funds will support an
            existing child care program or a new child care program;
                ``(5) identify the resources, including technical expertise
            and financial support, the institution will draw upon to support

    [[Page 112 STAT. 1670]]

            the child care program and the participation of low-income
            students in the program, such as accessing social services
            funding, using student activity fees to help pay the costs of
            child care, using resources obtained by meeting the needs of
            parents who are not low-income students, and accessing
            foundation, corporate or other institutional support, and
            demonstrate that the use of the resources will not result in
            increases in student tuition;
                ``(6) contain an assurance that the institution will meet
            the child care needs of low-income students through the
            provision of services, or through a contract for the provision
            of services;
                ``(7) describe the extent to which the child care program
            will coordinate with the institution's early childhood education
            curriculum, to the extent the curriculum is available, to meet
            the needs of the students in the early childhood education
            program at the institution, and the needs of the parents and
            children participating in the child care program assisted under
            this section;
                ``(8) in the case of an institution seeking assistance for a
            new child care program--
                        ``(A) provide a timeline, covering the period from
                    receipt of the grant through the provision of the child
                    care services, delineating the specific steps the
                    institution will take to achieve the goal of providing
                    low-income students with child care services;
                        ``(B) specify any measures the institution will take
                    to assist low-income students with child care during the
                    period before the institution provides child care
                    services; and
                        ``(C) include a plan for identifying resources
                    needed for the child care services, including space in
                    which to provide child care services, and technical
                    assistance if necessary;
                ``(9) contain an assurance that any child care facility
            assisted under this section will meet the applicable State or
            local government licensing, certification, approval, or
            registration requirements; and
                ``(10) contain a plan for any child care facility assisted
            under this section to become accredited within 3 years of the
            date the institution first receives assistance under this
            section.

        ``(d) Priority.--The Secretary shall give priority in awarding
    grants under this section to institutions of higher education that
    submit applications describing programs that--
                ``(1) leverage significant local or institutional resources,
            including in-kind contributions, to support the activities
            assisted under this section; and
                ``(2) utilize a sliding fee scale for child care services
            provided under this section in order to support a high number of
            low-income parents pursuing postsecondary education at the
            institution.

        ``(e) Reporting Requirements; Continuing Eligibility.--
                ``(1) Reporting requirements.--
                        ``(A) Reports.--Each institution of higher education
                    receiving a grant under this section shall report to the
                    Secretary 18 months, and 36 months, after receiving the
                    first grant payment under this section.

    [[Page 112 STAT. 1671]]

                        ``(B) Contents.--The report shall include--
                              ``(i) data on the population served under this

                          section;
                              ``(ii) information on campus and community
                          resources and funding used to help low-income
                          students access child care services;
                              ``(iii) information on progress made toward
                          accreditation of any child care facility; and
                              ``(iv) information on the impact of the grant
                          on the quality, availability, and affordability of
                          campus-based child care services.
                ``(2) Continuing eligibility.--The Secretary shall make the
            third annual grant payment under this section to an institution
            of higher education only if the Secretary determines, on the
            basis of the 18-month report submitted under paragraph (1), that
            the institution is making a good faith effort to ensure that
            low-income students at the institution have access to
            affordable, quality child care services.

        ``(f ) Construction.--No funds provided under this section shall be
    used for construction, except for minor renovation or repair to meet
    applicable State or local health or safety requirements.
        ``(g) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section $45,000,000 for fiscal year 1999
    and such sums as may be necessary for each of the 4 succeeding fiscal
    years.''.

    SEC. 411. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

        Subpart 8 of part A of title IV (20 U.S.C. 1070 et seq.) is amended
    to read as follows:

               ``Subpart 8--Learning Anytime Anywhere Partnerships

    ``SEC. 420D. FINDINGS. <<NOTE: 20 USC 1070f.>>

        ``Congress makes the following findings:
                ``(1) The nature of postsecondary education delivery is
            changing, and new technology and other related innovations can
            provide promising education opportunities for individuals who
            are currently not being served, particularly for individuals
            without easy access to traditional campus-based postsecondary
            education or for whom traditional courses are a poor match with
            education or training needs.
                ``(2) Individuals, including individuals seeking basic or
            technical skills or their first postsecondary experience,
            individuals with disabilities, dislocated workers, individuals
            making the transition from welfare-to-work, and individuals who
            are limited by time and place constraints can benefit from
            nontraditional, noncampus-based postsecondary education
            opportunities and appropriate support services.
                ``(3) The need for high-quality, nontraditional, technology-
            based education opportunities is great, as is the need for skill
            competency credentials and other measures of educational
            progress and attainment that are valid and widely accepted, but
            neither need is likely to be adequately addressed by the
            uncoordinated efforts of agencies and institutions acting
            independently and without assistance.

    [[Page 112 STAT. 1672]]

                ``(4) Partnerships, consisting of institutions of higher
            education, community organizations, or other public or private
            agencies or organizations, can coordinate and combine
            institutional resources--
                        ``(A) to provide the needed variety of education
                    options to students; and
                        ``(B) to develop new means of ensuring
                    accountability and quality for innovative education
                    methods.

    ``SEC. 420E. PURPOSE; PROGRAM AUTHORIZED. <<NOTE: 20 USC 1070f-1.>>

        ``(a) Purpose.--It is the purpose of this subpart to enhance the
    delivery, quality, and accountability of postsecondary education and
    career-oriented lifelong learning through technology and related
    innovations.
        ``(b) Program Authorized.--
                ``(1) Grants.--
                        ``(A) In general.--The Secretary may, from funds
                    appropriated under section 420J make grants to, or enter
                    into contracts or cooperative agreements with, eligible
                    partnerships to carry out the authorized activities
                    described in section 420G.
                        ``(B) Duration.--Grants under this subpart shall be
                    awarded for periods that do not exceed 5 years.
                ``(2) Definition of eligible partnership.--For purposes of
            this subpart, the term `eligible partnership' means a
            partnership consisting of 2 or more independent agencies,
            organizations, or institutions. The agencies, organizations, or
            institutions may include institutions of higher education,
            community organizations, and other public and private
            institutions, agencies, and organizations.

    ``SEC. 420F. APPLICATION. <<NOTE: 20 USC 1070f-2.>>

        ``(a) Requirement.--An eligible partnership desiring to receive a
    grant under this subpart shall submit an application to the Secretary,
    in such form and containing such information, as the Secretary may
    require.
        ``(b) Contents.--Each application shall include--
                ``(1) the name of each partner and a description of the
            responsibilities of the partner, including the designation of a
            nonprofit organization as the fiscal agent for the partnership;
                ``(2) a description of the need for the project, including a
            description of how the project will build on any existing
            services and activities;
                ``(3) a listing of human, financial (other than funds
            provided under this subpart), and other resources that each
            member of the partnership will contribute to the partnership,
            and a description of the efforts each member of the partnership
            will make in seeking additional resources; and
                ``(4) a description of how the project will operate,
            including how funds awarded under this subpart will be used to
            meet the purpose of this subpart.

    ``SEC. 420G. AUTHORIZED ACTIVITIES. <<NOTE: 20 USC 1070f-3.>>

        ``Funds awarded to an eligible partnership under this subpart shall
    be used to--
                ``(1) develop and assess model distance learning programs or
            innovative educational software;

    [[Page 112 STAT. 1673]]

                ``(2) develop methodologies for the identification and
            measurement of skill competencies;
                ``(3) develop and assess innovative student support
            services; or
                ``(4) support other activities that are consistent with the
            purpose of this subpart.

    ``SEC. 420H. MATCHING REQUIREMENT. <<NOTE: 20 USC 1070f-4.>>

        ``Federal funds shall provide not more than 50 percent of the cost
    of a project under this subpart. The non-Federal share of project costs
    may be in cash or in kind, fairly evaluated, including services,
    supplies, or equipment.

    ``SEC. 420I. PEER REVIEW. <<NOTE: 20 USC 1070f-5.>>

        ``The Secretary shall use a peer review process to review
    applications under this subpart and to make recommendations for funding
    under this subpart to the Secretary.

    ``SEC. 420J. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070f-6.>>

        ``There are authorized to be appropriated to carry out this subpart
    $10,000,000 for fiscal year 1999 and such sums as may be necessary for
    each of the 4 succeeding fiscal years.''.

                  PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

    SEC. 411. LIMITATION REPEALED.

        Section 421 (20 U.S.C. 1071) is amended by striking subsection (d).

    SEC. 412. ADVANCES TO RESERVE FUNDS.

        Section 422 (20 U.S.C. 1072) is amended--
                (1) in subsection (a)(2), by striking ``428(c)(10)(E)'' and
            inserting ``428(c)(9)(E)'';
                (2) in subsection (c)--
                        (A) in paragraph (6)(B)(i), by striking ``written''
                    and inserting ``written, electronic,'';
                        (B) in paragraph (7)(A), by striking ``during the
                    transition from the Federal Family Education Loan
                    Program under this part to the Federal Direct Student
                    Loan Program under part D of this title''; and
                        (C) in paragraph (7)(B), by striking
                    ``428(c)(10)(F)(v)'' and inserting ``428(c)(9)(F)(v)'';
                (3) in the first and second sentences of subsection (g)(1),
            by striking ``or the program authorized by part D of this
            title'' each place it appears; and
                (4) by adding at the end the following:

        ``(i) Additional Recall of Reserves.--
                ``(1) In general.--Notwithstanding any other provision of
            law and subject to paragraph (4), the Secretary shall recall,
            from reserve funds held in the Federal Student Loan Reserve
            Funds established under section 422A by guaranty agencies--
                        ``(A) $85,000,000 in fiscal year 2002;
                        ``(B) $82,500,000 in fiscal year 2006; and
                        ``(C) $82,500,000 in fiscal year 2007.
                ``(2) Deposit.--Funds recalled by the Secretary under this
            subsection shall be deposited in the Treasury.

    [[Page 112 STAT. 1674]]

                ``(3) Required share.--The Secretary shall require each
            guaranty agency to return reserve funds under paragraph (1) on
            the basis of the agency's required share. For purposes of this
            paragraph, a guaranty agency's required share shall be
            determined as follows:
                        ``(A) Equal percentage.--The Secretary shall require
                    each guaranty agency to return an amount representing an
                    equal percentage reduction in the amount of reserve
                    funds held by the agency on September 30, 1996.
                        ``(B) Calculation.--The equal percentage reduction
                    shall be the percentage obtained by dividing--
                              ``(i) $250,000,000, by
                              ``(ii) the total amount of all guaranty
                          agencies' reserve funds held on September 30,
                          1996, less any amounts subject to recall under
                          subsection (h).
                        ``(C) Special rule.--Notwithstanding subparagraphs
                    (A) and (B), the percentage reduction under subparagraph
                    (B) shall not result in the depletion of the reserve
                    funds of any agency which charges the 1.0 percent
                    insurance premium pursuant to section 428(b)(1)(H) below
                    an amount equal to the amount of lender claim payments
                    paid during the 90 days prior to the date of the return
                    under this subsection. If any additional amount is
                    required to be returned after deducting the total of the
                    required shares under subparagraph (B) and as a result
                    of the preceding sentence, such additional amount shall
                    be obtained by imposing on each guaranty agency to which
                    the preceding sentence does not apply, an equal
                    percentage reduction in the amount of the agency's
                    remaining reserve funds.
                ``(4) Offset of required shares.--If any guaranty agency
            returns to the Secretary any reserve funds in excess of the
            amount required under this subsection or subsection (h), the
            total amount required to be returned under paragraph (1) shall
            be reduced by the amount of such excess reserve funds returned.
                ``(5) Definition of reserve funds.--The term `reserve funds'
            when used with respect to a guaranty agency--
                        ``(A) includes any reserve funds in cash or liquid
                    assets held by the guaranty agency, or held by, or under
                    the control of, any other entity; and
                        ``(B) does not include buildings, equipment, or
                    other nonliquid assets.''.

    SEC. 413. GUARANTY AGENCY REFORMS.

        (a) Federal Student Loan Reserve Fund.--Part B of title IV is
    amended by inserting after section 422 (20 U.S.C. 1072) the following
    new section:

    ``SEC. 422A. FEDERAL STUDENT LOAN RESERVE FUND. <<NOTE: 20 USC 1072a.>>

        ``(a) <<NOTE: Deadline.>> Establishment.--Each guaranty agency
    shall, not later than 60 days after the date of enactment of this
    section, deposit all funds, securities, and other liquid assets
    contained in the reserve fund established pursuant to section 422 into a
    Federal Student Loan Reserve Fund (in this section and section 422B
    referred to as the `Federal Fund'), which shall be an account of a type
    selected by the agency, with the approval of the Secretary.

        ``(b) Investment of Funds.--Funds transferred to the Federal Fund
    shall be invested in obligations issued or guaranteed by the United
    States or a State, or in other similarly low-risk securities

    [[Page 112 STAT. 1675]]

    selected by the guaranty agency, with the approval of the Secretary.
    Earnings from the Federal Fund shall be the sole property of the Federal
    Government.
        ``(c) Additional Deposits.--After the establishment of the Federal
    Fund, a guaranty agency shall deposit into the Federal Fund--
                ``(1) all amounts received from the Secretary as payment of
            reinsurance on loans pursuant to section 428(c)(1);
                ``(2) from amounts collected on behalf of the obligation of
            a defaulted borrower, a percentage amount equal to the
            complement of the reinsurance percentage in effect when payment
            under the guaranty agreement was made--
                        ``(A) with respect to the defaulted loan pursuant to
                    sections 428(c)(6)(A) and 428F(a)(1)(B); and
                        ``(B) with respect to a loan that the Secretary has
                    repaid or discharged under section 437;
                ``(3) insurance premiums collected from borrowers pursuant
            to sections 428(b)(1)(H) and 428H(h);
                ``(4) all amounts received from the Secretary as payment for
            supplemental preclaims activity performed prior to the date of
            enactment of this section;
                ``(5) 70 percent of amounts received after such date of
            enactment from the Secretary as payment for administrative cost
            allowances for loans upon which insurance was issued prior to
            such date of enactment; and
                ``(6) other receipts as specified in regulations of the
            Secretary.

        ``(d) Uses of Funds.--Subject to subsection (f ), the Federal Fund
    may only be used by a guaranty agency--
                ``(1) to pay lender claims pursuant to sections
            428(b)(1)(G), 428( j), 437, and 439(q); and
                ``(2) to pay into the Agency Operating Fund established
            pursuant to section 422B (in this section and section 422B
            referred to as the ``Operating Fund'') a default aversion fee in
            accordance with section 428(l).

        ``(e) Ownership of Federal Fund.--The Federal Fund, and any
    nonliquid asset (such as a building or equipment) developed or purchased
    by the guaranty agency in whole or in part with Federal reserve funds,
    regardless of who holds or controls the Federal reserve funds or such
    asset, shall be considered to be the property of the United States,
    prorated based on the percentage of such asset developed or purchased
    with Federal reserve funds, which property shall be used in the
    operation of the program authorized by this part, as provided in
    subsection (d). The Secretary may restrict or regulate the use of such
    asset only to the extent necessary to reasonably protect the Secretary's
    prorated share of the value of such asset. The Secretary may direct a
    guaranty agency, or such agency's officers or directors, to cease any
    activity involving expenditures, use, or transfer of the Federal Fund
    administered by the guaranty agency that the Secretary determines is a
    misapplication, misuse, or improper expenditure of the Federal Fund or
    the Secretary's share of such asset.
        ``(f ) Transition.--
                ``(1) In general.--In order to establish the Operating Fund,
            each guaranty agency may transfer not more than 180 days' cash
            expenses for normal operating expenses (not including claim
            payments) as a working capital reserve as defined in

    [[Page 112 STAT. 1676]]

            Office of Management and Budget Circular A-87 (Cost Accounting
            Standards) from the Federal Fund for deposit into the Operating
            Fund for use in the performance of the guaranty agency's duties
            under this part. Such transfers may occur during the first 3
            years following the establishment of the Operating Fund.
            However, no agency may transfer in excess of 45 percent of the
            balance, as of September 30, 1998, of the agency's Federal Fund
            to the agency's Operating Fund during such 3-year period. In
            determining the amount that may be transferred, the agency shall
            ensure that sufficient funds remain in the Federal Fund to pay
            lender claims within the required time periods and to meet the
            reserve recall requirements of this section and subsections (h)
            and (i) of section 422.
                ``(2) Special rule.--A limited number of guaranty agencies
            may transfer interest earned on the Federal Fund to the
            Operating Fund during the first 3 years after the date of
            enactment of this section if the guaranty agency demonstrates to
            the Secretary that--
                        ``(A) the cash flow in the Operating Fund will be
                    negative without the transfer of such interest; and
                        ``(B) the transfer of such interest will
                    substantially improve the financial circumstances of the
                    guaranty agency.
                ``(3) Repayment provisions.--Each guaranty agency shall
            begin repayment of sums transferred pursuant to this subsection
            not later than the start of the fourth year after the
            establishment of the Operating Fund, and shall repay all amounts
            transferred not later than 5 years from the date of the
            establishment of the Operating Fund. With respect to amounts
            transferred from the Federal Fund, the guaranty agency shall not
            be required to repay any interest on the funds transferred and
            subsequently repaid. The guaranty agency shall provide to the
            Secretary a reasonable schedule for repayment of the sums
            transferred and an annual financial analysis demonstrating the
            agency's ability to comply with the schedule and repay all
            outstanding sums transferred.
                ``(4) Prohibition.--If a guaranty agency transfers funds
            from the Federal Fund in accordance with this section, and fails
            to make scheduled repayments to the Federal Fund, the agency may
            not receive any other funds under this part until the Secretary
            determines that the agency has made such repayments. The
            Secretary shall pay to the guaranty agency any funds withheld in
            accordance with this paragraph immediately upon making the
            determination that the guaranty agency has made all such
            repayments.
                ``(5) Waiver.--The Secretary may--
                        ``(A) waive the requirements of paragraph (3), but
                    only with respect to repayment of interest that was
                    transferred in accordance with paragraph (2); and
                        ``(B) waive paragraph (4);
            for a guaranty agency, if the Secretary determines that there
            are extenuating circumstances (such as State constitutional
            prohibitions) beyond the control of the agency that justify such
            a waiver.
                ``(6) Extension of repayment period for interest.--

    [[Page 112 STAT. 1677]]

                        ``(A) Extension permitted.--The Secretary shall
                    extend the period for repayment of interest that was
                    transferred in accordance with paragraph (2) from 2
                    years to 5 years if the Secretary determines that--
                              ``(i) the cash flow of the Operating Fund will
                          be negative as a result of repayment as required
                          by paragraph (3);
                              ``(ii) the repayment of the interest
                          transferred will substantially diminish the
                          financial circumstances of the guaranty agency;
                          and
                              ``(iii) the guaranty agency has demonstrated--
                                        ``(I) that the agency is able to
                                    repay all transferred funds by the end
                                    of the 8th year following the date of
                                    establishment of the Operating Fund; and
                                        ``(II) that the agency will be
                                    financially sound on the completion of
                                    repayment.
                        ``(B) Repayment of income on transferred funds.--All
                    repayments made to the Federal Fund during the 6th, 7th,
                    and 8th years following the establishment of the
                    Operating Fund of interest that was transferred shall
                    include the sums transferred plus any income earned from
                    the investment of the sums transferred after the 5th
                    year.
                ``(7) Investment of federal funds.--Funds transferred from
            the Federal Fund to the Operating Fund for operating expenses
            shall be invested in obligations issued or guaranteed by the
            United States or a State, or in other similarly low-risk
            securities selected by the guaranty agency, with the approval of
            the Secretary.
                ``(8) Special rule.--In calculating the minimum reserve
            level required by section 428(c)(9)(A), the Secretary shall
            include all amounts owed to the Federal Fund by the guaranty
            agency in the calculation.''.

        (b) Agency Operating Fund Established.--Part B of title IV is
    further amended by inserting after section 422A (as added by subsection
    (a)) the following new section:

    ``SEC. 422B. AGENCY OPERATING FUND. <<NOTE: 20 USC 1072b.>>

        ``(a) <<NOTE: Deadline.>> Establishment.--Each guaranty agency
    shall, not later than 60 days after the date of enactment of this
    section, establish a fund designated as the Operating Fund.

        ``(b) Investment of Funds.--Funds deposited into the Operating Fund
    shall be invested at the discretion of the guaranty agency in accordance
    with prudent investor standards.
        ``(c) Additional Deposits.--After the establishment of the Operating
    Fund, the guaranty agency shall deposit into the Operating Fund--
                ``(1) the loan processing and issuance fee paid by the
            Secretary pursuant to section 428(f );
                ``(2) 30 percent of amounts received after the date of
            enactment of this section from the Secretary as payment for
            administrative cost allowances for loans upon which insurance
            was issued prior to such date of enactment;
                ``(3) the account maintenance fee paid by the Secretary in
            accordance with section 458;
                ``(4) the default aversion fee paid in accordance with
            section 428(l);

    [[Page 112 STAT. 1678]]

                ``(5) amounts remaining pursuant to section 428(c)(6)(B)
            from collection on defaulted loans held by the agency, after
            payment of the Secretary's equitable share, excluding amounts
            deposited in the Federal Fund pursuant to section 422A(c)(2);
            and
                ``(6) other receipts as specified in regulations of the
            Secretary.

        ``(d) Uses of Funds.--
                ``(1) In general.--Funds in the Operating Fund shall be used
            for application processing, loan disbursement, enrollment and
            repayment status management, default aversion activities
            (including those described in section 422(h)(8)), default
            collection activities, school and lender training, financial aid
            awareness and related outreach activities, compliance
            monitoring, and other student financial aid related activities,
            as selected by the guaranty agency.
                ``(2) Special rule.--The guaranty agency may, in the
            agency's discretion, transfer funds from the Operating Fund to
            the Federal Fund for use pursuant to section 422A. Such transfer
            shall be irrevocable, and any funds so transferred shall become
            the sole property of the United States.
                ``(3) Definitions.--For purposes of this subsection:
                        ``(A) Default collection activities.--The term
                    `default collection activities' means activities of a
                    guaranty agency that are directly related to the
                    collection of the loan on which a default claim has been
                    paid to the participating lender, including the due
                    diligence activities required pursuant to regulations of
                    the Secretary.
                        ``(B) Default aversion activities.--The term
                    `default aversion activities' means activities of a
                    guaranty agency that are directly related to providing
                    collection assistance to the lender on a delinquent
                    loan, prior to the loan's being legally in a default
                    status, including due diligence activities required
                    pursuant to regulations of the Secretary.
                        ``(C) Enrollment and repayment status management.--
                    The term `enrollment and repayment status management'
                    means activities of a guaranty agency that are directly
                    related to ascertaining the student's enrollment status,
                    including prompt notification to the lender of such
                    status, an audit of the note or written agreement to
                    determine if the provisions of that note or agreement
                    are consistent with the records of the guaranty agency
                    as to the principal amount of the loan guaranteed, and
                    an examination of the note or agreement to assure that
                    the repayment provisions are consistent with the
                    provisions of this part.

        ``(e) Ownership and Regulation of Operating Fund.--
                ``(1) Ownership.--The Operating Fund, with the exception of
            funds transferred from the Federal Fund in accordance with
            section 422A(f ), shall be considered to be the property of the
            guaranty agency.
                ``(2) Regulation.--Except as provided in paragraph (3), the
            Secretary may not regulate the uses or expenditure of moneys in
            the Operating Fund, but the Secretary may require such necessary
            reports and audits as provided in section 428(b)(2).

    [[Page 112 STAT. 1679]]

                ``(3) Exception.--Notwithstanding paragraphs (1) and (2),
            during any period in which funds are owed to the Federal Fund as
            a result of transfer under section 422A(f )--
                        ``(A) moneys in the Operating Fund may only be used
                    for expenses related to the student loan programs
                    authorized under this part; and
                        ``(B) the Secretary may regulate the uses or
                    expenditure of moneys in the Operating Fund.''.

    SEC. 414. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

        Section 424(a) (20 U.S.C. 1074(a)) is amended--
                (1) by striking ``October 1, 2002'' and inserting ``October
            1, 2004''; and
                (2) by striking ``September 30, 2006'' and inserting
            ``September 30, 2008''.

    SEC. 415. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND FEDERAL
                LOAN INSURANCE.

        Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is amended--
                (1) in clause (i)--
                        (A) by inserting ``and'' after the semicolon at the
                    end of subclause (I); and
                        (B) by striking subclauses (II) and (III) and
                    inserting the following:
                              ``(II) if such student is enrolled in a
                          program of undergraduate education which is less
                          than one academic year, the maximum annual loan
                          amount that such student may receive may not
                          exceed the amount that bears the same ratio to the
                          amount specified in subclause (I) as the length of
                          such program measured in semester, trimester,
                          quarter, or clock hours bears to one academic
                          year;''; and
                (2) by inserting ``and'' after the semicolon at the end of
            clause (iii).

    SEC. 416. APPLICABLE INTEREST RATES.

        (a) Applicable Interest Rates.--
                (1) Amendment.--Section 427A (20 U.S.C. 1077a) is amended--
                        (A) by redesignating subsections (k) and (l) as
                    subsections (l) and (m), respectively; and
                        (B) by inserting after subsection ( j) the
                    following:

        ``(k) Interest Rates for New Loans on or After October 1, 1998, and
    Before July 1, 2003.--
                ``(1) In general.--Notwithstanding subsection (h) and
            subject to paragraph (2) of this subsection, with respect to any
            loan made, insured, or guaranteed under this part (other than a
            loan made pursuant to section 428B or 428C) for which the first
            disbursement is made on or after October 1, 1998, and before
            July 1, 2003, the applicable rate of interest shall, during any
            12-month period beginning on July 1 and ending on June 30, be
            determined on the preceding June 1 and be equal to--
                        ``(A) the bond equivalent rate of 91-day Treasury
                    bills auctioned at the final auction held prior to such
                    June 1; plus
                        ``(B) 2.3 percent,

    [[Page 112 STAT. 1680]]

            except that such rate shall not exceed 8.25 percent.
                ``(2) In school and grace period rules.--Notwithstanding
            subsection (h), with respect to any loan under this part (other
            than a loan made pursuant to section 428B or 428C) for which the
            first disbursement is made on or after October 1, 1998, and
            before July 1, 2003, the applicable rate of interest for
            interest which accrues--
                        ``(A) prior to the beginning of the repayment period
                    of the loan; or
                        ``(B) during the period 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),
            shall be determined under paragraph (1) by substituting `1.7
            percent' for `2.3 percent'.
                ``(3) PLUS loans.--Notwithstanding subsection (h), with
            respect to any loan under section 428B for which the first
            disbursement is made on or after October 1, 1998, and before
            July 1, 2003, the applicable rate of interest shall be
            determined under paragraph (1)--
                        ``(A) by substituting `3.1 percent' for `2.3
                    percent'; and
                        ``(B) by substituting `9.0 percent' for `8.25
                    percent'.
                ``(4) Consolidation loans.--With respect to any
            consolidation loan under section 428C for which the application
            is received by an eligible lender on or after October 1, 1998,
            and before July 1, 2003, the applicable rate of interest shall
            be at an annual rate on the unpaid principal balance of the loan
            that is equal to the lesser of--
                        ``(A) the weighted average of the interest rates on
                    the loans consolidated, rounded to the nearest higher
                    one-eighth of 1 percent; or
                        ``(B) 8.25 percent.
                ``(5) <<NOTE: Federal Register,
            publication.>> Consultation.--The Secretary shall determine the
            applicable rate of interest under this subsection after
            consultation with the Secretary of the Treasury and shall
            publish such rate in the Federal Register as soon as practicable
            after the date of determination.''.
                (2) Conforming amendment.--Section 428B(d)(4) (20 U.S.C.
            1078-2(d)(4)) is amended by striking ``section 427A(c)'' and
            inserting ``section 427A''.

        (b) Special Allowances.--
                (1) Amendment.--Section 438(b)(2) (20 U.S.C. 1087-1(b)(2))
            is amended by adding at the end the following:
                        ``(H) Loans disbursed on or after october 1, 1998,
                    and before july 1, 2003.--
                              ``(i) In general.--Subject to paragraph (4)
                          and clauses (ii), (iii), and (iv) 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 October 1,
                          1998, and before July 1, 2003, shall be computed--
                                        ``(I) by determining the average of
                                    the bond equivalent rates of 91-day
                                    Treasury bills auctioned for such 3-
                                    month period;

    [[Page 112 STAT. 1681]]

                                        ``(II) by subtracting the applicable
                                    interest rates on such loans from such
                                    average bond equivalent rate;
                                        ``(III) by adding 2.8 percent to the
                                    resultant percent; and
                                        ``(IV) by dividing the resultant
                                    percent by 4.
                              ``(ii) In school and grace period.--In the
                          case of any loan for which the first disbursement
                          is made on or after October 1, 1998, and before
                          July 1, 2003, and for which the applicable rate of
                          interest is described in section 427A(k)(2),
                          clause (i)(III) of this subparagraph shall be
                          applied by substituting `2.2 percent' for `2.8
                          percent'.
                              ``(iii) PLUS loans.--In the case of any loan
                          for which the first disbursement is made on or
                          after October 1, 1998, and before July 1, 2003,
                          and for which the applicable rate of interest is
                          described in section 427A(k)(3), clause (i)(III)
                          of this subparagraph shall be applied by
                          substituting `3.1 percent' for `2.8 percent',
                          subject to clause (v) of this subparagraph.
                              ``(iv) Consolidation loans.--In the case of
                          any consolidation loan for which the application
                          is received by an eligible lender on or after
                          October 1, 1998, and before July 1, 2003, and for
                          which the applicable interest rate is determined
                          under section 427A(k)(4), clause (i)(III) of this
                          subparagraph shall be applied by substituting `3.1
                          percent' for `2.8 percent', subject to clause (vi)
                          of this subparagraph.
                              ``(v) Limitation on special allowances for
                          plus loans.--In the case of PLUS loans made under
                          section 428B and first disbursed on or after
                          October 1, 1998, and before July 1, 2003, for
                          which the interest rate is determined under
                          section 427A(k)(3), a special allowance shall not
                          be paid for such loan during any 12-month period
                          beginning on July 1 and ending on June 30 unless,
                          on the June 1 preceding such July 1--
                                        ``(I) the bond equivalent rate of
                                    91-day Treasury bills auctioned at the
                                    final auction held prior to such June 1
                                    (as determined by the Secretary for
                                    purposes of such section); plus
                                        ``(II) 3.1 percent,
                          exceeds 9.0 percent.
                              ``(vi) Limitation on special allowances for
                          consolidation loans.--In the case of consolidation
                          loans made under section 428C and for which the
                          application is received on or after October 1,
                          1998, and before July 1, 2003, for which the
                          interest rate is determined under section
                          427A(k)(4), a special allowance shall not be paid
                          for such loan during any 3-month period ending
                          March 31, June 30, September 30, or December 31
                          unless--
                                        ``(I) the average of the bond
                                    equivalent rate of 91-day Treasury bills
                                    auctioned for such 3-month period; plus
                                        ``(II) 3.1 percent,
                          exceeds the rate determined under section
                          427A(k)(4).''.

    [[Page 112 STAT. 1682]]

                (2) Consolidation loans.--Section 428C(c)(1) (20 U.S.C.
            1078-3(c)(1)) is amended by striking everything preceding
            subparagraph (B) and inserting the following:
                ``(1) Interest rate.--(A) Notwithstanding subparagraphs (B)
            and (C), with respect to any loan made under this section for
            which the application is received by an eligible lender on or
            after October 1, 1998, and before July 1, 2003, the applicable
            interest rate shall be determined under section 427A(k)(4).''.
                (3) Conforming amendment.--Section 438(b)(2) (20 U.S.C.
            1087-1(b)(2)(C)(ii)) is amended--
                        (A) in subparagraph (A), by striking ``(F), and
                    (G)'' and inserting ``(F), (G), and (H)'';
                        (B) in subparagraph (B)(iv), by striking ``(F), or
                    (G)'' and inserting ``(F), (G), or (H)''; and
                        (C) in subparagraph (C)(ii), by striking
                    ``subparagraph (G)'' and inserting ``subparagraphs (G)
                    and (H)''.

        (c) <<NOTE: Applicability. 20 USC 1077a note.>> Effective Date.--The
    amendments made by this section shall apply with respect to any loan
    made, insured, or guaranteed under part B of title IV of the Higher
    Education Act of 1965 for which the first disbursement is made on or
    after October 1, 1998, and before July 1, 2003, except that such
    amendments shall apply with respect to any loan made under section 428C
    of such Act for which the application is received by an eligible lender
    on or after October 1, 1998, and before July 1, 2003.

    SEC. 417. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

        (a) Federal Interest Subsidies.--
                (1) Requirements to receive subsidy.--Section 428(a)(2) (20
            U.S.C. 1078(a)(2)) is amended--
                        (A) in subparagraph (A)(i), by striking subclauses
                    (I), (II), and (III) and inserting the following:
                              ``(I) sets forth the loan amount for which the
                          student shows financial need; and
                              ``(II) sets forth a schedule for disbursement
                          of the proceeds of the loan in installments,
                          consistent with the requirements of section 428G;
                          and''; and
                        (B) by amending subparagraph (B) to read as follows:
                ``(B) For the purpose of clause (ii) of subparagraph (A), a
            student shall qualify for a portion of an interest payment under
            paragraph (1) if the eligible institution has determined and
            documented the student's amount of need for a loan based on the
            student's estimated cost of attendance, estimated financial
            assistance, and, for the purpose of an interest payment pursuant
            to this section, expected family contribution (as determined
            under part F), subject to the provisions of subparagraph (D).'';
                        (C) by amending subparagraph (C) to read as follows:
                ``(C) For the purpose of subparagraph (B) and this
            paragraph--
                        ``(i) a student's cost of attendance shall be
                    determined under section 472;
                        ``(ii) a student's estimated financial assistance
                    means, for the period for which the loan is sought--
                              ``(I) the amount of assistance such student
                          will receive under subpart 1 of part A (as
                          determined in accordance with section 484(b)),
                          subpart 3 of part A, and parts C and E;

    [[Page 112 STAT. 1683]]

                              ``(II) any veterans' education benefits paid
                          because of enrollment in a postsecondary education
                          institution, including veterans' education
                          benefits (as defined in section 480(c), but
                          excluding benefits described in paragraph (2)(E)
                          of such section); plus
                              ``(III) other scholarship, grant, or loan
                          assistance, but excluding any national service
                          education award or post-service benefit under
                          title I of the National and Community Service Act
                          of 1990; and
                        ``(iii) the determination of need and of the amount
                    of a loan by an eligible institution under subparagraph
                    (B) with respect to a student shall be calculated in
                    accordance with part F.''; and
                        (D) by striking subparagraph (F).
                (2) Duration of authority.--Section 428(a)(5) is
            amended-- <<NOTE: 20 USC 1078.>>
                        (A) by striking ``September 30, 2002'' and inserting
                    ``September 30, 2004''; and
                        (B) by striking ``September 30, 2006'' and inserting
                    ``September 30, 2008''.

        (b) Insurance Program Agreements.--
                (1) Annual loan limits.--Section 428(b)(1)(A) is
            amended--
                        (A) in the matter preceding clause (i), by inserting
                    ``, as defined in section 481(a)(2),'' after ``academic
                    year'';
                        (B) in clause (i)--
                              (i) in subclause (I), by striking ``length (as
                          determined under section 481);'' and inserting
                          ``length; and''; and
                              (ii) by striking subclauses (II) and (III) and
                          inserting the following:
                                        ``(II) if such student is enrolled
                                    in a program of undergraduate education
                                    which is less than 1 academic year, the
                                    maximum annual loan amount that such
                                    student may receive may not exceed the
                                    amount that bears the same ratio to the
                                    amount specified in subclause (I) as the
                                    length of such program measured in
                                    semester, trimester, quarter, or clock
                                    hours bears to 1 academic year;'';
                        (C) in clause (iv), by striking ``and'' after the
                    semicolon;
                        (D) in clause (v), by inserting ``and'' after the
                    semicolon; and
                        (E) by inserting before the matter following clause
                    (v) the following:
                              ``(vi) in the case of a student enrolled in
                          coursework specified in sections 484(b)(3)(B) and
                          484(b)(4)(B)--
                                        ``(I) $2,625 for coursework
                                    necessary for enrollment in an
                                    undergraduate degree or certificate
                                    program, and, in the case of a student
                                    who has obtained a baccalaureate degree,
                                    $5,500 for coursework necessary for
                                    enrollment in a graduate or professional
                                    degree or certification program; and
                                        ``(II) in the case of a student who
                                    has obtained a baccalaureate degree,
                                    $5,500 for coursework necessary for a
                                    professional credential or certification
                                    from a State required for employment as
                                    a teacher in an elementary school or
                                    secondary school;''.

    [[Page 112 STAT. 1684]]

                (2) Selection of repayment plans.--Clause (ii) of section
            428(b)(1)(D) <<NOTE: 20 USC 1078.>>  is amended to read as
            follows: ``(ii) the student borrower may annually change the
            selection of a repayment plan under this part, and''.
                (3) Repayment plans.--Subparagraph (E) of section 428(b)(1)
            is amended to read as follows:
                        ``(E) subject to subparagraphs (D) and (L), and
                    except as provided by subparagraph (M), provides that--
                              ``(i) not more than 6 months prior to the date
                          on which the borrower's first payment is due, the
                          lender shall offer the borrower of a loan made,
                          insured, or guaranteed under this section or
                          section 428H, the option of repaying the loan in
                          accordance with a standard, graduated, income-
                          sensitive, or extended repayment schedule (as
                          described in paragraph (9)) established by the
                          lender in accordance with regulations of the
                          Secretary; and
                              ``(ii) repayment of loans shall be in
                          installments in accordance with the repayment plan
                          selected under paragraph (9) and commencing at the
                          beginning of the repayment period determined under
                          paragraph (7);'';
                (4) Coinsurance.--Section 428(b)(1)(G) is amended by
            striking ``not less than''.
                (5) Payment amounts.--Section 428(b)(1)(L)(i) is
            amended--
                        (A) by inserting ``except as otherwise provided by a
                    repayment plan selected by the borrower under clause
                    (ii) or (iii) of paragraph (9)(A),'' before ``during
                    any''; and
                        (B) by inserting ``, notwithstanding any payment
                    plan under paragraph (9)(A)'' after ``due and payable''.
                (6) Deferments.--Section 428(b)(1)(M) is amended--
                        (A) in clause (i)(I), by inserting before the
                    semicolon the following: ``, except that no borrower,
                    notwithstanding the provisions of the promissory note,
                    shall be required to borrow an additional loan under
                    this title in order to be eligible to receive a
                    deferment under this clause''; and
                        (B) in clause (ii), by inserting before the
                    semicolon the following: ``, except that no borrower who
                    provides evidence of eligibility for unemployment
                    benefits shall be required to provide additional
                    paperwork for a deferment under this clause''.
                (7) Limitation, suspension, and termination.--Section
            428(b)(1)(U) is amended--
                        (A) by striking ``emergency action,,'' each place
                    the term appears and inserting ``emergency action,'';
                    and
                        (B) in clause (iii)(I), by inserting ``that
                    originates or holds more than $5,000,000 in loans made
                    under this title for any lender fiscal year (except that
                    each lender described in section 435(d)(1)(A)(ii)(III)
                    shall annually submit the results of an audit required
                    by this clause),'' before ``at least once a year''.
                (8) Additional insurance program requirements.--
            Section 428(b)(1) is further amended--
                        (A) by striking ``and'' at the end of subparagraph
                    (W);
                        (B) in subparagraph (X)--

    [[Page 112 STAT. 1685]]

                              (i) by striking ``428(c)(10)'' and inserting
                          ``428(c)(9)''; and
                              (ii) by striking the period at the end and
                          inserting ``; and'';
                        (C) by adding at the end the following new sub-
                    paragraph:
                        ``(Y) provides that--
                              ``(i) the lender shall determine the
                          eligibility of a borrower for a deferment
                          described in subparagraph (M)(i) based on receipt
                          of--
                                        ``(I) a request for deferment from
                                    the borrower and documentation of the
                                    borrower's eligibility for the
                                    deferment;
                                        ``(II) a newly completed loan
                                    application that documents the
                                    borrower's eligibility for a deferment;
                                    or
                                        ``(III) student status information
                                    received by the lender that the borrower
                                    is enrolled on at least a half-time
                                    basis; and
                              ``(ii) the lender will notify the borrower of
                          the granting of any deferment under clause (i)(II)
                          or (III) of this subparagraph and of the option to
                          continue paying on the loan.''.
                (9) Restrictions on inducements.--Section 428(b)(3) is
            amended-- <<NOTE: 20 USC 1078.>>
                        (A) by striking subparagraph (C) and inserting the
                    following:
                        ``(C) conduct unsolicited mailings of student loan
                    application forms to students enrolled in secondary
                    school or a postsecondary institution, or to parents of
                    such students, except that applications may be mailed to
                    borrowers who have previously received loans guaranteed
                    under this part by the guaranty agency; or''; and
                        (B) by adding at the end the following new sentence:
            ``It shall not be a violation of this paragraph for a guaranty
            agency to provide assistance to institutions of higher education
            comparable to the kinds of assistance provided to institutions
            of higher education by the Department of Education.''.
                (10) Delay in commencement of repayment period.--Section
            428(b)(7) is amended by adding at the end the following:
                ``(D) There shall be excluded from the 6-month period that
            begins on the date on which a student ceases to carry at least
            one-half the normal full-time academic workload as described in
            subparagraph (A)(i) any period not to exceed 3 years during
            which a borrower who is a member of a reserve component of the
            Armed Forces named in section 10101 of title 10, United States
            Code, is called or ordered to active duty for a period of more
            than 30 days (as defined in section 101(d)(2) of such title).
            Such period of exclusion shall include the period necessary to
            resume enrollment at the borrower's next available regular
            enrollment period.''.
                (11) Repayment plans.--Section 428(b) is amended by
            adding at the end the following:
                ``(9) Repayment plans.--
                        ``(A) <<NOTE: Regulations.>> Design and selection.--
                    In accordance with regulations promulgated by the
                    Secretary, the lender shall offer a borrower of a loan
                    made under this part the plans

    [[Page 112 STAT. 1686]]

                    described in this subparagraph for repayment of such
                    loan, including principal and interest thereon. No plan
                    may require a borrower to repay a loan in less than 5
                    years unless the borrower, during the 6 months
                    immediately preceding the start of the repayment period,
                    specifically requests that repayment be made over of a
                    shorter period. The borrower may choose from--
                              ``(i) a standard repayment plan, with a fixed
                          annual repayment amount paid over a fixed period
                          of time, not to exceed 10 years;
                              ``(ii) a graduated repayment plan paid over a
                          fixed period of time, not to exceed 10 years;
                              ``(iii) an income-sensitive repayment plan,
                          with income-sensitive repayment amounts paid over
                          a fixed period of time, not to exceed 10 years,
                          except that the borrower's scheduled payments
                          shall not be less than the amount of interest due;
                          and
                              ``(iv) for new borrowers on or after the date
                          of enactment of the Higher Education Amendments of
                          1998 who accumulate (after such date) outstanding
                          loans under this part totaling more than $30,000,
                          an extended repayment plan, with a fixed annual or
                          graduated repayment amount paid over an extended
                          period of time, not to exceed 25 years, except
                          that the borrower shall repay annually a minimum
                          amount determined in accordance with paragraph
                          (1)(L)(i).
                        ``(B) Lender selection of option if borrower does
                    not select.--If a borrower of a loan made under this
                    part does not select a repayment plan described in
                    subparagraph (A), the lender shall provide the borrower
                    with a repayment plan described in subparagraph
                    (A)(i).''.

        (c) Guarantee Agreements.--
                (1) Reinsurance payments.--
                        (A) Amendments.--Section 428(c)(1) (20 U.S.C.
                    1078(c)(1)) is amended--
                              (i) in subparagraph (A), by striking ``98
                          percent'' and inserting ``95 percent'';
                              (ii) in subparagraph (B)(i), by striking ``88
                          percent'' and inserting ``85 percent'';
                              (iii) in subparagraph (B)(ii), by striking
                          ``78 percent'' and inserting ``75 percent'';
                              (iv) in subparagraph (E)--
                                        (I) in clause (i), by striking ``98
                                    percent'' and inserting ``95 percent'';
                                        (II) in clause (ii), by striking
                                    ``88 percent'' and inserting ``85
                                    percent''; and
                                        (III) in clause (iii), by striking
                                    ``78 percent'' and inserting ``75
                                    percent''; and
                              (v) in subparagraph (F)--
                                        (I) in clause (i), by striking ``98
                                    percent'' and inserting ``95 percent'';
                                        (II) in clause (ii), by striking
                                    ``88 percent'' and inserting ``85
                                    percent''; and
                                        (III) in clause (iii), by striking
                                    ``78 percent'' and inserting ``75
                                    percent''.

    [[Page 112 STAT. 1687]]

                        (B) <<NOTE: Applicability. 20 USC 1078
                    note.>> Effective date.--The amendments made by
                    subparagraph (A) of this paragraph apply to loans for
                    which the first disbursement is made on or after October
                    1, 1998.
                (2) Notice to institutions of defaults.--Section 428(c)(2)
            is amended-- <<NOTE: 20 USC 1078.>>
                        (A) in subparagraph (A), by striking ``proof that
                    reasonable attempts were made'' and inserting ``proof
                    that the institution was contacted and other reasonable
                    attempts were made''; and
                        (B) in subparagraph (G), by striking ``certifies to
                    the Secretary that diligent attempts have been made''
                    and inserting ``certifies to the Secretary that diligent
                    attempts, including contact with the institution, have
                    been made''.
                (3) Guaranty agency information to eligible institutions.--
            Section 428(c)(2)(H)(ii) is amended to read as follows:
                              ``(ii) the guaranty agency shall not require
                          the payment from the institution of any fee for
                          such information; and''.
                (4) Forbearance.--Section 428(c)(3) is amended--
                        (A) in subparagraph (A)(i), by striking ``written'';
                        (B) in subparagraph (B), by striking ``and'' after
                    the semicolon;
                        (C) in subparagraph (C), by striking the period and
                    inserting ``; and''; and
                        (D) by inserting before the matter following
                    subparagraph (C) the following:
                        ``(D) shall contain provisions that specify that--
                              ``(i) forbearance for a period not to exceed
                          60 days may be granted if the lender reasonably
                          determines that such a suspension of collection
                          activity is warranted following a borrower's
                          request for deferment, forbearance, a change in
                          repayment plan, or a request to consolidate loans,
                          in order to collect or process appropriate
                          supporting documentation related to the request,
                          and
                              ``(ii) during such period interest shall
                          accrue but not be capitalized.''.
                (5) Equitable share.--Paragraph (6) of section 428(c) is
            amended to read as follows:
                ``(6) Secretary's equitable share.--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--
                        ``(A) a percentage amount equal to the complement of
                    the reinsurance percentage in effect when payment under
                    the guaranty agreement was made with respect to the
                    loan; and
                        ``(B) <<NOTE: Effective date. Applicability.>> 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'.''.
                (6) Assignment.--Section 428(c)(8) is amended--
                        (A) by striking ``(A) If'' and inserting ``If''; and
                        (B) by striking subparagraph (B).

    [[Page 112 STAT. 1688]]

                 <<NOTE: 20 USC 1078.>> (7) Guaranty agency reserve level;
            agency termination.--Section 428(c)(9) is amended--
                        (A) in subparagraph (A), by striking ``maintain a
                    current minimum reserve level of at least .5 percent''
                    and inserting ``maintain in the agency's Federal Student
                    Loan Reserve Fund established under section 422A a
                    current minimum reserve level of at least 0.25
                    percent'';
                        (B) in subparagraph (C)--
                              (i) by striking ``80 percent pursuant to
                          section 428(c)(1)(B)(ii)'' and inserting ``85
                          percent pursuant to paragraph (1)(B)(i)'';
                              (ii) by striking ``, as appropriate,''; and
                              (iii) by striking ``30 working days'' and
                          inserting ``45 working days'';
                        (C) in subparagraph (E)--
                              (i) by inserting ``or'' at the end of clause
                          (iv);
                              (ii) by striking ``; or'' at the end of clause
                          (v) and inserting a period; and
                              (iii) by striking clause (vi);
                        (D) in subparagraph (F)(vii), by striking ``to avoid
                    disruption'' and everything that follows and inserting
                    ``and to avoid disruption of the student loan
                    program.'';
                        (E) in subparagraph (I), by inserting ``that, if
                    commenced after September 24, 1998, shall be on the
                    record'' after ``for a hearing''; and
                        (F) in subparagraph (K)--
                              (i) by striking ``and Labor'' and inserting
                          ``and the Workforce''; and
                              (ii) by striking everything after ``guaranty
                          agency system'' and inserting a period.

        (d) Payment for Lender Referral Services; Income-Sensitive
    Repayment.--Subsection (e) of section 428 is amended to read as follows:
        ``(e) <<NOTE: Regulations.>> Notice of Availability of Income-
    Sensitive Repayment Option.--At the time of offering a borrower a loan
    under this part, and at the time of offering the borrower the option of
    repaying a loan in accordance with this section, the lender shall
    provide the borrower with a notice that informs the borrower, in a form
    prescribed by the Secretary by regulation--
                ``(1) that all borrowers are eligible for income-sensitive
            repayment, including through loan consolidation under section
            428C;
                ``(2) the procedures by which the borrower may elect income-
            sensitive repayment; and
                ``(3) where and how the borrower may obtain additional
            information concerning income-sensitive repayment.''.

        (e) Payment of Certain Costs.--Subsection (f ) of section 428 is
    amended to read as follows:
        ``(f ) Payments of Certain Costs.--
                ``(1) Payment for certain activities.--
                        ``(A) In general.--The Secretary--
                              ``(i) for loans originated during fiscal years
                          beginning on or after October 1, 1998, and before
                          October 1, 2003, and in accordance with the
                          provisions of this paragraph, shall, except as
                          provided in subparagraph (C), pay to each guaranty
                          agency, a loan processing and issuance fee equal
                          to 0.65 percent of the total

    [[Page 112 STAT. 1689]]

                          principal amount of the loans on which insurance
                          was issued under this part during such fiscal year
                          by such agency; and
                              ``(ii) for loans originated during fiscal
                          years beginning on or after October 1, 2003, and
                          in accordance with the provisions of this
                          paragraph, shall, except as provided in
                          subparagraph (C), pay to each guaranty agency, a
                          loan processing and issuance fee equal to 0.40
                          percent of the total principal amount of the loans
                          on which insurance was issued under this part
                          during such fiscal year by such agency.
                        ``(B) Payment.--The payment required by subparagraph
                    (A) shall be paid on a quarterly basis. The guaranty
                    agency shall be deemed to have a contractual right
                    against the United States to receive payments according
                    to the provisions of this paragraph. Payments shall be
                    made promptly and without administrative delay to any
                    guaranty agency submitting an accurate and complete
                    application under this subparagraph.
                        ``(C) Requirement for payment.--No payment may be
                    made under this paragraph for loans for which the
                    disbursement checks have not been cashed or for which
                    electronic funds transfers have not been completed.''.

        (f ) Action on Agreements.--Section 428(g) is amended <<NOTE: 20 USC
    1078.>> by striking ``and Labor'' and inserting ``and the Workforce''.

        (g) Lenders-of-Last-Resort.--Paragraph (3) of section 428( j) is
    amended--
                (1) in the paragraph heading, by striking ``during
            transition to direct lending'';
                (2) in subparagraph (A)--
                        (A) by striking ``during the transition from the
                    Federal Family Education Loan Program under this part to
                    the Federal Direct Student Loan Program under part D of
                    this title,'' and inserting a comma;
                        (B) by inserting ``designated for a State'' after
                    ``a
                    guaranty agency''; and
                        (C) by inserting ``subparagraph (C) and'' before
                    ``section 422(c)(7),''; and
                (3) by adding at the end thereof the following:
                ``(C) The Secretary shall exercise the authority described
            in subparagraph (A) only if the Secretary determines that
            eligible borrowers are seeking and are unable to obtain loans
            under this part, and that the guaranty agency designated for
            that State has the capability to provide lender-of-last-resort
            loans in a timely manner, in accordance with the guaranty
            agency's obligations under paragraph (1), but cannot do so
            without advances provided by the Secretary under this paragraph.
            If the Secretary makes the determinations described in the
            preceding sentence and determines that it would be cost-
            effective to do so, the Secretary may provide advances under
            this paragraph to such guaranty agency. If the Secretary
            determines that such guaranty agency does not have such
            capability, or will not provide such loans in a timely fashion,
            the Secretary may provide such advances to enable another
            guaranty agency, that the Secretary determines to have such
            capability, to make lender-of-last-resort loans to eligible
            borrowers in that State who are experiencing loan access
            problems.''.

    [[Page 112 STAT. 1690]]

        (h) Default Aversion Assistance.--Subsection (l) of section 428 is
    amended to <<NOTE: 20 USC 1078.>> read as follows:

        ``(l) Default Aversion Assistance.--
                ``(1) Assistance required.--Upon receipt of a complete
            request from a lender received not earlier than the 60th day of
            delinquency, a guaranty agency having an agreement with the
            Secretary under subsection (c) shall engage in default aversion
            activities designed to prevent the default by a borrower on a
            loan covered by such agreement.
                ``(2) Reimbursement.--
                        ``(A) In general.--A guaranty agency, in accordance
                    with the provisions of this paragraph, may transfer from
                    the Federal Student Loan Reserve Fund under section 422A
                    to the Agency Operating Fund under section 422B a
                    default aversion fee. Such fee shall be paid for any
                    loan on which a claim for default has not been paid as a
                    result of the loan being brought into current repayment
                    status by the guaranty agency on or before the 300th day
                    after the loan becomes 60 days delinquent.
                        ``(B) Amount.--The default aversion fee shall be
                    equal to 1 percent of the total unpaid principal and
                    accrued interest on the loan at the time the request is
                    submitted by the lender. A guaranty agency may transfer
                    such fees earned under this subsection not more
                    frequently than monthly. Such a fee shall not be paid
                    more than once on any loan for which the guaranty agency
                    averts the default unless--
                              ``(i) at least 18 months has elapsed between
                          the date the borrower entered current repayment
                          status and the date the lender filed a subsequent
                          default aversion assistance request; and
                              ``(ii) during the period between such dates,
                          the borrower was not more than 30 days past due on
                          any payment of principal and interest on the loan.
                        ``(C) Definition.--For the purpose of earning the
                    default aversion fee, the term `current repayment
                    status' means that the borrower is not delinquent in the
                    payment of any principal or interest on the loan.''.

        (i) Income Contingent Repayment.--Section 428(m) is amended by
    striking ``shall require at least 10 percent of the borrowers'' and
    inserting ``may require borrowers''.
        ( j) State Share of Default Costs.--Subsection (n) of section 428 is
    repealed.
        (k) Blanket Certificate of Guaranty.--Section 428 is amended by
    adding at the end the following:
        ``(n) Blanket Certificate of Loan Guaranty.--
                ``(1) In general.--Subject to paragraph (3), any guaranty
            agency that has entered into or enters into any insurance
            program agreement with the Secretary under this part may--
                        ``(A) offer eligible lenders participating in the
                    agency's guaranty program a blanket certificate of loan
                    guaranty that permits the lender to make loans without
                    receiving prior approval from the guaranty agency of
                    individual loans for eligible borrowers enrolled in
                    eligible programs at eligible institutions; and
                        ``(B) provide eligible lenders with the ability to
                    transmit electronically data to the agency concerning
                    loans the

    [[Page 112 STAT. 1691]]

                    lender has elected to make under the agency's insurance
                    program via standard reporting formats, with such
                    reporting to occur at reasonable and standard intervals.
                ``(2) Limitations on blanket certificate of guaranty.--(A)
            An eligible lender may not make a loan to a borrower under this
            section after such lender receives a notification from the
            guaranty agency that the borrower is not an eligible borrower.
                ``(B) A guaranty agency may establish limitations or
            restrictions on the number or volume of loans issued by a lender
            under the blanket certificate of guaranty.
                ``(3) Participation level.--During fiscal years 1999 and
            2000, the Secretary may permit, on a pilot basis, a limited
            number of guaranty agencies to offer blanket certificates of
            guaranty under this subsection. Beginning in fiscal year 2001,
            any guaranty agency that has an insurance program agreement with
            the Secretary may offer blanket certificates of guaranty under
            this subsection.
                ``(4) Report required.--The Secretary shall, at the
            conclusion of the pilot program under paragraph (3), provide a
            report to the Committee on Education and the Workforce of the
            House of Representatives and the Committee on Labor and Human
            Resources of the Senate on the impact of the blanket
            certificates of guaranty on program efficiency and integrity.''.

    SEC. 418. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY
                AGENCIES.

        Part B of title IV (20 U.S.C. 1071 et seq.) is amended by inserting
    after section 428 (20 U.S.C. 1078) the following:

    ``SEC. 428A. <<NOTE: 20 USC 1078-1.>> VOLUNTARY FLEXIBLE AGREEMENTS WITH
                GUARANTY AGENCIES.

        ``(a) Voluntary Agreements.--
                ``(1) Authority.--Subject to paragraph (2), the Secretary
            may enter into a voluntary, flexible agreement with a guaranty
            agency under this section, in lieu of agreements with a guaranty
            agency under subsections (b) and (c) of section 428. The
            Secretary may waive or modify any requirement under such
            subsections, except that the Secretary may not waive--
                        ``(A) any statutory requirement pertaining to the
                    terms and conditions attached to student loans or
                    default claim payments made to lenders; or
                        ``(B) the prohibitions on inducements contained in
                    section 428(b)(3) unless the Secretary determines that
                    such a waiver is consistent with the purposes of this
                    section and is limited to activities of the guaranty
                    agency within the State or States for which the guaranty
                    agency serves as the designated guarantor.
                ``(2) Special rule.--If the Secretary grants a waiver
            pursuant to paragraph (1)(B), any guaranty agency doing business
            within the affected State or States may request, and the
            Secretary shall grant, an identical waiver to such guaranty
            agency under the same terms and conditions (including service
            area limitations) as govern the original waiver.
                ``(3) Eligibility.--During fiscal years 1999, 2000, and
            2001, the Secretary may enter into a voluntary, flexible
            agreement with not more than 6 guaranty agencies that had 1 or
            more agreements with the Secretary under subsections (b) and (c)

    [[Page 112 STAT. 1692]]

            of section 428 as of the day before the date of enactment of the
            Higher Education Amendments of 1998. Beginning in fiscal year
            2002, any guaranty agency or consortium thereof may enter into a
            voluntary flexible agreement with the Secretary.
                ``(4) <<NOTE: Deadline.>> Report required.--Not later than
            September 30, 2001, the Secretary shall report to the Committee
            on Labor and Human Resources of the Senate and the Committee on
            Education and the Workforce of the House of Representatives
            regarding the impact that the voluntary flexible agreements have
            had upon program integrity, program and cost efficiencies, and
            the availability and delivery of student financial aid. Such
            report shall include--
                        ``(A) a description of each voluntary flexible
                    agreement and the performance goals established by the
                    Secretary for each agreement;
                        ``(B) <<NOTE: Records.>> a list of participating
                    guaranty agencies and the specific statutory or
                    regulatory waivers provided to each guaranty agency and
                    any waivers provided to other guaranty agencies under
                    paragraph (2);
                        ``(C) a description of the standards by which each
                    agency's performance under the agency's voluntary
                    flexible agreement was assessed and the degree to which
                    each agency achieved the performance standards; and
                        ``(D) an analysis of the fees paid by the Secretary,
                    and the costs and efficiencies achieved under each
                    voluntary agreement.

        ``(b) Terms of Agreement.--An agreement between the Secretary and a
    guaranty agency under this section--
                ``(1) shall be developed by the Secretary, in consultation
            with the guaranty agency, on a case-by-case basis;
                ``(2) may only include provisions--
                        ``(A) specifying the responsibilities of the
                    guaranty agency under the agreement, with respect to--
                              ``(i) administering the issuance of insurance
                          on loans made under this part on behalf of the
                          Secretary;
                              ``(ii) monitoring insurance commitments made
                          under this part;
                              ``(iii) default aversion activities;
                              ``(iv) review of default claims made by
                          lenders;
                              ``(v) payment of default claims;
                              ``(vi) collection of defaulted loans;
                              ``(vii) adoption of internal systems of
                          accounting and auditing that are acceptable to the
                          Secretary, and reporting the result thereof to the
                          Secretary in a timely manner, and on an accurate,
                          and auditable basis;
                              ``(viii) timely and accurate collection and
                          reporting of such other data as the Secretary may
                          require to carry out the purposes of the programs
                          under this title;
                              ``(ix) monitoring of institutions and lenders
                          participating in the program under this part; and
                              ``(x) informational outreach to schools and
                          students in support of access to higher education;
                        ``(B) regarding the fees the Secretary shall pay, in
                    lieu of revenues that the guaranty agency may otherwise
                    receive under this part, to the guaranty agency under

    [[Page 112 STAT. 1693]]

                    the agreement, and other funds that the guaranty agency
                    may receive or retain under the agreement, except that
                    in no case may the cost to the Secretary of the
                    agreement, as reasonably projected by the Secretary,
                    exceed the cost to the Secretary, as similarly
                    projected, in the absence of the agreement;
                        ``(C) regarding the use of net revenues, as
                    described in the agreement under this section, for such
                    other activities in support of postsecondary education
                    as may be agreed to by the Secretary and the guaranty
                    agency;
                        ``(D) regarding the standards by which the guaranty
                    agency's performance of the agency's responsibilities
                    under the agreement will be assessed, and the
                    consequences for a guaranty agency's failure to achieve
                    a specified level of performance on 1 or more
                    performance standards;
                        ``(E) regarding the circumstances in which a
                    guaranty agency's agreement under this section may be
                    ended in advance of the agreement's expiration date;
                        ``(F) regarding such other businesses, previously
                    purchased or developed with reserve funds, that relate
                    to the program under this part and in which the
                    Secretary permits the guaranty agency to engage; and
                        ``(G) such other provisions as the Secretary may
                    determine to be necessary to protect the United States
                    from the risk of unreasonable loss and to promote the
                    purposes of this part;
                ``(3) shall provide for uniform lender participation with
            the guaranty agency under the terms of the agreement; and
                ``(4) shall not prohibit or restrict borrowers from
            selecting a lender of the borrower's choosing, subject to the
            prohibitions and restrictions applicable to the selection under
            this Act.

        ``(c) Public Notice.--
                ``(1) <<NOTE: Federal Register, publication.>> In general.--
            The Secretary shall publish in the
            Federal Register a notice to all guaranty agencies that sets
            forth--
                        ``(A) an invitation for the guaranty agencies to
                    enter into agreements under this section; and
                        ``(B) the criteria that the Secretary will use for
                    selecting the guaranty agencies with which the Secretary
                    will enter into agreements under this section.
                ``(2) Agreement notice.--The Secretary shall notify the
            Chairperson and the Ranking Minority Member of 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 30 days prior to concluding an agreement under this
            section. The notice shall contain--
                        ``(A) a description of the voluntary flexible
                    agreement and the performance goals established by the
                    Secretary for the agreement;
                        ``(B) <<NOTE: Records.>> a list of participating
                    guaranty agencies and the specific statutory or
                    regulatory waivers provided to each guaranty agency;
                        ``(C) a description of the standards by which each
                    guaranty agency's performance under the agreement will
                    be assessed; and
                        ``(D) a description of the fees that will be paid to
                    each participating guaranty agency.

    [[Page 112 STAT. 1694]]

                ``(3) <<NOTE: Deadline.>> Waiver notice.--The Secretary
            shall notify the Chairperson and the Ranking Minority Member of
            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 30 days prior to the granting of
            a waiver pursuant to subsection (a)(2) to a guaranty agency that
            is not a party to a voluntary flexible agreement.
                ``(4) Public availability.--The text of any voluntary
            flexible agreement, and any subsequent revisions, and any
            waivers related to section 428(b)(3) that are not part of such
            an agreement, shall be readily available to the public.
                ``(5) Modification notice.--The Secretary shall notify the
            Chairperson and the Ranking Minority Members of the Committee on
            Labor and Human Resources of the Senate and the Committee on
            Education and the Workforce of the House of Representatives 30
            days prior to any modifications to an agreement under this
            section.

        ``(d) Termination.--At the expiration or early termination of an
    agreement under this section, the Secretary shall reinstate the guaranty
    agency's prior agreements under subsections (b) and (c) of section 428,
    subject only to such additional requirements as the Secretary determines
    to be necessary in order to ensure the efficient transfer of
    responsibilities between the agreement under this section and the
    agreements under subsections (b) and (c) of section 428, and including
    the guaranty agency's compliance with reserve requirements under
    sections 422 and 428.''.

    SEC. 419. FEDERAL PLUS LOANS.

        Section 428B (20 U.S.C. 1078-2) is amended--
                (1) by amending subsection (a) to read as follows:

        ``(a) Authority To Borrow.--
                ``(1) Authority and eligibility.--Parents of a dependent
            student shall be eligible to borrow funds under this section in
            amounts specified in subsection (b), if--
                        ``(A) the parents do not have an adverse credit
                    history as determined pursuant to regulations
                    promulgated by the Secretary; and
                        ``(B) the parents meet such other eligibility
                    criteria as the Secretary may establish by regulation,
                    after consultation with guaranty agencies, eligible
                    lenders, and other organizations involved in student
                    financial assistance.
                ``(2) Terms, conditions, and benefits.--Except as provided
            in subsections (c), (d), and (e), loans made under this section
            shall have the same terms, conditions, and benefits as all other
            loans made under this part.
                ``(3) Special rule.--Whenever necessary to carry out the
            provisions of this section, the terms `student' and `borrower'
            as used in this part shall include a parent borrower under this
            section.''; and
                (2) by adding at the end the following:

        ``(f ) Verification of Immigration Status and Social
    Security Number.--A parent who wishes to borrow funds under this section
    shall be subject to verification of the parent's--
                ``(1) immigration status in the same manner as immigration
            status is verified for students under section 484(g); and

    [[Page 112 STAT. 1695]]

                ``(2) social security number in the same manner as social
            security numbers are verified for students under section
            484(p).''.

    SEC. 420. FEDERAL CONSOLIDATION LOANS.

        (a) Definition of Eligible Borrower.--Section 428C(a)(3) (20 U.S.C.
    1078-3(a)(3)) is amended by striking everything preceding subparagraph
    (C) and inserting the following:
                ``(3) Definition of eligible borrower.--(A) For the
            purpose of this section, the term `eligible borrower' means a
            borrower who--
                        ``(i) is not subject to a judgment secured through
                    litigation with respect to a loan under this title or to
                    an order for wage garnishment under section 488A; and
                        ``(ii) at the time of application for a
                    consolidation loan--
                              ``(I) is in repayment status;
                              ``(II) is in a grace period preceding repay-
                          ment; or
                              ``(III) is a defaulted borrower who has made
                          arrangements to repay the obligation on the
                          defaulted loans satisfactory to the holders of the
                          defaulted loans.
                ``(B)(i) An individual's status as an eligible borrower
            under this section terminates upon receipt of a consolidation
            loan under this section, except that--
                        ``(I) an individual who receives eligible student
                    loans after the date of receipt of the consolidation
                    loan may receive a subsequent consolidation loan;
                        ``(II) loans received prior to the date of the
                    consolidation loan may be added during the 180-day
                    period following the making of the consolidation loan;
                        ``(III) loans received following the making of the
                    consolidation loan may be added during the 180-day
                    period following the making of the consolidation loan;
                    and
                        ``(IV) loans received prior to the date of the first
                    consolidation loan may be added to a subsequent
                    consolidation loan.''.

        (b) Definition of Eligible Student Loan.--Section 428C(a)(4) is
    amended by striking subparagraph (C) and inserting the
    following:
                        ``(C) made under part D of this title;''.

        (c) Contents of Agreements.--Section 428C(b) is amended--
                (1) in paragraph (1)(A)(i), by inserting ``except that this
            clause shall not apply in the case of a borrower with multiple
            holders of loans under this part,'' after ``under this
            section,'';
                (2) in paragraph (4)(C)(ii)--
                        (A) in the matter preceding subclause (I), by
                    inserting ``during any such period'' after ``and be
                    paid'';
                        (B) in subclause (I), by striking ``, or on or after
                    October 1, 1998,''; and
                        (C) in subclause (II), by striking ``and before
                    October 1, 1998,'';
                (3) in paragraph (6)(A), by inserting before the semicolon
            at the end the following: ``, except that a lender is not
            required to consolidate loans described in subparagraph (D) or
            (E) of subsection (a)(4) or subsection (d)(1)(C)(ii)''.

    [[Page 112 STAT. 1696]]

        (d) Extension of Authority.--Section 428C(e) <<NOTE: 20 USC 1078-
    3.>> is amended by striking ``September 30, 2002'' and inserting
    ``September 30, 2004''.

        (e) Special Rule.--Section 428C(f ) is amended--
                (1) by redesignating paragraph (2) as paragraph (3); and
                (2) by inserting after paragraph (1) the following:
                ``(2) Special rule.--For consolidation loans based on
            applications received during the period from October 1, 1998
            through January 31, 1999, inclusive, the rebate described in
            paragraph (1) shall be equal to 0.62 percent of the principal
            plus accrued unpaid interest on such loan.''.

    SEC. 421. DEFAULT REDUCTION PROGRAM.

        The heading for subsection (b) of section 428F (20 U.S.C. 1078-6) is
    amended by striking ``Special Rule'' and inserting ``Satisfactory
    Repayment Arrangements To Renew Eligibility''.

    SEC. 422. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

        (a) Special Rule.--Section 428G(a) (20 U.S.C. 1078-7(a)) is amended
    by adding at the end the following:
                ``(3) Special rule.--An institution whose cohort default
            rate (as determined under section 435(m)) for each of the 3 most
            recent fiscal years for which data are available is less than 10
            percent may disburse any loan made, insured, or guaranteed under
            this part in a single installment for any period of enrollment
            that is not more than 1 semester, 1 trimester, 1 quarter, or 4
            months.''.

        (b) Disbursement.--Section 428G(b)(1) is amended by adding at the
    end the following new sentence: ``An institution whose cohort default
    rate (as determined under section 435(m)) for each of the three most
    recent fiscal years for which data are available is less than 10 percent
    shall be exempt from the requirements of this paragraph.''.
        (c) Exclusions.--Section 428G(e) is amended--
                (1) by striking ``or made'' and inserting ``, made''; and
                (2) by inserting ``, or made to a student to cover the cost
            of attendance in a program of study abroad approved by the home
            eligible institution if the home eligible institution has a
            cohort default rate (as calculated under section 435(m)) of less
            than 5 percent'' before the period.

        (d) <<NOTE: Termination date. 20 USC 1078-7 note.>> Effective
    Date.--The amendments made by subsections (a) and (b) shall be effective
    during the period beginning on October 1, 1998, and ending on September
    30, 2002.

    SEC. 423. UNSUBSIDIZED LOANS.

        (a) Eligible Borrowers.--Subsection (b) of section 428H (20
    U.S.C.1078-8(b)) is amended to read as follows:
        ``(b) <<NOTE: Regulations.>> Eligible Borrowers.--Any student
    meeting the requirements for student eligibility under section 484
    (including graduate and professional students as defined in regulations
    promulgated by the Secretary) shall be entitled to borrow an
    unsubsidized Federal Stafford Loan if the eligible institution at which
    the student has been accepted for enrollment, or at which the student is
    in attendance, has--
                ``(1) determined and documented the student's need for the
            loan based on the student's estimated cost of attendance (as
            determined under section 472) and the student's estimated

    [[Page 112 STAT. 1697]]

            financial assistance, including a loan which qualifies for
            interest subsidy payments under section 428; and
                ``(2) provided the lender a statement--
                        ``(A) certifying the eligibility of the student to
                    receive a loan under this section and the amount of the
                    loan for which such student is eligible, in accordance
                    with subsection (c); and
                        ``(B) setting forth a schedule for disbursement of
                    the proceeds of the loan in installments, consistent
                    with the requirements of section 428G.''.

        (b) Loan Limits.--Section 428H(d) is amended-- <<NOTE: 20 USC 1078-
    8.>>
                (1) in paragraph (2)--
                        (A) in the matter preceding subparagraph (A)--
                              (i) by inserting ``(as defined in section
                          481(a)(2))'' after ``academic year''; and
                              (ii) by striking ``or in any period of 7
                          consecutive months, whichever is longer,'';
                        (B) in subparagraph (A)--
                              (i) in clause (i), by striking ``length (as
                          determined under section 481);'' and inserting
                          ``length; and''; and
                              (ii) by striking clauses (ii) and (iii) and
                          inserting the following:
                              ``(ii) if such student is enrolled in a
                          program of undergraduate education which is less
                          than one academic year, the maximum annual loan
                          amount that such student may receive may not
                          exceed the amount that bears the same ratio to the
                          amount specified in clause (i) as the length of
                          such program measured in semester, trimester,
                          quarter, or clock hours bears to one academic
                          year;''.
                        (C) in subparagraph (C), by inserting ``and'' after
                    the semicolon; and
                        (D) by inserting before the matter following
                    subparagraph (C) the following:
                        ``(D) in the case of a student enrolled in
                    coursework specified in sections 484(b)(3)(B) and
                    484(b)(4)(B)--
                              ``(i) $4,000 for coursework necessary for
                          enrollment in an undergraduate degree or
                          certificate program, and, in the case of a student
                          who has obtained a baccalaureate degree, $5,000
                          for coursework necessary for enrollment in a
                          graduate or professional program; and
                              ``(ii) in the case of a student who has
                          obtained a baccalaureate degree, $5,000 for
                          coursework necessary for a professional credential
                          or certification from a State required for
                          employment as a teacher in an elementary or
                          secondary school;''; and
                (2) in paragraph (3), by adding at the end the following:
            ``Interest capitalized shall not be deemed to exceed such
            maximum aggregate amount.''.

        (c) Capitalization of Interest.--Paragraph (2) of section 428H(e) is
    amended to read as follows:
                ``(2) Capitalization of interest.--(A) Interest on loans
            made under this section for which payments of principal are not
            required during the in-school and grace periods or for which
            payments are deferred under sections 427(a)(2)(C) and

    [[Page 112 STAT. 1698]]

            428(b)(1)(M) shall, if agreed upon by the borrower and the
            lender--
                        ``(i) be paid monthly or quarterly; or
                        ``(ii) be added to the principal amount of the loan
                    by the lender only--
                              ``(I) when the loan enters repayment;
                              ``(II) at the expiration of a grace period, in
                          the case of a loan that qualifies for a grace
                          period;
                              ``(III) at the expiration of a period of
                          deferment or forbearance; or
                              ``(IV) when the borrower defaults.
                ``(B) The capitalization of interest described in
            subparagraph (A) shall not be deemed to exceed the annual
            insurable limit on account of the student.''.

        (d) Extended Repayment Plan.--Section 428H(e)(6) is
    amended <<NOTE: 20 USC 1078-8.>> by striking ``10 year repayment period
    under section 428(b)(1)(D)'' and inserting ``repayment period under
    section 428(b)(9)''.

        (e) Qualification.--Section 428H(e) is amended by adding at the end
    the following:
                ``(7) Qualification for forbearance.--A lender may grant the
            borrower of a loan under this section a forbearance for a period
            not to exceed 60 days if the lender reasonably determines that
            such a forbearance from collection activity is warranted
            following a borrower's request for forbearance, deferment, or a
            change in repayment plan, or a request to consolidate loans in
            order to collect or process appropriate supporting documentation
            related to the request. During any such period, interest on the
            loan shall accrue but not be capitalized.''.

        (f ) Repeal.--Subsection (f ) of section 428H is repealed.

    SEC. 424. LOAN FORGIVENESS FOR TEACHERS.

        Section 428J (20 U.S.C. 1078-10) is amended to read as follows:

    ``SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.

        ``(a) Statement of Purpose.--It is the purpose of this section to
    encourage individuals to enter and continue in the teaching profession.
        ``(b) Program Authorized.--The Secretary shall carry out a program,
    through the holder of the loan, of assuming the obligation to repay a
    qualified loan amount for a loan made under section 428 or 428H, in
    accordance with subsection (c), for any new borrower on or after October
    1, 1998, who--
                ``(1) has been employed as a full-time teacher for 5
            consecutive complete school years--
                        ``(A) in a school that qualifies under section
                    465(a)(2)(A) for loan cancellation for Perkins loan
                    recipients who teach in such schools;
                        ``(B) if employed as a secondary school teacher, is
                    teaching a subject area that is relevant to the
                    borrower's academic major as certified by the chief
                    administrative officer of the public or nonprofit
                    private secondary school in which the borrower is
                    employed; and
                        ``(C) if employed as an elementary school teacher,
                    has demonstrated, as certified by the chief
                    administrative officer of the public or nonprofit
                    private elementary school in which the borrower is
                    employed, knowledge and teaching

    [[Page 112 STAT. 1699]]

                    skills in reading, writing, mathematics, and other areas
                    of the elementary school curriculum; and
                ``(2) is not in default on a loan for which the borrower
            seeks forgiveness.

        ``(c) Qualified Loans Amount.--
                ``(1) In general.--The Secretary shall repay not more than
            $5,000 in the aggregate of the loan obligation on a loan made
            under section 428 or 428H that is outstanding after the
            completion of the fifth complete school year of teaching
            described in subsection (b)(1). No borrower may receive a
            reduction of loan obligations under both this section and
            section 460.
                ``(2) <<NOTE: Regulations.>> Treatment of consolidation
            loans.--A loan amount for a loan made under section 428C may be
            a qualified loan amount for the purposes of this subsection only
            to the extent that such loan amount was used to repay a Federal
            Direct Stafford Loan, a Federal Direct Unsubsidized Stafford
            Loan, or a loan made under section 428 or 428H for a borrower
            who meets the requirements of subsection (b), as determined in
            accordance with regulations prescribed by the Secretary.

        ``(d) Regulations.--The Secretary is authorized to issue such
    regulations as may be necessary to carry out the provisions of this
    section.
        ``(e) Construction.--Nothing in this section shall be construed to
    authorize any refunding of any repayment of a loan.
        ``(f ) List.--If the list of schools in which a teacher may perform
    service pursuant to subsection (b) is not available before May 1 of any
    year, the Secretary may use the list for the year preceding the year for
    which the determination is made to make such service determination.
        ``(g) Additional Eligibility Provisions.--
                ``(1) Continued eligibility.--Any teacher who performs
            service in a school that--
                        ``(A) meets the requirements of subsection (b)(1)(A)
                    in any year during such service; and
                        ``(B) in a subsequent year fails to meet the
                    requirements of such subsection,
            may continue to teach in such school and shall be eligible for
            loan forgiveness pursuant to subsection (b).
                ``(2) Prevention of double benefits.--No borrower may, for
            the same service, receive a benefit under both this subsection
            and subtitle D of title I of the National and Community Service
            Act of 1990 (42 U.S.C. 12571 et seq.).

        ``(h) Definition.--For purposes of this section, the term `year',
    where applied to service as a teacher, means an academic year as defined
    by the Secretary.''.

    SEC. 425. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

        Part B (20 U.S.C. 1071 et seq.) is amended by inserting after
    section 428J (20 U.S.C. 1078-10) the following:

    ``SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS. <<NOTE: 20 USC
                1078-11.>>

        ``(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:

    [[Page 112 STAT. 1700]]

                ``(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;

    [[Page 112 STAT. 1701]]

                        ``(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--

    [[Page 112 STAT. 1702]]

                        ``(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) <<NOTE: Deadline.>> 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. 426. NOTICE TO SECRETARY AND PAYMENT OF LOSS.

        The third sentence of section 430(a) (20 U.S.C. 1080(a)) is amended
    by inserting ``the institution was contacted and other'' after ``submit
    proof that''.

    SEC. 427. LEGAL POWERS AND RESPONSIBILITIES.

        (a) Audit of Financial Transactions.--Section 432(f )(1) is
    amended-- <<NOTE: 20 USC 1082.>>
                (1) in subparagraph (B), by striking ``section 435(d)(1)
            (D), (F), or (H);'' and inserting ``section 435(d)(1); and'';
                (2) in subparagraph (C)--
                        (A) by striking ``and Labor'' and inserting ``and
                    the Workforce''; and
                        (B) by striking ``; and'' inserting a period; and
                (3) by striking subparagraph (D).

        (b) Program of Assistance.--Section 432(k)(3) is amended by striking
    ``Within 1 year'' and everything that follows through ``1992, the'' and
    inserting ``The''.
        (c) Common Forms and Formats.--Section 432(m) is
    amended--
                (1) in paragraph (1)--
                        (A) in subparagraph (A), by striking ``a common
                    application form and promissory note'' and inserting
                    ``common application forms and promissory notes, or
                    master promissory notes,'';
                        (B) in subparagraph (B)--

    [[Page 112 STAT. 1703]]

                              (i) by striking ``The form'' and inserting
                          ``The forms'';
                              (ii) by striking clause (iii); and
                        (C) by amending subparagraph (C) to read as follows:
                        ``(C) Free application form.--For academic year
                    1999-2000 and succeeding academic years, the Secretary
                    shall prescribe the form developed under section 483 as
                    the application form under this part, other than for
                    loans under sections 428B and 428C.'';
                        (D) by amending subparagraph (D) to read as follows:
                        ``(D) Master promissory note.--
                              ``(i) In general.--The Secretary shall develop
                          and require the use of master promissory note
                          forms for loans made under this part and part
                          D. <<NOTE: Deadline.>>  Such forms shall be
                          available for periods of enrollment beginning not
                          later than July 1, 2000. Each form shall allow
                          eligible borrowers to receive, in addition to
                          initial loans, additional loans for the same or
                          subsequent periods of enrollment through a student
                          confirmation process approved by the Secretary.
                          Such forms shall be used for loans made under this
                          part or part D as directed by the Secretary.
                              ``(ii) Consultation.--In developing the master
                          promissory note under this subsection, the
                          Secretary shall consult with representatives of
                          guaranty agencies, eligible lenders, institutions
                          of higher education, students, and organizations
                          involved in student financial assistance.
                              ``(iii) Sale; assignment; enforceability.--
                          Notwithstanding any other provision of law, each
                          loan made under a master promissory note under
                          this subsection may be sold or assigned
                          independently of any other loan made under the
                          same promissory note and each such loan shall be
                          separately enforceable in all Federal and State
                          courts on the basis of an original or copy of the
                          master promissory note in accordance with the
                          terms of the master promissory note.
                              ``(iv) Perfection of security interests in
                          student loans.--Notwithstanding the provisions of
                          any State law to the contrary, including the
                          Uniform Commercial Code as in effect in any State,
                          a security interest in loans made under this part
                          created on behalf of any eligible lender as
                          defined in section 435(d) may be perfected either
                          through the taking of possession of such loans
                          (which can be through taking possession of an
                          original or copy of the master promissory note) or
                          by the filing of notice of such security interest
                          in such loans in the manner provided by such State
                          law for perfection of security interests in
                          accounts.''; and
                (2) by adding at the end the following:
                ``(4) Electronic forms.--Nothing in this section shall be
            construed to limit the development and use of electronic forms
            and procedures.''.

        (d) Default Reduction Management.--Section 432(n) is amended--
    <<NOTE: 20 USC 1082.>>

    [[Page 112 STAT. 1704]]

                (1) in paragraph (1), by striking ``1993'' and inserting
            ``1999''; and
                (2) in paragraph (3), by striking ``and Labor'' and
            inserting ``and the Workforce''.

        (e) Reporting Requirement.--Section 432(p) is amended <<NOTE: 20 USC
    1082.>> by striking ``State postsecondary reviewing entities designated
    under subpart 1 of part H,''.

    SEC. 428. STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.

        (a) Required Disclosure Before Disbursement.--Section 433(a) (20
    U.S.C. 1083(a)) is amended by amending the matter preceding paragraph
    (1) to read as follows:
        ``(a) Required Disclosure Before Disbursement.--Each eligible
    lender, at or prior to the time such lender disburses a loan that is
    insured or guaranteed under this part (other than a loan made under
    section 428C), shall provide thorough and accurate loan information on
    such loan to the borrower in simple and understandable terms. Any
    disclosure required by this subsection may be made by an eligible lender
    by written or electronic means, including as part of the application
    material provided to the borrower, as part of the promissory note
    evidencing the loan, or on a separate written form provided to the
    borrower. Each lender shall provide to each borrower a telephone number,
    and may provide an electronic address, through which additional loan
    information can be obtained. The disclosure shall include--''.
        (b) Required Disclosure Before Repayment.--Section 433(b) is amended
    by amending the matter preceding paragraph (1) to read as follows:
        ``(b) Required Disclosure Before Repayment.--Each eligible lender
    shall, at or prior to the start of the repayment period of the student
    borrower on loans made, insured, or guaranteed under this part, disclose
    to the borrower by written or electronic means the information required
    under this subsection in simple and understandable terms. Each eligible
    lender shall provide to each borrower a telephone number, and may
    provide an electronic address, through which additional loan information
    can be obtained. For any loan made, insured, or guaranteed under this
    part, other than a loan made under section 428B or 428C, such disclosure
    required by this subsection shall be made not less than 30 days nor more
    than 240 days before the first payment on the loan is due from the
    borrower. The disclosure shall include--''.

    SEC. 429. DEFINITIONS.

        (a) Cohort Default Rate.--Section 435(a) (20 U.S.C. 1085(a)) is
    amended--
                (1) in paragraph (2)--
                        (A) in subparagraph (A)--
                              (i) by striking ``or'' at the end of clause
                          (i);
                              (ii) by striking clause (ii) and inserting the
                          following:
                        ``(ii) there are exceptional mitigating
                    circumstances within the meaning of paragraph (4); or
                        ``(iii) there are, in the judgment of the Secretary,
                    other exceptional mitigating circumstances that would
                    make the application of this paragraph inequitable.'';
                    and
                              (iii) by adding after the matter following
                          clause (iii) (as added by clause (ii)) the
                          following:

    [[Page 112 STAT. 1705]]

            ``If an institution continues to participate in a program under
            this part, and the institution's appeal of the loss of
            eligibility is unsuccessful, the institution shall be required
            to pay to the Secretary an amount equal to the amount of
            interest, special allowance, reinsurance, and any related
            payments made by the Secretary (or which the Secretary is
            obligated to make) with respect to loans made under this part to
            students attending, or planning to attend, that institution
            during the pendency of such appeal.''; and
                        (B) in subparagraph (C), by striking ``July 1,
                    1998,'' and inserting ``July 1, 1999,'';
                (2) in the matter following subparagraph (C) of para-
            graph (3)--
                        (A) by inserting ``for a reasonable period of time,
                    not to exceed 30 days,'' after ``access''; and
                        (B) by striking ``of the affected guaranty agencies
                    and loan servicers for a reasonable period of time, not
                    to exceed 30 days'' and inserting ``used by a guaranty
                    agency in determining whether to pay a claim on a
                    defaulted loan or by the Department in determining an
                    institution's default rate in the loan program under
                    part D of this title''; and
                (3) by adding at the end the following new paragraphs:
                ``(4) Definition of mitigating circumstances.--(A) For
            purposes of paragraph (2)(A)(ii), an institution of higher
            education shall be treated as having exceptional mitigating
            circumstances that make application of that paragraph
            inequitable if such institution, in the opinion of an
            independent auditor, meets the following criteria:
                        ``(i) For a 12-month period that ended during the 6
                    months immediately preceding the fiscal year for which
                    the cohort of borrowers used to calculate the
                    institution's cohort default rate is determined, at
                    least two-thirds of the students enrolled on at least a
                    half-time basis at the institution--
                              ``(I) are eligible to receive a Federal Pell
                          Grant award that is at least equal to one-half the
                          maximum Federal Pell Grant award for which a
                          student would be eligible based on the student's
                          enrollment status; or
                              ``(II) have an adjusted gross income that when
                          added with the adjusted gross income of the
                          student's parents (unless the student is an
                          independent student), of less than the poverty
                          level, as determined by the Department of Health
                          and Human Services.
                        ``(ii) In the case of an institution of higher
                    education that offers an associate, baccalaureate,
                    graduate or professional degree, 70 percent or more of
                    the institution's regular students who were initially
                    enrolled on a full-time basis and were scheduled to
                    complete their programs during the same 12-month period
                    described in clause (i)--
                              ``(I) completed the educational programs in
                          which the students were enrolled;
                              ``(II) transferred from the institution to a
                          higher level educational program;

    [[Page 112 STAT. 1706]]

                              ``(III) at the end of the 12-month period,
                          remained enrolled and making satisfactory progress
                          toward completion of the student's educational
                          programs; or
                              ``(IV) entered active duty in the Armed Forces
                          of the United States.
                        ``(iii)(I) In the case of an institution of higher
                    education that does not award a degree described in
                    clause (ii), had a placement rate of 44 percent or more
                    with respect to the institution's former regular
                    students who--
                              ``(aa) remained in the program beyond the
                          point the students would have received a 100
                          percent tuition refund from the institution;
                              ``(bb) were initially enrolled on at least a
                          half-time basis; and
                              ``(cc) were originally scheduled, at the time
                          of enrollment, to complete their educational
                          programs during the same 12-month period described
                          in clause (i).
                        ``(II) The placement rate shall not include students
                    who are still enrolled and making satisfactory progress
                    in the educational programs in which the students were
                    originally enrolled on the date following 12 months
                    after the date of the student's last date of attendance
                    at the institution.
                        ``(III) The placement rate is calculated by
                    determining the percentage of all those former regular
                    students who--
                              ``(aa) are employed, in an occupation for
                          which the institution provided training, on the
                          date following 12 months after the date of their
                          last day of attendance at the institution;
                              ``(bb) were employed, in an occupation for
                          which the institution provided training, for at
                          least 13 weeks before the date following 12 months
                          after the date of their last day of attendance at
                          the institution; or
                              ``(cc) entered active duty in the Armed Forces
                          of the United States.
                        ``(IV) The placement rate shall not include as
                    placements a student or former student for whom the
                    institution is the employer.
                ``(B) For purposes of determining a rate of completion and a
            placement rate under this paragraph, a student is originally
            scheduled, at the time of enrollment, to complete the
            educational program on the date when the student will have been
            enrolled in the program for the amount of time normally required
            to complete the program. The amount of time normally required to
            complete the program for a student who is initially enrolled
            full-time is the period of time specified in the institution's
            enrollment contract, catalog, or other materials, for completion
            of the program by a full-time student. For a student who is
            initially enrolled less than full-time, the period is the amount
            of time it would take the student to complete the program if the
            student remained enrolled at that level of enrollment throughout
            the program.
                ``(5) Reduction of default rates at certain minority
            institutions.--

    [[Page 112 STAT. 1707]]

                        ``(A) Beneficiaries of exception required to
                    establish management plan.--After July 1, 1999, any
                    institution that has a cohort default rate that equals
                    or exceeds 25 percent for each of the three most recent
                    fiscal years for which data are available and that
                    relies on the exception in subparagraph (B) to continue
                    to be an eligible institution shall--
                              ``(i) submit to the Secretary a default
                          management plan which the Secretary, in the
                          Secretary's discretion, after consideration of the
                          institution's history, resources, dollars in
                          default, and targets for default reduction,
                          determines is acceptable and provides reasonable
                          assurance that the institution will, by July 1,
                          2002, have a cohort default rate that is less than
                          25 percent;
                              ``(ii) engage an independent third party
                          (which may be paid with funds received under
                          section 317 or part B of title III) to provide
                          technical assistance in implementing such default
                          management plan; and
                              ``(iii) provide to the Secretary, on an annual
                          basis or at such other intervals as the Secretary
                          may require, evidence of cohort default rate
                          improvement and successful implementation of such
                          default management plan.
                        ``(B) Discretionary eligibility conditioned on
                    improvement.--Notwithstanding the expiration of the
                    exception in paragraph (2)(C), the Secretary may, in the
                    Secretary's discretion, continue to treat an institution
                    described in subparagraph (A) of this paragraph as an
                    eligible institution for each of the 1-year periods
                    beginning on July 1 of 1999, 2000, and 2001, only if the
                    institution submits by the beginning of such period
                    evidence satisfactory to the Secretary that--
                              ``(i) such institution has complied and is
                          continuing to comply with the requirements of
                          subparagraph (A); and
                              ``(ii) such institution has made substantial
                          improvement, during each of the preceding 1-year
                          periods, in the institution's cohort default rate.
                ``(6) Participation rate index.--
                        ``(A) In general.--An institution that demonstrates
                    to the Secretary that the institution's participation
                    rate index is equal to or less than 0.0375 for any of
                    the 3 most recent fiscal years for which data is
                    available shall not be subject to paragraph (2). The
                    participation rate index shall be determined by
                    multiplying the institution's cohort default rate for
                    loans under part B or D, or weighted average cohort
                    default rate for loans under parts B and D, by the
                    percentage of the institution's regular students,
                    enrolled on at least a half-time basis, who received a
                    loan made under part B or D for a 12-month period ending
                    during the 6 months immediately preceding the fiscal
                    year for which the cohort of borrowers used to calculate
                    the institution's cohort default rate is determined.

    [[Page 112 STAT. 1708]]

                        ``(B) Data.--An institution shall provide the
                    Secretary with sufficient data to determine the
                    institution's participation rate index within 30 days
                    after receiving an initial notification of the
                    institution's draft cohort default rate.
                        ``(C) Notification.--Prior to publication of a final
                    cohort default rate for an institution that provides the
                    data described in subparagraph (B), the Secretary shall
                    notify the institution of the institution's compliance
                    or noncompliance with subparagraph (A).''.

        (b) Eligible Lender.--Section 435(d) (20 U.S.C. 1085(d)) is
    amended--
                (1) in paragraph (1)--
                        (A) in subparagraph (A)(ii)--
                              (i) by striking ``or'' after ``1992,''; and
                              (ii) by inserting before the semicolon the
                          following: ``, or (III) it is a bank (as defined
                          in section 3(a)(1) of the Federal Deposit
                          Insurance Act (12 U.S.C. 1813(a)(1)) that is a
                          wholly owned subsidiary of a nonprofit foundation,
                          the foundation is described in section 501(c)(3)
                          of the Internal Revenue Code of 1986 and exempt
                          from taxation under section 501(1) of such Code,
                          and the bank makes loans under this part only to
                          undergraduate students who are age 22 or younger
                          and has a portfolio of such loans that is not more
                          than $5,000,000'';
                        (B) by striking ``and'' at the end of subparagraph
                    (I);
                        (C) by striking the period at the end of
                    subparagraph (J) and inserting ``; and''; and
                        (D) by adding at the end the following new
                    subparagraph:
                        ``(K) a consumer finance company subsidiary of a
                    national bank which, as of the date of enactment of this
                    subparagraph, through one or more subsidiaries: (i) acts
                    as a small business lending company, as determined under
                    regulations of the Small Business Administration under
                    section 120.470 of title 13, Code of Federal Regulations
                    (as such section is in effect on the date of enactment
                    of this subparagraph); and (ii) participates in the
                    program authorized by this part pursuant to subparagraph
                    (C), provided the national bank and all of the bank's
                    direct and indirect subsidiaries taken together as a
                    whole, do not have, as their primary consumer credit
                    function, the making or holding of loans made to
                    students under this part.''; and
                (2) in paragraph (5), by adding at the end the following new
            sentence:
            ``It shall not be a violation of this paragraph for a lender to
            provide assistance to institutions of higher education
            comparable to the kinds of assistance provided to institutions
            of higher education by the Department of Education.''.

        (c) Definition of Default.--
                (1) Amendment.--Section 435(l) is amended--
                        (A) by striking ``180 days'' and inserting ``270
                    days''; and
                        (B) <<NOTE: Applicability. 20 USC 1085 note.>>  by
                    striking ``240 days'' and inserting ``330 days''.
                (2) Effective date.--The amendment made by paragraph (1)
            shall apply with respect to loans for which the first day

    [[Page 112 STAT. 1709]]

            of delinquency occurs on or after the date of enactment of this
            Act.

        (d) Cohort Default Rate.--Section 435(m) is amended-- <<NOTE: 20 USC
    1085.>>
                (1) in paragraph (1)(B), by striking ``insurance, and, in
            considering appeals with respect to cohort default rates
            pursuant to subsection (a)(3), exclude'' and inserting
            ``insurance. In considering appeals with respect to cohort
            default rates pursuant to subsection (a)(3), the Secretary shall
            exclude, from the calculation of the number of students who
            entered repayment and from the calculation of the number of
            students who default,''; and
                (2) in paragraph (2)(C), by adding at the end the following:
            ``The Secretary may require guaranty agencies to collect data
            with respect to defaulted loans in a manner that will permit the
            identification of any defaulted loan for which (i) the borrower
            is currently making payments and has made not less than 6
            consecutive on-time payments by the end of such following fiscal
            year, and (ii) a guaranty agency has renewed the borrower's
            title IV eligibility as provided in section 428F(b).''; and
                (3) in paragraph (4), by adding at the end the following:
                ``(D) <<NOTE: Publication. Deadline.>>  The Secretary shall
            publish the report described in subparagraph (C) by September 30
            of each year.''.

    SEC. 430. DELEGATION OF FUNCTIONS.

        Section 436 (20 U.S.C. 1086) is amended to read as follows:

    ``SEC. 436. DELEGATION OF FUNCTIONS.

        ``(a) In General.--An eligible lender or guaranty agency that
    contracts with another entity to perform any of the lender's or agency's
    functions under this title, or otherwise delegates the performance of
    such functions to such other entity--
                ``(1) shall not be relieved of the lender's or agency's duty
            to comply with the requirements of this title; and
                ``(2) shall monitor the activities of such other entity for
            compliance with such requirements.

        ``(b) Special Rule.--A lender that holds a loan made under part B in
    the lender's capacity as a trustee is responsible for complying with all
    statutory and regulatory requirements imposed on any other holder of a
    loan made under this part.''.

    SEC. 431. DISCHARGE.

        Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended--
                (1) by inserting after ``falsely certified by the eligible
            institution,'' the following: ``or if the institution failed to
            make a refund of loan proceeds which the institution owed to
            such student's lender,''; and
                (2) by adding at the end the following new sentences: ``In
            the case of a discharge based upon a failure to refund, the
            amount of the discharge shall not exceed that portion of the
            loan which should have been refunded. <<NOTE: Reports.>> The
            Secretary shall report to the Committee on Education and the
            Workforce of the House of Representatives and the Committee on
            Labor and Human Resources of the Senate annually as to the
            dollar amount of loan discharges attributable to failures to
            make refunds.''.

    [[Page 112 STAT. 1710]]

    SEC. 432. DEBT MANAGEMENT OPTIONS.

        Section 437A (20 U.S.C. 1087-0) is repealed.

    SEC. 433. SPECIAL ALLOWANCES.

        (a) Deduction From Interest and Special Allowance
    Subsidies.--Paragraph (1) of section 438(c) (20 U.S.C. 1087-1) is
    amended to read as follows:
                ``(1) Deduction from interest and special allowance
            subsidies.--(A) Notwithstanding subsection (b), the Secretary
            shall collect the amount the lender is authorized to charge as
            an origination fee in accordance with paragraph (2) of this
            subsection--
                        ``(i) by reducing the total amount of interest and
                    special allowance payable under section 428(a)(3)(A) and
                    subsection (b) of this section, respectively, to any
                    holder; or
                        ``(ii) directly from the holder of the loan, if the
                    lender fails or is not required to bill the Secretary
                    for interest and special allowance or withdraws from the
                    program with unpaid loan origination fees.
                ``(B) If the Secretary collects the origination fee under
            this subsection through the reduction of interest and special
            allowance, and the total amount of interest and special
            allowance payable under section 428(a)(3)(A) and subsection (b)
            of this section, respectively, is less than the amount the
            lender was authorized to charge borrowers for origination fees
            in that quarter, the Secretary shall deduct the excess amount
            from the subsequent quarters' payments until the total amount
            has been deducted.''.

        (b) Origination Fees.--Section 438(c) is amended--
                (1) in paragraph (2)--
                        (A) by striking ``(other than'' and inserting
                    ``(including loans made under section 428H, but
                    excluding''; and
                        (B) by adding at the end the following new sentence:
                    ``Except as provided in paragraph (8), a lender that
                    charges an origination fee under this paragraph shall
                    assess the same fee to all student borrowers.''; and
                (2) by adding at the end the following new paragraph:
                ``(8) Exception.--Notwithstanding paragraph (2), a lender
            may assess a lesser origination fee for a borrower demonstrating
            greater financial need as determined by such borrower's adjusted
            gross family income.''.

        (c) Collection of Fees.--Paragraph (1) of section 438(d) is amended
    to read as follows:
                ``(1) Deduction from interest and special allowance
            subsidies.--
                        ``(A) In general.--Notwithstanding subsection (b),
                    the Secretary shall collect a loan fee in an amount
                    determined in accordance with paragraph (2)--
                              ``(i) by reducing the total amount of interest
                          and special allowance payable under section
                          428(a)(3)(A) and subsection (b), respectively, to
                          any holder of a loan; or
                              ``(ii) directly from the holder of the loan,
                          if the lender--
                                        ``(I) fails or is not required to
                                    bill the Secretary for interest and
                                    special allowance payments; or

    [[Page 112 STAT. 1711]]

                                        ``(II) withdraws from the program
                                    with unpaid loan fees.
                        ``(B) Special rule.--If the Secretary collects loan
                    fees under this subsection through the reduction of
                    interest and special allowance payments, and the total
                    amount of interest and special allowance payable under
                    section 428(a)(3)(A) and subsection (b), respectively,
                    is less than the amount of such loan fees, then the
                    Secretary shall deduct the amount of the loan fee
                    balance from the amount of interest and special
                    allowance payments that would otherwise be payable, in
                    subsequent quarterly increments until the balance has
                    been deducted.''.

        (d) Lending From Proceeds of Tax-Exempt Obligations.--
                (1) Amendment.--Subsection (e) of section 438 <<NOTE: 20 USC
            1087-1.>> is amended to read as follows:

        ``(e) Nondiscrimination.--In order for the holders of loans which
    were made or purchased with funds obtained by the holder from an
    Authority issuing obligations, the income from which is exempt from
    taxation under the Internal Revenue Code of 1986, to be eligible to
    receive a special allowance under subsection (b)(2) on any such loans,
    the Authority shall not engage in any pattern or practice which results
    in a denial of a borrower's access to loans under this part because of
    the borrower's race, sex, color, religion, national origin, age,
    disability status, income, attendance at a particular eligible
    institution within the area served by the Authority, length of the
    borrower's educational program, or the borrower's academic year in
    school.''.
                (2) <<NOTE: 20 USC 1087-1 note.>> Effective date.--The
            amendment made by paragraph (1) shall be effective as of the
            date the plan required by section 438(e)(1) (as such section was
            in effect prior to such amendment) was approved by the Secretary
            or the Governor (whichever was the case). No Authority shall
            have a right or cause of action against the Secretary for any
            amounts paid to or offset by the Secretary pursuant to a final
            settlement agreement entered into prior to July 1, 1998,
            resolving any audit or program review findings alleging
            violations of any provision of section 438(e) (as in effect
            prior to such amendment).

    SEC. 434. FEDERAL FAMILY EDUCATION LOAN INSURANCE FUND. <<NOTE: 20 USC
                1081 note.>>

        Any funds in the insurance fund, as established under section 431 of
    the Higher Education Act of 1965 (20 U.S.C. 1081), on the date of
    enactment of this Act shall be transferred to and deposited in the
    Treasury. All funds received by the Secretary of Education under
    subsection (a) of such section after the date of enactment of this Act
    shall be deposited into the fund in accordance with such subsection.

                       PART C--FEDERAL WORK-STUDY PROGRAMS

    SEC. 441. AUTHORIZATION OF APPROPRIATIONS; COMMUNITY
                SERVICES.

        (a) Authorization of Appropriations.--Section 441(b) (42 U.S.C.
    2751(b)) is amended by striking ``$800,000,000 for fiscal year 1993''
    and inserting ``$1,000,000,000 for fiscal year 1999''.
        (b) Definition of Community Services.--Section 441(c) is amended--

    [[Page 112 STAT. 1712]]

                (1) in paragraph (1), by inserting ``(including child care
            services provided on campus that are open and accessible to the
            community)'' after ``child care''; and
                (2) in paragraph (3), by inserting ``, including students
            with disabilities who are enrolled at the institution'' before
            the semicolon.

    SEC. 442. ALLOCATION OF FUNDS.

        (a) Updating the Base Period.--Section 442(a) <<NOTE: 42 USC
    2752.>> (20 U.S.C. 2752(a)) is amended--
                (1) in paragraph (1), by striking ``received and used under
            this part for fiscal year 1985'' and inserting ``received under
            subsections (a) and (b) for fiscal year 1999 (as such
            subsections were in effect with respect to allocations for such
            fiscal year)'';
                (2) in paragraph (2)--
                        (A) in subparagraphs (A) and (B), by striking
                    ``1985'' each place the term appears and inserting
                    ``1999''; and
                        (B) in subparagraph (C)(i), by striking ``1986'' and
                    inserting ``2000''.

        (b) Elimination of Pro Rata Share.--Section 442 is
    amended--
                (1) by striking subsection (b);
                (2) by redesignating subsections (c) through (f ) as
            subsections (b) through (e), respectively;
                (3) in subsection (b)(1) (as redesignated by paragraph (2)),
            by striking ``three-quarters of'';
                (4) in subsection (b)(2)(A)(i) (as so redesignated), by
            striking ``subsection (d)'' and inserting ``subsection (c)'';
                (5) in subsection (c)(3) (as so redesignated), by striking
            ``the Secretary, for academic year 1988-1989 shall use the
            procedures employed for academic year 1986-1987, and, for any
            subsequent academic years,''; and
                (6) in subsection (d)(1) (as so redesignated)--
                        (A) by striking ``10 percent'' and inserting ``5
                    percent'';
                        (B) by striking ``in community service'' and
                    inserting ``in tutoring in reading and family literacy
                    activities''; and
                        (C) by striking ``subsection (c)'' and inserting
                    ``subsection (b)''.

        (c) <<NOTE: Applicability. 42 USC 2752 note.>> Effective Date.--The
    amendments made by this section shall apply with respect to allocations
    of amounts appropriated pursuant to section 441(b) for fiscal year 2000
    or any succeeding fiscal year.

    SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

        (a) Eligible Employment.--Section 443(b)(1) (42 U.S.C. 2753(b)(1))
    is amended by inserting ``, including internships, practica, or research
    assistantships as determined by the Secretary,'' after ``part-time
    employment''.
        (b) Community Service.--Section 443(b)(2)(A) is amended--
                (1) by striking ``in fiscal year 1994 and succeeding fiscal
            years,'' and inserting ``for fiscal year 1999,''; and
                (2) by inserting ``(including a reasonable amount of time
            spent in travel or training directly related to such community
            service)'' after ``community service''.

        (c) Tutoring and Literacy Activities.--Section 443 is
    amended--
                (1) in subsection (b)(2)--
                        (A) by striking ``and'' at the end of subparagraph
                    (A);

    [[Page 112 STAT. 1713]]

                        (B) by redesignating subparagraph (B) as
                    subparagraph (C); and
                        (C) by inserting after subparagraph (A) the
                    following:
                        ``(B) for fiscal year 2000 and succeeding fiscal
                    years, an institution shall use at least 7 percent of
                    the total amount of funds granted to such institution
                    under this section for such fiscal year to compensate
                    students employed in community service, and shall ensure
                    that not less than 1 tutoring or family literacy project
                    (as described in subsection (d)) is included in meeting
                    the requirement of this subparagraph, except that the
                    Secretary may waive this subparagraph if the Secretary
                    determines that enforcing this subparagraph would cause
                    hardship for students at the institution; and''; and
                (2) by adding at the end the following new subsection:

        ``(d) Tutoring and Literacy Activities.--
                ``(1) Use of funds.--In any academic year to which
            subsection (b)(2)(B) applies, an institution shall ensure that
            funds granted to such institution under this section are used in
            accordance with such subsection to compensate (including
            compensation for time spent in training and travel directly
            related to tutoring in reading and family literacy activities)
            students--
                        ``(A) employed as reading tutors for children who
                    are preschool age or are in elementary school; or
                        ``(B) employed in family literacy projects.
                ``(2) Priority for schools.--To the extent practicable, an
            institution shall--
                        ``(A) give priority to the employment of students in
                    the provision of tutoring in reading in schools that are
                    participating in a reading reform project that--
                              ``(i) is designed to train teachers how to
                          teach reading on the basis of scientifically-based
                          research on reading; and
                              ``(ii) is funded under the Elementary and
                          Secondary Education Act of 1965; and
                        ``(B) ensure that any student compensated with the
                    funds described in paragraph (1) who is employed in a
                    school participating in a reading reform project
                    described in subparagraph (A) receives training from the
                    employing school in the instructional practices used by
                    the school.
                ``(3) Federal share.--The Federal share of the compensation
            of work-study students compensated under this subsection may
            exceed 75 percent.''.

        (d) Use of Funds for Independent and Less Than Full-Time Students.--
    Paragraph (3) of section 443(b) is amended <<NOTE: 42 USC 2753.>>  to
    read as follows:
                ``(3) provide that in the selection of students for
            employment under such work-study program, only students who
            demonstrate financial need in accordance with part F and meet
            the requirements of section 484 will be assisted, except that if
            the institution's grant under this part is directly or
            indirectly based in part on the financial need demonstrated by
            students who are (A) attending the institution on less than a
            full-time basis, or (B) independent students, a reasonable
            portion of the grant shall be made available to such
            students;''.

        (e) Federal Share.--Paragraph (5) of section 443(b) is
    amended to read as follows:

    [[Page 112 STAT. 1714]]

                ``(5) provide that the Federal share of the compensation of
            students employed in the work-study program in accordance with
            the agreement shall not exceed 75 percent, except that--
                        ``(A) the Federal share may exceed 75 percent, but
                    not exceed 90 percent, if, consistent with regulations
                    of the Secretary--
                              ``(i) the student is employed at a nonprofit
                          private organization or a government agency that--
                                        ``(I) is not a part of, and is not
                                    owned, operated, or controlled by, or
                                    under common ownership, operation, or
                                    control with, the institution;
                                        ``(II) is selected by the
                                    institution on an individual case-by-
                                    case basis for such student; and
                                        ``(III) would otherwise be unable to
                                    afford the costs of such employment; and
                              ``(ii) not more than 10 percent of the
                          students compensated through the institution's
                          grant under this part during the academic year are
                          employed in positions for which the Federal share
                          exceeds 75 percent; and
                        ``(B) the Federal share may exceed 75 percent if the
                    Secretary determines, pursuant to regulations
                    promulgated by the Secretary establishing objective
                    criteria for such determinations, that a Federal share
                    in excess of such amounts is required in furtherance of
                    the purpose of this part;''.

        (f ) Availability of Employment.--Section 443(b)(6) is
    amended <<NOTE: 42 USC 2753.>> by striking ``, and to make'' and all
    that follows through ``such employment''.

        (g) Academic Relevance.--Section 443(c)(4) is amended by inserting
    before the semicolon at the end the following: ``, to the maximum extent
    practicable''.

    SEC. 444. FLEXIBLE USE OF FUNDS.

        Section 445 (42 U.S.C. 2755) is amended by adding at the end the
    following:
        ``(c) Flexible Use of Funds.--An eligible institution may, upon the
    request of a student, make payments to the student under this part by
    crediting the student's account at the institution or by making a direct
    deposit to the student's account at a depository institution. An
    eligible institution may only credit the student's account at the
    institution for (1) tuition and fees, (2) in the case of institutionally
    owned housing, room and board, and (3) other institutionally provided
    goods and services.''.

    SEC. 445. WORK COLLEGES.

        Section 448 (42 U.S.C. 2756b) is amended--
                (1) in subsection (b)(2)--
                        (A) in subparagraph (C), by striking ``and'' after
                    the semicolon;
                        (B) in subparagraph (D)(ii), by striking the period
                    and inserting a semicolon; and
                        (C) by adding at the end the following:
                        ``(E) coordinate and carry out joint projects and
                    activities to promote work service learning; and
                        ``(F) carry out a comprehensive, longitudinal study
                    of student academic progress and academic and career
                    outcomes, relative to student self-sufficiency in
                    financing their

    [[Page 112 STAT. 1715]]

                    higher education, repayment of student loans, continued
                    community service, kind and quality of service
                    performed, and career choice and community service
                    selected after graduation.''; and
                (2) in subsection (f ), by striking ``1993'' and inserting
            ``1999''.

               PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

    SEC. 451. SELECTION OF INSTITUTIONS.

        (a) General Authority.--Section 453(a) (20 U.S.C. 1087c(a)) is
    amended--
                (1) by striking ``Phase-In'' and everything that follows
            through ``General authority.--'' and inserting ``General
            Authority.--''; and
                (2) by striking paragraphs (2), (3), and (4).

        (b) Selection Criteria.--Section 453(b)(2) is amended by striking
    ``prescribe,'' and everything that follows through the end of
    subparagraph (B) and inserting ``prescribe.''.
        (c) Origination.--Section 453(c) is amended--
                (1) in paragraph (2)--
                        (A) in the heading, by striking ``Transition
                    selection criteria'' and inserting ``Selection
                    criteria'';
                        (B) by striking ``For academic year 1994-1995, the
                    Secretary'' and inserting ``The Secretary'';
                        (C) by striking subparagraph (A);
                        (D) by striking subparagraph (E); and
                        (E) by redesignating subparagraphs (B), (C), (D),
                    (F), (G), and (H) as subparagraphs (A) through (F),
                    respectively; and
                (2) in paragraph (3)--
                        (A) in the paragraph heading, by striking ``After
                    transition''; and
                        (B) by striking ``For academic year 1995-1996 and
                    subsequent academic years, the'' and inserting ``The''.

    SEC. 452. TERMS AND CONDITIONS.

        (a) Direct Loan Interest Rates.--
                (1) Amendment.--Section 455(b) (20 U.S.C. 1087e(b)) is
            amended by adding at the end the following:
                ``(6) Interest rate provision for new loans on or after
            october 1, 1998, and before july 1, 2003.--
                        ``(A) Rates for fdsl and fdusl.--Notwithstanding the
                    preceding paragraphs of this subsection, for Federal
                    Direct Stafford Loans and Federal Direct Unsubsidized
                    Stafford Loans for which the first disbursement is made
                    on or after October 1, 1998, and before July 1, 2003,
                    the applicable rate of interest shall, during any 12-
                    month period beginning on July 1 and ending on June 30,
                    be determined on the preceding June 1 and be equal to--
                              ``(i) the bond equivalent rate of 91-day
                          Treasury bills auctioned at the final auction held
                          prior to such June 1; plus
                              ``(ii) 2.3 percent,
                    except that such rate shall not exceed 8.25 percent.

    [[Page 112 STAT. 1716]]

                        ``(B) In school and grace period rules.--
                    Notwithstanding the preceding paragraphs of this
                    subsection, with respect to any Federal Direct Stafford
                    Loan or Federal Direct Unsubsidized Stafford Loan for
                    which the first disbursement is made on or after October
                    1, 1998, and before July 1, 2003, the applicable rate of
                    interest for interest which accrues--
                              ``(i) prior to the beginning of the repayment
                          period of the loan; or
                              ``(ii) during the period in which principal
                          need not be paid (whether or not such principal is
                          in fact paid) by reason of a provision described
                          in section 428(b)(1)(M) or 427(a)(2)(C),
                    shall be determined under subparagraph (A) by
                    substituting `1.7 percent' for `2.3 percent'.
                        ``(C) PLUS loans.--Notwithstanding the preceding
                    paragraphs of this subsection, with respect to Federal
                    Direct PLUS Loan for which the first disbursement is
                    made on or after October 1, 1998, and before July 1,
                    2003, the applicable rate of interest shall be
                    determined under subparagraph (A)--
                              ``(i) by substituting `3.1 percent' for `2.3
                          percent'; and
                              ``(ii) by substituting `9.0 percent' for `8.25
                          percent'.
                        ``(D) Consolidation loans.--Notwithstanding the
                    preceding paragraphs of this subsection, any Federal
                    Direct Consolidation loan for which the application is
                    received on or after February 1, 1999, and before July
                    1, 2003, shall bear interest at an annual rate on the
                    unpaid principal balance of the loan that is equal to
                    the lesser of--
                              ``(i) the weighted average of the interest
                          rates on the loans consolidated, rounded to the
                          nearest higher one-eighth of one percent; or
                              ``(ii) 8.25 percent.
                        ``(E) Temporary rules for consolidation loans.--
                    Notwithstanding the preceding paragraphs of this
                    subsection, any Federal Direct Consolidation loan for
                    which the application is received on or after October 1,
                    1998, and before February 1, 1999, shall bear interest
                    at an annual rate on the unpaid principal balance of the
                    loan that is equal to--
                              ``(i) the bond equivalent rate of 91-day
                          Treasury bills auctioned at the final auction held
                          prior to such June 1; plus
                              ``(ii) 2.3 percent,
                    except that such rate shall not exceed 8.25 percent.''.
                (2) <<NOTE: 20 USC 1087e note.>> Limitation on consolidation
            loans during temporary interest rate.--Notwithstanding section
            455(g) of the Higher Education Act of 1965, a borrower who is
            enrolled or accepted for enrollment in an institution of higher
            education may not consolidate loans under such section during
            the period beginning October 1, 1998, and ending February 1,
            1999, unless the borrower certifies that the borrower has no
            outstanding loans made, insured, or guaranteed under title IV of
            such Act other than loans made under part D of such title.

        (b) Repayment Incentives.--Section 455(b) (20 U.S.C. 1087e(b)) is
    further amended by adding at the end the following:

    [[Page 112 STAT. 1717]]

                ``(7) Repayment incentives.--
                        ``(A) <<NOTE: Regulations.>> In general.--
                    Notwithstanding any other provision of this part, the
                    Secretary is authorized to prescribe by regulation such
                    reductions in the interest rate paid by a borrower of a
                    loan made under this part as the Secretary determines
                    appropriate to encourage on-time repayment of the loan.
                    Such reductions may be offered only if the Secretary
                    determines the reductions are cost neutral and in the
                    best financial interest of the Federal Government. Any
                    increase in subsidy costs resulting from such reductions
                    shall be completely offset by corresponding savings in
                    funds available for the William D. Ford Federal Direct
                    Loan Program in that fiscal year from section 458 and
                    other administrative accounts.
                        ``(B) Accountability.--Prior to publishing
                    regulations proposing repayment incentives, the
                    Secretary shall ensure the cost neutrality of such
                    reductions. <<NOTE: Reports.>> The Secretary shall not
                    prescribe such regulations in final form unless an
                    official report from the Director of the Office of
                    Management and Budget to the Secretary and a comparable
                    report from the Director of the Congressional Budget
                    Office to the Congress each certify that any such
                    reductions will be completely cost
                    neutral. <<NOTE: Deadline.>> Such reports shall be
                    transmitted 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
                    less than 60 days prior to the publication of
                    regulations proposing such reductions.''.

        (c) Consolidation Loans.--The first sentence of section 455(g) is
    amended <<NOTE: 20 USC 1087e.>> by striking everything after ``section
    428C(a)(4)'' and inserting a period.

        (d) <<NOTE: Applicability. 20 USC 1087e note.>> Effective Date.--The
    amendments made by subsection (a) shall apply with respect to any loan
    made under part D of title IV of the Higher Education Act of 1965 for
    which the first disbursement is made on or after October 1, 1998, and
    before July 1, 2003, except that such amendments shall apply with
    respect to a Federal Direct Consolidation Loan for which the application
    is received on or after October 1, 1998, and before July 1, 2003.

    SEC. 453. CONTRACTS.

        Section 456(b) (20 U.S.C. 1087f(b)) is amended--
                (1) in paragraph (3), by inserting ``and'' after the
            semicolon;
                (2) by striking paragraph (4); and
                (3) by redesignating paragraph (5) as paragraph (4).

    SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.

        Section 458 (20 U.S.C. 1087h) is amended--
                (1) by amending subsection (a) to read as follows:

        ``(a) Administrative Expenses.--
                ``(1) In general.--Each fiscal year there shall be available
            to the Secretary, from funds not otherwise appropriated, funds
            to be obligated for--
                        ``(A) administrative costs under this part and part
                    B, including the costs of the direct student loan
                    programs under this part; and
                        ``(B) account maintenance fees payable to guaranty
                    agencies under part B and calculated in accordance with
                    subsections (b) and (c),

    [[Page 112 STAT. 1718]]

            not to exceed (from such funds not otherwise appropriated)
            $617,000,000 in fiscal year 1999, $735,000,000 in fiscal year
            2000, $770,000,000 in fiscal year 2001, $780,000,000 in fiscal
            year 2002, and $795,000,000 in fiscal year 2003.
                ``(2) Account maintenance fees.--Account maintenance fees
            under paragraph (1)(B) shall be paid quarterly and deposited in
            the Agency Operating Fund established under section 422B.
                ``(3) Carryover.--The Secretary may carry over funds made
            available under this section to a subsequent fiscal year.'';
                (2) by amending subsection (b) to read as follows:

        ``(b) Calculation Basis.--Except as provided in subsection (c),
    account maintenance fees payable to guaranty agencies under paragraph
    (1)(B) shall be calculated--
                ``(1) for fiscal years 1999 and 2000, on the basis of 0.12
            percent of the original principal amount of outstanding loans on
            which insurance was issued under part B; and
                ``(2) for fiscal years 2001, 2002, and 2003, on the basis of
            0.10 percent of the original principal amount of outstanding
            loans on which insurance was issued under part B.'';
                (3) by striking subsection (d);
                (4) by redesignating subsection (c) as subsection (d); and
                (5) by inserting after subsection (b) the following:

        ``(c) Special Rules.--
                ``(1) Fee cap.--The total amount of account maintenance fees
            payable under this section--
                        ``(A) for fiscal year 1999, shall not exceed
                    $177,000,000;
                        ``(B) for fiscal year 2000, shall not exceed
                    $180,000,000;
                        ``(C) for fiscal year 2001, shall not exceed
                    $170,000,000;
                        ``(D) for fiscal year 2002, shall not exceed
                    $180,000,000; and
                        ``(E) for fiscal year 2003, shall not exceed
                    $195,000,000.
                ``(2) Insufficient funding.--
                        ``(A) In general.--If the amounts set forth in
                    paragraph (1) are insufficient to pay the account
                    maintenance fees payable to guaranty agencies pursuant
                    to subsection (b) for a fiscal year, the Secretary shall
                    pay the insufficiency by requiring guaranty agencies to
                    transfer funds from the Federal Student Loan Reserve
                    Funds under section 422A to the Agency Operating Funds
                    under section 422B.
                        ``(B) Entitlement.--A guaranty agency shall be
                    deemed to have a contractual right against the United
                    States to receive payments according to the provisions
                    of subparagraph (A).''.

    SEC. 455. AUTHORITY TO SELL LOANS.

        Part D of title IV (20 U.S.C. 1087a et seq.) is amended by adding at
    the end the following:

    ``SEC. 459. AUTHORITY TO SELL LOANS. <<NOTE: 20 USC 1087i.>>

        ``The Secretary, in consultation with the Secretary of the Treasury,
    is authorized to sell loans made under this part on such terms as the
    Secretary determines are in the best interest of the United States,
    except that any such sale shall not result in any cost to the Federal
    Government. Notwithstanding any other provision of law, the proceeds of
    any such sale may be used by the Secretary to offer reductions in the
    interest rate paid by a borrower

    [[Page 112 STAT. 1719]]

    of a loan made under this part as the Secretary determines appropriate
    to encourage on-time repayment in accordance with section 455(b)(7).
    Such reductions may be offered only if the Secretary determines the
    reductions are in the best financial interests of the Federal
    Government.''.

    SEC. 456. LOAN CANCELLATION FOR TEACHERS.

        Part D of title IV (20 U.S.C. 1087a et seq.) is further amended by
    adding after section 459 (as added by section 455) the following:

    ``SEC. 460. LOAN CANCELLATION FOR TEACHERS. <<NOTE: 20 USC 1087j.>>

        ``(a) Statement of Purpose.--It is the purpose of this section to
    encourage individuals to enter and continue in the teaching profession.
        ``(b) Program Authorized.--
                ``(1) In general.--The Secretary shall carry out a program
            of canceling the obligation to repay a qualified loan amount in
            accordance with subsection (c) for Federal Direct Stafford Loans
            and Federal Direct Unsubsidized Stafford Loans made under this
            part for any new borrower on or after October 1, 1998, who--
                        ``(A) has been employed as a full-time teacher for 5
                    consecutive complete school years--
                              ``(i) in a school that qualifies under section
                          465(a)(2)(A) for loan cancellation for Perkins
                          loan recipients who teach in such schools;
                              ``(ii) if employed as a secondary school
                          teacher, is teaching a subject area that is
                          relevant to the borrower's academic major as
                          certified by the chief administrative officer of
                          the public or non-profit private secondary school
                          in which the borrower is employed; and
                              ``(iii) if employed as an elementary school
                          teacher, has demonstrated, as certified by the
                          chief administrative officer of the public or
                          nonprofit private elementary school in which the
                          borrower is employed, knowledge and teaching
                          skills in reading, writing, mathematics and other
                          areas of the elementary school curriculum; and
                        ``(B) is not in default on a loan for which the
                    borrower seeks forgiveness.
                ``(2) Special rule.--No borrower may obtain a reduction of
            loan obligations under both this section and section 428J.

        ``(c) Qualified Loan Amounts.--
                ``(1) In general.--The Secretary shall cancel not more than
            $5,000 in the aggregate of the loan obligation on a Federal
            Direct Stafford Loan or a Federal Direct Unsubsidized Stafford
            Loan that is outstanding after the completion of the fifth
            complete school year of teaching described in subsection
            (b)(1)(A).
                ``(2) <<NOTE: Regulations.>> Treatment of consolidation
            loans.--A loan amount for a Federal Direct Consolidation Loan
            may be a qualified loan amount for the purposes of this
            subsection only to the extent that such loan amount was used to
            repay a Federal Direct Stafford Loan, a Federal Direct
            Unsubsidized Stafford Loan, or a loan made under section 428 or
            428H, for a borrower who meets the requirements of subsection
            (b), as determined in accordance with regulations prescribed by
            the Secretary.

    [[Page 112 STAT. 1720]]

        ``(d) Regulations.--The Secretary is authorized to issue such
    regulations as may be necessary to carry out the provisions of this
    section.
        ``(e) Construction.--Nothing in this section shall be construed to
    authorize any refunding of any canceled loan.
        ``(f ) List.--If the list of schools in which a teacher may perform
    service pursuant to subsection (b) is not available before May 1 of any
    year, the Secretary may use the list for the year preceding the year for
    which the determination is made to make such service determination.
        ``(g) Additional Eligibility Provisions.--
                ``(1) Continued eligibility.--Any teacher who performs
            service in a school that--
                        ``(A) meets the requirements of subsection (b)(1)(A)
                    in any year during such service; and
                        ``(B) in a subsequent year fails to meet the
                    requirements of such subsection, may continue to teach
                    in such school and shall be eligible for loan
                    cancellation pursuant to subsection (b).
                ``(2) Prevention of double benefits.--No 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. 12571 et seq.).

        ``(h) Definition.--For the purpose of this section, the term `year'
    where applied to service as a teacher means an academic year as defined
    by the Secretary.''.

                          PART E--FEDERAL PERKINS LOANS

    SEC. 461. AUTHORIZATION OF APPROPRIATIONS.

        Subsection (b) of section 461 (20 U.S.C. 1087aa) is amended--
                (1) in paragraph (1), by striking ``1993'' and inserting
            ``1999''; and
                (2) in paragraph (2), by striking ``1997'' each place the
            term appears and inserting ``2003''.

    SEC. 462. ALLOCATION OF FUNDS.

        (a) Changes in Allocation Formula.--
                (1) Updating the base period.--Section 462(a) (20 U.S.C.
            1087bb(a)) is amended--
                        (A) in paragraph (1)(A), by striking ``the amount of
                    the Federal capital contribution allocated to such
                    institution under this part for fiscal year 1985'' and
                    inserting ``the amount received under subsections (a)
                    and (b) of this section for fiscal year 1999 (as such
                    subsections were in effect with respect to allocations
                    for such fiscal year)'';
                        (B) in paragraph (2)--
                              (i) in subparagraphs (A) and (B), by striking
                          ``1985'' each place the term appears and inserting
                          ``1999''; and
                              (ii) in subparagraph (C)(i), by striking
                          ``1986'' and inserting ``2000''.
                (2) Elimination of pro rata share.--Section 462 is further
            amended--
                        (A) in subsection (a)--
                              (i) in paragraph (1)(B), by striking
                          ``subsection (f )'' and inserting ``subsection
                          (e)'';

    [[Page 112 STAT. 1721]]

                              (ii) in the matter following paragraph (1)(B),
                          by striking ``subsection (g)'' and inserting
                          ``subsection (f)'';
                              (iii) in paragraph (2)(D)(ii), by striking
                          ``subsection (f)'' and inserting ``subsection
                          (e)''; and
                              (iv) in the matter following paragraph
                          (2)(D)(ii), by striking ``subsection (g)'' and
                          inserting ``subsection (f)'';
                        (B) by striking subsection (b);
                        (C) in subsection (c)(1), by striking ``three-
                    quarters of the remainder'' and inserting ``the
                    remainder'';
                        (D) in the matter following subsection (c)(2)(B), by
                    striking ``subsection (g)'' and inserting ``subsection
                    (f )'';
                        (E) in subsection (c)(3)--
                              (i) in subparagraph (A), by striking
                          ``subsection (d)'' and inserting ``subsection
                          (c)'';
                              (ii) in subparagraph (C), by striking
                          ``subsection (f )'' and inserting ``subsection
                          (e)''; and
                              (iii) in the matter following subparagraph
                          (C), by striking ``subsection (g)'' and inserting
                          ``subsection (f )'';
                        (F) in subsection ( j)(1)(B)(i), by striking
                    ``1985'' and inserting ``1999'';
                        (G) in subsection ( j)(2)--
                              (i) in subparagraph (A), by striking
                          ``paragraph (3) of subsection (c)'' and inserting
                          ``subsection (b)(3)''; and
                              (ii) in subparagraph (B), by striking
                          ``subsection (c) of section 462'' and inserting
                          ``subsection (b)''; and
                        (H) by redesignating subsections (c) through ( j) as
                    subsections (b) through (i), respectively.
                (3) <<NOTE: Applicability. 20 USC 1087bb note.>> Effective
            Date.--The amendments made by this subsection shall apply with
            respect to allocations of amounts appropriated pursuant to
            section 461(b) for fiscal year 2000 or any succeeding fiscal
            year.

        (b) Self-Help Need.--The matter preceding subparagraph (A) of
    section 462(c)(3) (as redesignated by subsection (a)(2)(G)) is
    amended <<NOTE: 20 USC 1087bb.>> by striking ``the Secretary, for'' and
    all that follows through ``years,''.

        (c) Default Penalties.--Subsections (e) and (f ) of section 462 (as
    redesignated by subsection (a)(2)(G)) are amended to read as follows:
        ``(e) Default Penalties.--
                ``(1) Years preceding fiscal year 2000.--For any fiscal year
            preceding fiscal year 2000, any institution with a cohort
            default rate that--
                        ``(A) <<NOTE: Regulations.>> equals or exceeds 15
                    percent, shall establish a default reduction plan
                    pursuant to regulations prescribed by the Secretary,
                    except that such plan shall not be required with respect
                    to an institution that has a default rate of less than
                    20 percent and that has less than 100 students who have
                    loans under this part in such academic year;
                        ``(B) equals or exceeds 20 percent, but is less than
                    25 percent, shall have a default penalty of 0.9;
                        ``(C) equals or exceeds 25 percent, but is less than
                    30 percent, shall have a default penalty of 0.7; and
                        ``(D) equals or exceeds 30 percent shall have a
                    default penalty of zero.

    [[Page 112 STAT. 1722]]

                ``(2) Years following fiscal year 2000.--For fiscal year
            2000 and any succeeding fiscal year, any institution with a
            cohort default rate (as defined under subsection (g)) that
            equals or exceeds 25 percent shall have a default penalty of
            zero.
                ``(3) Ineligibility.--
                        ``(A) <<NOTE: Deadlines.>> In general.--For fiscal
                    year 2000 and any succeeding fiscal year, any
                    institution with a cohort default rate (as defined in
                    subsection (g)) that equals or exceeds 50 percent for
                    each of the 3 most recent years for which data are
                    available shall not be eligible to participate in a
                    program under this part for the fiscal year for which
                    the determination is made and the 2 succeeding fiscal
                    years, unless, within 30 days of receiving notification
                    from the Secretary of the loss of eligibility under this
                    paragraph, the institution appeals the loss of
                    eligibility to the Secretary. The Secretary shall issue
                    a decision on any such appeal within 45 days after the
                    submission of the appeal. Such decision may permit the
                    institution to continue to participate in a program
                    under this part if--
                              ``(i) the institution demonstrates to the
                          satisfaction of the Secretary that the calculation
                          of the institution's cohort default rate is not
                          accurate, and that recalculation would reduce the
                          institution's cohort default rate for any of the 3
                          fiscal years below 50 percent; or
                              ``(ii) there are, in the judgment of the
                          Secretary, such a small number of borrowers
                          entering repayment that the application of this
                          subparagraph would be inequitable.
                        ``(B) Continued participation.--During an appeal
                    under subparagraph (A), the Secretary may permit the
                    institution to continue to participate in a program
                    under this part.
                        ``(C) <<NOTE: Deadline.>> Return of funds.--Within
                    90 days after the date of any termination pursuant to
                    subparagraph (A), or the conclusion of any appeal
                    pursuant to subparagraph (B), whichever is later, the
                    balance of the student loan fund established under this
                    part by the institution that is the subject of the
                    termination shall be distributed as follows:
                              ``(i) The Secretary shall first be paid an
                          amount which bears the same ratio to such balance
                          (as of the date of such distribution) as the total
                          amount of Federal capital contributions to such
                          fund by the Secretary under this part bears to the
                          sum of such Federal capital contributions and the
                          capital contributions to such fund made by the
                          institution.
                              ``(ii) The remainder of such student loan fund
                          shall be paid to the institution.
                        ``(D) Use of returned funds.--Any funds returned to
                    the Secretary under this paragraph shall be reallocated
                    to institutions of higher education pursuant to
                    subsection (i).
                        ``(E) Definition.--For the purposes of subparagraph
                    (A), the term `loss of eligibility' shall be defined as
                    the mandatory liquidation of an institution's student
                    loan fund, and assignment of the institution's
                    outstanding loan portfolio to the Secretary.

        ``(f ) Applicable Maximum Cohort Default Rate.--

    [[Page 112 STAT. 1723]]

                ``(1) Award years prior to 2000.--For award years prior to
            award year 2000, the applicable maximum cohort default rate is
            30 percent.
                ``(2) Award year 2000 and succeeding award years.--For award
            year 2000 and subsequent years, the applicable maximum cohort
            default rate is 25 percent.''.

        (d) Cohort Default Rate Definition.--Section 462(g) (as redesignated
    by subsection (a)(2)(G)) is amended-- <<NOTE: 20 USC 1087bb.>>
                (1) by striking the subsection heading and paragraphs (1)
            and (2) and inserting the following:

        ``(g) Definition of Cohort Default Rate.--'';
                (2) by striking ``(3)(A) For award year 1994 and any
            succeeding award year, the term'' and inserting the following:
                ``(1)(A) The term'';
                (3) in paragraph (1) (as redesignated by paragraph (2))--
                        (A) by striking subparagraphs (B) and (E); and
                        (B) by redesignating subparagraphs (C), (D), (F),
                    and (G) as subparagraphs (B), (C), (D), and (F),
                    respectively;
                        (C) by inserting after subparagraph (D) (as
                    redesignated by subparagraph (B)) the following:
                ``(E) In determining the number of students who default
            before the end of such award year, the institution, in
            calculating the cohort default rate, shall exclude--
                        ``(i) any loan on which the borrower has, after the
                    time periods specified in paragraph (2)--
                              ``(I) voluntarily made 6 consecutive payments;
                              ``(II) voluntarily made all payments currently
                          due;
                              ``(III) repaid in full the amount due on the
                          loan; or
                              ``(IV) received a deferment or forbearance,
                          based on a condition that began prior to such time
                          periods;
                        ``(ii) any loan which has, after the time periods
                    specified in paragraph (2), been rehabilitated or
                    canceled; and
                        ``(iii) any other loan that the Secretary determines
                    should be excluded from such determination.''; and
                (4) by striking paragraph (4) and inserting the following:
                ``(2) For purposes of calculating the cohort default rate
            under this subsection, a loan shall be considered to be in
            default--
                        ``(A) 240 days (in the case of a loan repayable
                    monthly), or
                        ``(B) 270 days (in the case of a loan repayable
                    quarterly),
            after the borrower fails to make an installment payment when due
            or to comply with other terms of the promissory note.''.

        (e) Conforming Amendments.--Section 462 (20 U.S.C. 1087bb) is
    amended--
                (1) in the matter following paragraphs (1)(B) and (2)(D)(ii)
            of subsection (a), by inserting ``cohort'' before ``default''
            each place the term appears;
                (2) in the matter following paragraphs (2)(B) and (3)(C) of
            subsection (b) (as redesignated by subsection (a)(2)(G)), by
            inserting ``cohort'' before ``default'' each place the term
            appears;
                (3) in subsection (d)(2) (as redesignated by subsection
            (a)(2)(G)), by inserting ``cohort'' before ``default''; and
                (4) in subsection (g)(1)(F) (as redesignated by subsections
            (a)(2)(G) and (d)(3)(B)), by inserting ``cohort'' before
            ``default''.

    [[Page 112 STAT. 1724]]

    SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

        (a) Contents of Agreements.--Section 463(a) (20 U.S.C. 1087cc(a)) is
    amended--
                (1) by amending subparagraph (B) of paragraph (2) to read as
            follows:
                        ``(B) a capital contribution by an institution in an
                    amount equal to one-third of the Federal capital
                    contributions described in subparagraph (A);'';
                (2) by striking paragraph (4); and
                (3) by redesignating paragraphs (5) through (10) as
            paragraphs (4) through (9);

        (b) Agreements With Credit Bureaus.--Section 463(c) is amended--
                (1) in paragraph (1)--
                        (A) by striking ``the Secretary shall'' and
                    inserting ``the Secretary and each institution of higher
                    education participating in the program under this part
                    shall''; and
                        (B) by inserting ``and regarding loans held by the
                    Secretary or an institution'' after ``section 467'';
                (2) in paragraph (2)--
                        (A) in the matter preceding subparagraph (A), by
                    striking ``by the Secretary'' and all that follows
                    through ``of--'' and inserting ``by the Secretary or an
                    institution, as the case may be, to such organizations,
                    with respect to any loan held by the Secretary or the
                    institution, respectively, of--'';
                        (B) by amending subparagraph (A) to read as follows:
                        ``(A) the date of disbursement and the amount of
                    such loans made to any borrower under this part at the
                    time of disbursement of the loan;'';
                        (C) in subparagraph (B)--
                              (i) by inserting ``the repayment and'' after
                          ``concerning''; and
                              (ii) by striking ``any defaulted'' and
                          inserting ``such''; and
                        (D) in subparagraph (C), by inserting ``, or upon
                    cancellation or discharge of the borrower's obligation
                    on the loan for any reason'' before the period;
                (3) in paragraph (3)--
                        (A) in the matter preceding subparagraph (A)--
                              (i) by inserting ``or an institution'' after
                          ``from the Secretary''; and
                              (ii) by striking ``until--'' and inserting
                          ``until the loan is paid in full.''; and
                        (B) by striking subparagraphs (A) and (B);
                (4) by amending paragraph (4) to read as follows:

        ``(4)(A) Except as provided in subparagraph (B), an institution of
    higher education, after consultation with the Secretary and pursuant to
    the agreements entered into under paragraph (1), shall disclose at least
    annually to any credit bureau organization with which the Secretary has
    such an agreement the information set forth in paragraph (2), and shall
    disclose promptly to such credit bureau organization any changes to the
    information previously disclosed.
        ``(B) The Secretary may promulgate regulations establishing criteria
    under which an institution of higher education may cease

    [[Page 112 STAT. 1725]]

    reporting the information described in paragraph (2) before a loan is
    paid in full.''; and
                (4) by inserting after paragraph (4) the following:

        ``(5) <<NOTE: Notification.>> Each institution of higher education
    shall notify the appropriate credit bureau organizations whenever a
    borrower of a loan that is made and held by the institution and that is
    in default makes 6 consecutive monthly payments on such loan, for the
    purpose of encouraging such organizations to update the status of
    information maintained with respect to that borrower.''.

        (c) Conforming Amendment.--Section 463(d) is
    amended by <<NOTE: 20 USC 1087cc.>> striking ``subsection (a)(10)'' and
    inserting ``subsection (a)(9)''.

    SEC. 464. TERMS OF LOANS.

        (a) Terms and Conditions; Annual Limits.--Paragraph (2) of section
    464(a) (20 U.S.C. 1087dd(a)) is amended to read as follows:
        ``(2)(A) Except as provided in paragraph (4), the total of loans
    made to a student in any academic year or its equivalent by an
    institution of higher education from a loan fund established pursuant to
    an agreement under this part shall not exceed--
                ``(i) $4,000, in the case of a student who has not
            successfully completed a program of undergraduate education; or
                ``(ii) <<NOTE: Regulations.>> $6,000, in the case of a
            graduate or professional student (as defined in regulations
            issued by the Secretary).

        ``(B) Except as provided in paragraph (4), the aggregate unpaid
    principal amount for all loans made to a student by institutions of
    higher education from loan funds established pursuant to agreements
    under this part may not exceed--
                ``(i) $40,000, in the case of any graduate or professional
            student (as defined by regulations issued by the Secretary, and
            including any loans from such funds made to such person before
            such person became a graduate or professional student);
                ``(ii) <<NOTE: Regulations.>> $20,000, in the case of a
            student who has successfully completed 2 years of a program of
            education leading to a bachelor's degree but who has not
            completed the work necessary for such a degree (determined under
            regulations issued by the Secretary), and including any loans
            from such funds made to such person before such person became
            such a student; and
                ``(iii) $8,000, in the case of any other student.''.

        (b) Need and Eligibility.--Section 464(b) is amended--
                (1) in paragraph (1), by adding at the end the following:
            ``A student who is in default on a loan under this part shall
            not be eligible for an additional loan under this part unless
            such loan meets one of the conditions for exclusion under
            section 462(g)(1)(E).''; and
                (2) by amending paragraph (2) to read as follows:

        ``(2) If the institution's capital contribution under section 462 is
    directly or indirectly based in part on the financial need demonstrated
    by students who are (A) attending the institution less than full time,
    or (B) independent students, then a reasonable portion of the loans made
    from the institution's student loan fund containing the contribution
    shall be made available to such students.''.
        (c) Contents of Loan Agreement.--Section 464(c) is
    amended--

    [[Page 112 STAT. 1726]]

                (1) in paragraph (1)(D)--
                        (A) by striking ``(i) 3 percent'' and all that
                    follows through ``or (iii)''; and
                        (B) by striking ``subparagraph (A)(i)'' and
                    inserting ``paragraph (2)(A)(i)'';
                (2) in the matter following clause (iv) of paragraph (2)(A),
            by striking ``subparagraph (B)'' and inserting ``subparagraph
            (A) of paragraph (1)'';
                (3) by adding at the end of paragraph (2) the following:

        ``(C) An individual with an outstanding loan balance who meets the
    eligibility criteria for a deferment described in subparagraph (A) as in
    effect on the date of enactment of this subparagraph shall be eligible
    for deferment under this paragraph notwithstanding any contrary
    provision of the promissory note under which the loan or loans were
    made, and notwithstanding any amendment (or effective date provision
    relating to any amendment) to this section made prior to the date of
    such deferment.''; and
                (4) by adding at the end the following:

        ``(7) There shall be excluded from the 9-month period that begins on
    the date on which a student ceases to carry at least one-half the normal
    full-time academic workload (as described in paragraph (1)(A)) any
    period not to exceed 3 years during which a borrower who is a member of
    a reserve component of the Armed Forces named in section 10101 of title
    10, United States Code, is called or ordered to active duty for a period
    of more than 30 days (as defined in section 101(d)(2) of such title).
    Such period of exclusion shall include the period necessary to resume
    enrollment at the borrower's next available regular enrollment
    period.''.
        (d) Discharge; Rehabilitation; Incentive Repayment.--
    Section 464 is amended <<NOTE: 20 USC 1087dd.>> by adding at the end the
    following:

        ``(g) Discharge.--
                ``(1) In general.--If a student borrower who received a loan
            made under this part on or after January 1, 1986, is unable to
            complete the program in which such student is enrolled due to
            the closure of the institution, then the Secretary shall
            discharge the borrower's liability on the loan (including the
            interest and collection fees) and shall subsequently pursue any
            claim available to such borrower against the institution and the
            institution's affiliates and principals, or settle the loan
            obligation pursuant to the financial responsibility standards
            described in section 498(c).
                ``(2) Assignment.--A borrower whose loan has been discharged
            pursuant to this subsection shall be deemed to have assigned to
            the United States the right to a loan refund in an amount that
            does not exceed the amount discharged against the institution
            and the institution's affiliates and principals.
                ``(3) Eligibility for additional assistance.--The period
            during which a student was unable to complete a course of study
            due to the closing of the institution shall not be considered
            for purposes of calculating the student's period of eligibility
            for additional assistance under this title.
                ``(4) Special rule.--A borrower whose loan has been
            discharged pursuant to this subsection shall not be precluded,
            because of that discharge, from receiving additional grant,
            loan, or work assistance under this title for which the borrower

    [[Page 112 STAT. 1727]]

            would be otherwise eligible (but for the default on the
            discharged loan). The amount discharged under this subsection
            shall be treated as an amount canceled under section 465(a).
                ``(5) Reporting.--The Secretary or institution, as the case
            may be, shall report to credit bureaus with respect to loans
            that have been discharged pursuant to this subsection.

        ``(h) Rehabilitation of Loans.--
                ``(1) Rehabilitation.--
                        ``(A) In general.--If the borrower of a loan made
                    under this part who has defaulted on the loan makes 12
                    ontime, consecutive, monthly payments of amounts owed on
                    the loan, as determined by the institution, or by the
                    Secretary in the case of a loan held by the Secretary,
                    the loan shall be considered rehabilitated, and the
                    institution that made that loan (or the Secretary, in
                    the case of a loan held by the Secretary) shall request
                    that any credit bureau organization or credit reporting
                    agency to which the default was reported remove the
                    default from the borrower's credit history.
                        ``(B) Comparable conditions.--As long as the
                    borrower continues to make scheduled repayments on a
                    loan rehabilitated under this paragraph, the
                    rehabilitated loan shall be subject to the same terms
                    and conditions, and qualify for the same benefits and
                    privileges, as other loans made under this part.
                        ``(C) Additional assistance.--The borrower of a
                    rehabilitated loan shall not be precluded by section 484
                    from receiving additional grant, loan, or work
                    assistance under this title (for which the borrower is
                    otherwise eligible) on the basis of defaulting on the
                    loan prior to such rehabilitation.
                        ``(D) Limitations.--A borrower only once may obtain
                    the benefit of this paragraph with respect to
                    rehabilitating a loan under this part.
                ``(2) Restoration of eligibility.--If the borrower of a loan
            made under this part who has defaulted on that loan makes 6
            ontime, consecutive, monthly payments of amounts owed on such
            loan, the borrower's eligibility for grant, loan, or work
            assistance under this title shall be restored to the extent that
            the borrower is otherwise eligible. A borrower only once may
            obtain the benefit of this paragraph with respect to restored
            eligibility.

        ``(i) Incentive Repayment Program.--
                ``(1) In general.--Each institution of higher education may
            establish, with the approval of the Secretary, an incentive
            repayment program designed to reduce default and to replenish
            student loan funds established under this part. Each such
            incentive repayment program may--
                        ``(A) offer a reduction of the interest rate on a
                    loan on which the borrower has made 48 consecutive,
                    monthly repayments, but in no event may the rate be
                    reduced by more than 1 percent;
                        ``(B) provide for a discount on the balance owed on
                    a loan on which the borrower pays the principal and
                    interest in full prior to the end of the applicable
                    repayment period, but in no event may the discount
                    exceed 5 percent

    [[Page 112 STAT. 1728]]

                    of the unpaid principal balance due on the loan at the
                    time the early repayment is made; and
                        ``(C) include such other incentive repayment options
                    as the institution determines will carry out the
                    objectives of this subsection.
                ``(2) Limitation.--No incentive repayment option under an
            incentive repayment program authorized by this subsection may be
            paid for with Federal funds, including any Federal funds from
            the student loan fund, or with institutional funds from the
            student loan fund.''.

    SEC. 465. CANCELLATION FOR PUBLIC SERVICE.

        Section 465 (20 U.S.C. 1087ee) is amended--
                (1) in subsection (a)--
                        (A) in paragraph (2)(C), by striking ``section
                    676(b)(9)'' and inserting ``section 635(a)(10)'';
                        (B) in the last sentence of paragraph (2), by
                    striking ``section 602(a)(1)'' and inserting ``section
                    602''; and
                        (C) by adding at the end the following new
                    paragraph:

        ``(7) An individual with an outstanding loan obligation under this
    part who performs service of any type that is described in paragraph (2)
    as in effect on the date of enactment of this paragraph shall be
    eligible for cancellation under this section for such service
    notwithstanding any contrary provision of the promissory note under
    which the loan or loans were made, and notwithstanding any amendment (or
    effective date provision relating to any amendment) to this section made
    prior to the date of such service.''; and
                (2) <<NOTE: Deadline.>> in subsection (b), by adding at the
            end the following new sentence: ``To the extent feasible, the
            Secretary shall pay the amounts for which any institution
            qualifies under this subsection not later than 3 months after
            the institution files an institutional application for campus-
            based funds.''.

    SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

        Section 466 (20 U.S.C. 1087ff) is amended--
                (1) in subsection (a)--
                        (A) in the matter preceding paragraph (1)--
                              (i) by striking ``1996'' and inserting
                          ``2003''; and
                              (ii) by striking ``1997'' and inserting
                          ``2004''; and
                        (B) in paragraph (1), by striking ``1996'' and
                    inserting ``2003'';
                (2) in subsection (b)--
                        (A) by striking ``2005'' and inserting ``2012''; and
                        (B) by striking ``1996'' and inserting ``2003''; and
                (3) in subsection (c), by striking ``1997'' and inserting
            ``2004''.

    SEC. 467. PERKINS LOAN REVOLVING FUND.

        (a) Repeal.--Subsection (c) of section 467 (20 U.S.C. 1087gg(c)) is
    repealed.
        (b) <<NOTE: 20 USC 1087gg note.>> Transfer of Balance.--Any funds in
    the Perkins Loan Revolving Fund on the date of enactment of this Act
    shall be transferred to and deposited in the Treasury.

    [[Page 112 STAT. 1729]]

                              PART F--NEED ANALYSIS

    SEC. 471. COST OF ATTENDANCE.

        Section 472 (20 U.S.C. 1087ll) is amended--
                (1) in paragraph (2), by inserting after ``personal
            expenses'' the following: ``, including a reasonable allowance
            for the documented rental or purchase of a personal computer,'';
                (2) in paragraph (3)--
                        (A) in subparagraph (A), by striking ``of not less
                    than $1,500'' and inserting ``determined by the
                    institution''; and
                        (B) in subparagraph (C), by striking ``, except that
                    the amount may not be less than $2,500'';
                (3) in paragraph (10), by striking everything after
            ``determining costs'' and inserting a semicolon; and
                (4) in paragraph (11), by striking ``placed'' and inserting
            ``engaged''.

    SEC. 472. DATA ELEMENTS.

        Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amended by
    inserting ``, excluding the student's parents,'' after ``family of the
    student''.

    SEC. 473. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

        (a) Parents' Contribution from Adjusted Available Income.--Section
    475(b)(3) (20 U.S.C. 1087oo(b)(3)) is amended by inserting ``, excluding
    the student's parents,'' after ``number of family members''.
        (b) Student Contribution From Available Income.--Section 475(g) is
    amended--
                (1) in paragraph (2)--
                        (A) in subparagraph (D), by striking ``$1,750; and''
                    and inserting ``$2,200 (or a successor amount prescribed
                    by the Secretary under section 478);'';
                        (B) by striking the period at the end of
                    subparagraph (E) and inserting ``; and''; and
                        (C) by inserting after subparagraph (E) the
                    following new subparagraph:
                        ``(F) an allowance for parents' negative available
                    income, determined in accordance with paragraph (6).'';
                    and
                (2) by adding at the end the following new paragraph:
                ``(6) Allowance for parents' negative available income.--The
            allowance for parents' negative available income is the amount,
            if any, by which the sum of the amounts deducted under
            subparagraphs (A) through (F) of subsection (c)(1) exceeds the
            sum of the parents' total income (as defined in section 480) and
            the parents' contribution from assets (as determined in
            accordance with subsection (d)).''.

        (c) Adjustments to Student's Contribution for Enrollment Periods
    Other Than Nine Months.--Section 475 is amended by adding at the end the
    following:
        ``( j) Adjustments to Student's Contribution for Enrollment Periods
    of Less Than Nine Months.--For periods of enrollment of less than 9
    months, the student's contribution from adjusted available income (as
    determined under subsection (g)) is determined, for purposes other than
    subpart 2 of part A, by dividing the amount

    [[Page 112 STAT. 1730]]

    determined under such subsection by 9, and multiplying the result by the
    number of months in the period of enrollment.''.

    SEC. 474. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT
                DEPENDENTS OTHER THAN A SPOUSE.

        (a) Adjustments for Enrollment Periods of Less Than Nine Months.--
    Section 476(a) (20 U.S.C. 1087pp(a)) is amended--
                (1) by striking ``and'' at the end of paragraph (1)(B);
                (2) by inserting ``and'' after the semicolon at the end of
            paragraph (2); and
                (3) by inserting after paragraph (2) the following new
            paragraph:
                ``(3) for periods of enrollment of less than 9 months, for
            purposes other than subpart 2 of part A--
                        ``(A) dividing the quotient resulting under
                    paragraph (2) by 9; and
                        ``(B) multiplying the result by the number of months
                    in the period of enrollment;''.

        (b) Contribution from Available Income.--Section 476(b)(1)(A)(iv) is
    amended--
                (1) by striking ``allowance of--'' and inserting ``allowance
            of the following amount (or a successor amount prescribed by the
            Secretary under section 478)--'';
                (2) in subclauses (I) and (II), by striking ``$3,000'' each
            place the term appears and inserting ``$5,000''; and
                (3) in subclause (III), by striking ``$6,000'' and inserting
            ``$8,000''.

    SEC. 475. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS
                OTHER THAN A SPOUSE.

        Section 477(a) (20 U.S.C. 1087qq(a)) is amended--
                (1) by striking ``and'' at the end of paragraph (2);
                (2) by inserting ``and'' after the semicolon at the end of
            paragraph (3); and
                (3) by inserting after paragraph (3) the following new
            paragraph:
                ``(4) for periods of enrollment of less than 9 months, for
            purposes other than subpart 2 of part A--
                        ``(A) dividing the quotient resulting under
                    paragraph (3) by 9; and
                        ``(B) multiplying the result by the number of months
                    in the period of enrollment;''.

    SEC. 476. REGULATIONS; UPDATED TABLES AND AMOUNTS.

        Section 478(b) (20 U.S.C. 1087rr(b)) is amended--
                (1) by striking ``For each academic year'' and inserting the
            following:
                ``(1) Revised tables.--For each academic year''; and
                (2) by adding at the end the following new paragraph:
                ``(2) <<NOTE: Federal Register, publication.>> Revised
            amounts.--For each academic year after academic year 2000-2001,
            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 1999 and

    [[Page 112 STAT. 1731]]

            the December next preceding the beginning of such academic year,
            and rounding the result to the nearest $10.''.

    SEC. 477. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CONTRIBUTION.

        Section 479 (20 U.S.C. 1087ss) is amended--
                (1) in subsection (b)(3)--
                        (A) in the matter preceding subparagraph (A), by
                    striking ``this paragraph'' and inserting ``this
                    subsection, or subsection (c), as the case may be,'';
                        (B) in subparagraph (A), by striking ``or'' at the
                    end thereof;
                        (C) by redesignating subparagraph (B) as
                    subparagraph (C); and
                        (D) by inserting after subparagraph (A) the
                    following new subparagraph:
                        ``(B) a form 1040 (including any prepared or
                    electronic version of such form) required pursuant to
                    the Internal Revenue Code of 1986, except that such form
                    shall be considered a qualifying form only if the
                    student or family files such form in order to take a tax
                    credit under section 25A of the Internal Revenue Code of
                    1986, and would otherwise be eligible to file a form
                    described in subparagraph (A); or'';
                (2) in subsection (c)--
                        (A) by amending paragraph (1)(A) to read as follows:
                        ``(A) the student's parents file, or are eligible to
                    file, a form described in subsection (b)(3), or certify
                    that the parents are not required to file an income tax
                    return and the student files, or is eligible to file,
                    such a form, or certifies that the student is not
                    required to file an income tax return; and''; and
                        (B) by amending paragraph (2)(A) to read as follows:
                        ``(A) the student (and the student's spouse, if any)
                    files, or is eligible to file, a form described in
                    subsection (b)(3), or certifies that the student (and
                    the student's spouse, if any) is not required to file an
                    income tax return; and''.

    SEC. 478. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

        Section 479A (20 U.S.C. 1087tt) is amended--
                (1) in subsection (a), by inserting after the second
            sentence the following: ``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, 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.'';
            and
                (2) by amending subsection (c) to read as follows:

        ``(c) Refusal or Adjustment of Loan Certifications.--On a case-by-
    case basis, an eligible institution may refuse to certify a statement
    that permits a student to receive a loan under part B or D, or may
    certify a loan amount or make a loan that is less than the student's
    determination of need (as determined under this part), if the reason for
    the action is documented and provided

    [[Page 112 STAT. 1732]]

    in written form to the student. No eligible institution shall
    discriminate against any borrower or applicant in obtaining a loan on
    the basis of race, national origin, religion, sex, marital status, age,
    or disability status.''.

    SEC. 479. TREATMENT OF OTHER FINANCIAL ASSISTANCE.

        Section 480( j) (20 U.S.C. 1087vv( j)) is amended--
                (1) in paragraph (1), by inserting before the period at the
            end the following: ``, and national service educational awards
            or post-service benefits under title I of the National and
            Community Service Act of 1990 (42 U.S.C. 12571 et seq.)'';
                (2) by striking paragraph (3); and
                (3) by redesignating paragraph (4) as paragraph (3).

    SEC. 480. CLERICAL AMENDMENTS.

        (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended by
    striking ``or 4'' and inserting ``or 2''.
        (b) Family Contribution.--Section 473 (20 U.S.C. 1087mm) is amended
    by striking ``subpart 4'' and inserting ``subpart 2''.

    SEC. 480A. EFFECTIVE DATES. <<NOTE: 20 USC 1087kk note.>>

        (a) In General.--Except as provided in subsection (b), the
    amendments made by this part are effective on the date of enactment of
    this Act.
        (b) <<NOTE: Applicability.>> Provisions Effective for Academic Year
    2000-2001, and Thereafter.--The amendments made by sections 472, 473,
    474, and 475 shall apply with respect to determinations of need under
    part F of title IV of the Higher Education Act of 1965 for academic
    years beginning on or after July 1, 2000.

                           PART G--GENERAL PROVISIONS

    SEC. 481. MASTER CALENDAR.

        (a) Required Schedule.--Section 482(a) (20 U.S.C. 1089(a)) is
    amended by adding at the end the following:
                ``(3) <<NOTE: Notification.>> The Secretary shall, to the
            extent practicable, notify eligible institutions, guaranty
            agencies, lenders, interested software providers, and, upon
            request, other interested parties, by December 1 prior to the
            start of an award year of minimal hardware and software
            requirements necessary to administer programs under this title.
                ``(4) The Secretary shall attempt to conduct training
            activities for financial aid administrators and others in an
            expeditious and timely manner prior to the start of an award
            year in order to ensure that all participants are informed of
            all administrative requirements.''.

        (b) Delay of Effective Date of Late Publications.--Subsection (c) of
    section 482 is amended to read as follows:
        ``(c) Delay of Effective Date of Late Publications.--(1) Except as
    provided in paragraph (2), any regulatory changes initiated by the
    Secretary affecting the programs under this title that have not been
    published in final form by November 1 prior to the start of the award
    year shall not become effective until the beginning of the second award
    year after such November 1 date.
        ``(2)(A) The Secretary may designate any regulatory provision that
    affects the programs under this title and is published in final form
    after November 1 as one that an entity subject to the provision may, in
    the entity's discretion, choose to implement prior

    [[Page 112 STAT. 1733]]

    to the effective date described in paragraph (1). The Secretary may
    specify in the designation when, and under what conditions, an entity
    may implement the provision prior to that effective date.
    The <<NOTE: Federal Register, publication.>> Secretary shall publish any
    designation under this subparagraph in the Federal Register.

        ``(B) If an entity chooses to implement a regulatory provision prior
    to the effective date described in paragraph (1), as permitted by
    subparagraph (A), the provision shall be effective with respect to that
    entity in accordance with the terms of the Secretary's designation.''.

    SEC. 482. FORMS AND REGULATIONS.

        (a) Common Financial Aid Form Development.--Section 483(a) (20
    U.S.C. 1090(a)) is amended--
                (1) in the subsection heading, by striking ``Form'' and
            inserting ``Form Development'';
                (2) in paragraph (1)--
                        (A) by striking ``A, C, D, and E'' and inserting ``A
                    through E'';
                        (B) by striking ``and to determine the need of a
                    student for the purpose of part B of this title'';
                        (C) by striking the second sentence and inserting
                    the following: ``The Secretary shall include on the form
                    developed under this subsection such data items as the
                    Secretary determines are appropriate for inclusion. Such
                    items shall be selected in consultation with States to
                    assist in the awarding of State financial assistance. In
                    no case shall the number of such data items be less than
                    the number included on the form on the date of enactment
                    of the Higher Education Amendments of 1998.''; and
                        (D) by striking the last sentence;
                (3) in paragraph (2)--
                        (A) by striking ``A, C, D, and E'' each place the
                    term appears and inserting ``A through E'';
                        (B) by striking ``and the need of a student for the
                    purpose of part B of this title,''; and
                        (C) by striking ``or have the student's need
                    established for the purpose of part B of this title'';
                (4) by amending paragraph (3) to read as follows:
                ``(3) Distribution of data.--Institutions of higher
            education, guaranty agencies, and States shall receive, without
            charge, the data collected by the Secretary using the form
            developed pursuant to this section for the purposes of
            processing loan applications and determining need and
            eligibility for institutional and State financial aid awards.
            Entities designated by institutions of higher education,
            guaranty agencies, or States to receive such data shall be
            subject to all the requirements of this section, unless such
            requirements are waived by the Secretary.'';
                (5) by adding at the end the following:
                ``(5) Electronic forms.--(A) The Secretary, in cooperation
            with representatives of agencies and organizations involved in
            student financial assistance, including private computer
            software providers, shall develop an electronic version of the
            form described in paragraph (1). As permitted by the Secretary,
            such an electronic version shall not require a signature to be
            collected at the time such version is submitted, if a signature

    [[Page 112 STAT. 1734]]

            is subsequently submitted by the
            applicant. <<NOTE: Deadline.>> The Secretary shall prescribe
            such version not later than 120 days after the date of enactment
            of the Higher Education Amendments of 1998.
                ``(B) Nothing in this section shall be construed to prohibit
            the use of the form developed by the Secretary pursuant to
            subparagraph (A) by an eligible institution, eligible lender,
            guaranty agency, State grant agency, private computer software
            providers, a consortium thereof, or such other entities as the
            Secretary may designate.
                ``(C) No fee shall be charged to students in connection with
            the use of the electronic version of the form, or of any other
            electronic forms used in conjunction with such form in applying
            for Federal or State student financial assistance.
                ``(D) <<NOTE: Privacy.>> The Secretary shall ensure that
            data collection complies with section 552a of title 5, United
            States Code, and that any entity using the electronic version of
            the form developed by the Secretary pursuant to subparagraph (A)
            shall maintain reasonable and appropriate administrative,
            technical, and physical safeguards to ensure the integrity and
            confidentiality of the information, and to protect against
            security threats, or unauthorized uses or disclosures of the
            information provided on the electronic version of the form. Data
            collected by such version of the form shall be used only for the
            application, award, and administration of aid awarded under this
            title, State aid, or aid awarded by eligible institutions or
            such entities as the Secretary may designate. No data collected
            by such version of the form shall be used for making final aid
            awards under this title until such data have been processed by
            the Secretary or a contractor or designee of the Secretary.
                ``(6) Third party servicers and private software
            providers.--To the extent practicable and in a timely manner,
            the Secretary shall provide, to private organizations and
            consortia that develop software used by eligible institutions
            for the administration of funds under this title, all the
            necessary specifications that the organizations and consortia
            must meet for the software the organizations and consortia
            develop, produce, and distribute (including any diskette, modem,
            or network communications) which are so used. The specifications
            shall contain record layouts for required data. The Secretary
            shall develop in advance of each processing cycle an annual
            schedule for providing such specifications. The Secretary, to
            the extent practicable, shall use means of providing such
            specifications, including conferences and other meetings,
            outreach, and technical support mechanisms (such as training and
            printed reference materials). The Secretary shall, from time to
            time, solicit from such organizations and consortia means of
            improving the support provided by the Secretary.
                ``(7) Parent's social security number and birth date.--The
            Secretary is authorized to include on the form developed under
            this subsection space for the social security number and birth
            date of parents of dependent students seeking financial
            assistance under this title.''.

        (b) Streamlined Reapplication Process.--Section 483(b)(1) is
    amended <<NOTE: 20 USC 1090.>> by striking ``, within 240 days'' and all
    that follows through ``of 1992,''.

        (c) Information to Committees.--Section 483(c) is amended by
    striking ``and Labor'' and inserting ``and the Workforce''.

    [[Page 112 STAT. 1735]]

         <<NOTE: 20 USC 1090.>> (d) Toll-Free Information.--Section 483(d)
    is amended by striking ``section 633(c)'' and inserting ``section
    685(d)(2)(C)''.

        (e) Repeal.--Subsection (f ) of section 483 is repealed.

    SEC. 483. STUDENT ELIGIBILITY.

        (a) In General.--Section 484(a) (20 U.S.C. 1091(a)) is
    amended--
                (1) in paragraph (4), by striking ``the institution'' and
            everything that follows through ``lender), a document'' and
            inserting ``the Secretary, as part of the original financial aid
            application process, a certification,''; and
                (2) in paragraph (5), by striking ``or a permanent resident
            of the Trust Territory of the Pacific Islands, Guam, or the
            Northern Mariana Islands'' and inserting ``a citizen of any one
            of the Freely Associated States''.

        (b) Home-Schooled Students.--Section 484(d) is amended--
                (1) in the matter preceding paragraph (1), by striking
            ``either''; and
                (2) by adding at the end the following:
                ``(3) The student has completed a secondary school education
            in a home school setting that is treated as a home school or
            private school under State law.''.

        (c) Termination of Eligibility.--Section 484( j) is amended to read
    as follows:
        ``( j) Assistance Under Subparts 1 and 3 of Part A, and Part C.--
    Notwithstanding any other provision of law, a student shall be eligible
    until September 30, 2004, for assistance under subparts 1 and 3 of part
    A, and part C, if the student is otherwise qualified and--
                ``(1) is a citizen of any one of the Freely Associated
            States and attends an institution of higher education in a State
            or a public or nonprofit private institution of higher education
            in the Freely Associated States; or
                ``(2) meets the requirements of subsection (a)(5) and
            attends a public or nonprofit private institution of higher
            education in any one of the Freely Associated States.''.

        (d) Correspondence Courses.--Paragraph (1) of section 484(l) is
    amended to read as follows:
                ``(1) Relation to correspondence courses.--
                        ``(A) In general.--A student enrolled in a course of
                    instruction at an institution of higher education that
                    is offered in whole or in part through
                    telecommunications and leads to a recognized certificate
                    for a program of study of 1 year or longer, or a
                    recognized associate, baccalaureate, or graduate degree,
                    conferred by such institution, shall not be considered
                    to be enrolled in correspondence courses unless the
                    total amount of telecommunications and correspondence
                    courses at such institution equals or exceeds 50 percent
                    of the total amount of all courses at the institution.
                        ``(B) Requirement.--An institution of higher
                    education referred to in subparagraph (A) is an
                    institution of higher education--
                              ``(i) that is not an institute or school
                          described in section 521(4)(C) of the Carl D.
                          Perkins Vocational and Applied Technology
                          Education Act; and

    [[Page 112 STAT. 1736]]

                              ``(ii) for which at least 50 percent of the
                          programs of study offered by the institution lead
                          to the award of a recognized associate,
                          baccalaureate, or graduate degree.''.

        (e) Verification of Income Data.--Section 484 <<NOTE: 20 USC
    1091.>> is amended by adding at the end the following:

        ``(q) Verification of Income Data.--
                ``(1) Confirmation with irs.--The Secretary of Education, in
            cooperation with the Secretary of the Treasury, is authorized to
            confirm with the Internal Revenue Service the adjusted gross
            income, Federal income taxes paid, filing status, and exemptions
            reported by applicants (including parents) under this title on
            their Federal income tax returns for the purpose of verifying
            the information reported by applicants on student financial aid
            applications.
                ``(2) <<NOTE: Procedures.>> Notification.--The Secretary
            shall establish procedures under which an applicant is notified
            that the Internal Revenue Service will disclose to the Secretary
            tax return information as authorized under section 6103(l)(13)
            of the Internal Revenue Code of 1986.''.

        (f ) Suspension of Eligibility for Drug-Related Offenses.--
                (1) Amendment.--Section 484 is amended by adding at the end
            thereof the following:

        ``(r) Suspension of Eligibility for Drug-Related Offenses.--
                ``(1) In general.--A student who has been convicted of any
            offense under any Federal or State law involving the possession
            or sale of a controlled substance shall not be eligible to
            receive any grant, loan, or work assistance under this title
            during the period beginning on the date of such conviction and
            ending after the interval specified in the following table:

    ``If convicted of an offense involving:

        The  possession  of  a  con-
          trolled substance:  Ineligibility period is:
            First offense.....    1 year
            Second offense....    2 years
            Third offense.....    Indefinite.

        The  sale  of  a  cont  lled
          substance:          Ineligibility period is:
            First offense.....    2 years
            Second offense....    Indefinite.

                ``(2) Rehabilitation.--A student whose eligibility has been
            suspended under paragraph (1) may resume eligibility before the
            end of the ineligibility period determined under such paragraph
            if--
                        ``(A) the student satisfactorily completes a drug
                    rehabilitation program that--
                              ``(i) complies with such criteria as the
                          Secretary shall prescribe in regulations for
                          purposes of this paragraph; and
                              ``(ii) includes two unannounced drug tests; or
                        ``(B) the conviction is reversed, set aside, or
                    otherwise rendered nugatory.
                ``(3) Definitions.--In this subsection, the term `controlled
            substance' has the meaning given the term in section 102(6) of
            the Controlled Substances Act (21 U.S.C. 802(6)).''.

    [[Page 112 STAT. 1737]]

                (2) <<NOTE: Applicability. 20 USC 1091 note.>> Effective
            date.--The amendment made by paragraph (1), regarding suspension
            of eligibility for drug-related offenses, shall apply with
            respect to financial assistance to cover the costs of attendance
            for periods of enrollment beginning after the date of enactment
            of this Act.

    SEC. 484. STATE COURT JUDGMENTS.

        Section 484A (20 U.S.C. 1091a) is amended--
                (1) in the heading of the section by inserting ``, and state
            court judgments'' after ``limitations''; and
                (2) by adding at the end the following:

        ``(c) State Court Judgments.--A judgment of a State court for the
    recovery of money provided as grant, loan, or work assistance under this
    title that has been assigned or transferred to the Secretary under this
    title may be registered in any district court of the United States by
    filing a certified copy of the judgment and a copy of the assignment or
    transfer. A judgment so registered shall have the same force and effect,
    and may be enforced in the same manner, as a judgment of the district
    court of the district in which the judgment is registered.''.

    SEC. 485. INSTITUTIONAL REFUNDS.

        Section 484B (20 U.S.C. 1091b) is amended to read as follows:

    ``SEC. 484B. INSTITUTIONAL REFUNDS.

        ``(a) Return of Title IV Funds.--
                ``(1) In general.--If a recipient of assistance under this
            title withdraws from an institution during a payment period or
            period of enrollment in which the recipient began attendance,
            the amount of grant or loan assistance (other than assistance
            received under part C) to be returned to the title IV programs
            is calculated according to paragraph (3) and returned in
            accordance with subsection (b).
                ``(2) Leave of absence.--
                        ``(A) Leave not treated as withdrawal.--In the case
                    of a student who takes a leave of absence from an
                    institution for not more than a total of 180 days in any
                    12-month period, the institution may consider the
                    student as not having withdrawn from the institution
                    during the leave of absence, and not calculate the
                    amount of grant and loan assistance provided under this
                    title that is to be returned in accordance with this
                    section if--
                              ``(i) the institution has a formal policy
                          regarding leaves of absence;
                              ``(ii) the student followed the institution's
                          policy in requesting a leave of absence; and
                              ``(iii) the institution approved the student's
                          request in accordance with the institution's
                          policy.
                        ``(B) Consequences of failure to return.--If a
                    student does not return to the institution at the
                    expiration of an approved leave of absence that meets
                    the requirements of subparagraph (A), the institution
                    shall calculate the amount of grant and loan assistance
                    provided under this title that is to be returned in
                    accordance with this section based on the day the
                    student withdrew (as determined under subsection (c)).
                ``(3) Calculation of amount of title iv assistance earned.--

    [[Page 112 STAT. 1738]]

                        ``(A) In general.--The amount of grant or loan
                    assistance under this title that is earned by the
                    recipient for purposes of this section is calculated
                    by--
                              ``(i) determining the percentage of grant and
                          loan assistance under this title that has been
                          earned by the student, as described in
                          subparagraph (B); and
                              ``(ii) applying such percentage to the total
                          amount of such grant and loan assistance that was
                          disbursed (and that could have been disbursed) to
                          the student, or on the student's behalf, for the
                          payment period or period of enrollment for which
                          the assistance was awarded, as of the day the
                          student withdrew.
                        ``(B) Percentage earned.--For purposes of
                    subparagraph (A)(i), the percentage of grant or loan
                    assistance under this title that has been earned by the
                    student is--
                              ``(i) equal to the percentage of the payment
                          period or period of enrollment for which
                          assistance was awarded that was completed (as
                          determined in accordance with subsection (d)) as
                          of the day the student withdrew, provided that
                          such date occurs on or before the completion of 60
                          percent of the payment period or period of
                          enrollment; or
                              ``(ii) 100 percent, if the day the student
                          withdrew occurs after the student has completed 60
                          percent of the payment period or period of
                          enrollment.
                        ``(C) Percentage and amount not earned.--For
                    purposes of subsection (b), the amount of grant and loan
                    assistance awarded under this title that has not been
                    earned by the student shall be calculated by--
                              ``(i) determining the complement of the
                          percentage of grant or loan assistance under this
                          title that has been earned by the student
                          described in subparagraph (B); and
                              ``(ii) applying the percentage determined
                          under clause (i) to the total amount of such grant
                          and loan assistance that was disbursed (and that
                          could have been disbursed) to the student, or on
                          the student's behalf, for the payment period or
                          period of enrollment, as of the day the student
                          withdrew.
                ``(4) Differences between amounts earned and amounts
            received.--
                        ``(A) <<NOTE: Regulations.>> In general.--If the
                    student has received less grant or loan assistance than
                    the amount earned as calculated under subparagraph (A)
                    of paragraph (3), the institution of higher education
                    shall comply with the procedures for late disbursement
                    specified by the Secretary in regulations.
                        ``(B) Return.--If the student has received more
                    grant or loan assistance than the amount earned as
                    calculated under paragraph (3)(A), the unearned funds
                    shall be returned by the institution or the student, or
                    both, as may be required under paragraphs (1) and (2) of
                    subsection (b), to the programs under this title in the
                    order specified in subsection (b)(3).

        ``(b) Return of Title IV Program Funds.--

    [[Page 112 STAT. 1739]]

                ``(1) Responsibility of the institution.--The institution
            shall return, in the order specified in paragraph (3), the
            lesser of--
                        ``(A) the amount of grant and loan assistance
                    awarded under this title that has not been earned by the
                    student, as calculated under subsection (a)(3)(C); or
                        ``(B) an amount equal to--
                              ``(i) the total institutional charges incurred
                          by the student for the payment period or period of
                          enrollment for which such assistance was awarded;
                          multiplied by
                              ``(ii) the percentage of grant and loan
                          assistance awarded under this title that has not
                          been earned by the student, as described in
                          subsection (a)(3)(C)(i).
                ``(2) Responsibility of the student.--
                        ``(A) In general.--The student shall return
                    assistance that has not been earned by the student as
                    described in subsection (a)(3)(C)(ii) in the order
                    specified in paragraph (3) minus the amount the
                    institution is required to return under paragraph (1).
                        ``(B) Special rule.--The student (or parent in the
                    case of funds due to a loan borrowed by a parent under
                    part B or D) shall return or repay, as appropriate, the
                    amount determined under subparagraph (A) to--
                              ``(i) a loan program under this title in
                          accordance with the terms of the loan; and
                              ``(ii) a grant program under this title, as an
                          overpayment of such grant and shall be subject
                          to--
                                        ``(I) repayment arrangements
                                    satisfactory to the institution; or
                                        ``(II) overpayment collection
                                    procedures prescribed by the Secretary.
                        ``(C) Requirement.--Notwithstanding subparagraphs
                    (A) and (B), a student shall not be required to return
                    50 percent of the grant assistance received by the
                    student under this title, for a payment period or period
                    of enrollment, that is the responsibility of the student
                    to repay under this section.
                ``(3) Order of return of title iv funds.--
                        ``(A) In general.--Excess funds returned by the
                    institution or the student, as appropriate, in
                    accordance with paragraph (1) or (2), respectively,
                    shall be credited to outstanding balances on loans made
                    under this title to the student or on behalf of the
                    student for the payment period or period of enrollment
                    for which a return of funds is required. Such excess
                    funds shall be credited in the following order:
                              ``(i) To outstanding balances on loans made
                          under section 428H for the payment period or
                          period of enrollment for which a return of funds
                          is required.
                              ``(ii) To outstanding balances on loans made
                          under section 428 for the payment period or period
                          of enrollment for which a return of funds is
                          required.
                              ``(iii) To outstanding balances on
                          unsubsidized loans (other than parent loans) made
                          under part D for the payment period or period of
                          enrollment for which a return of funds is
                          required.

    [[Page 112 STAT. 1740]]

                              ``(iv) To outstanding balances on subsidized
                          loans made under part D for the payment period or
                          period of enrollment for which a return of funds
                          is required.
                              ``(v) To outstanding balances on loans made
                          under part E for the payment period or period of
                          enrollment for which a return of funds is
                          required.
                              ``(vi) To outstanding balances on loans made
                          under section 428B for the payment period or
                          period of enrollment for which a return of funds
                          is required.
                              ``(vii) To outstanding balances on parent
                          loans made under part D for the payment period or
                          period of enrollment for which a return of funds
                          is required.
                        ``(B) Remaining excesses.--If excess funds remain
                    after repaying all outstanding loan amounts, the
                    remaining excess shall be credited in the following
                    order:
                              ``(i) To awards under subpart 1 of part A for
                          the payment period or period of enrollment for
                          which a return of funds is required.
                              ``(ii) To awards under subpart 3 of part A for
                          the payment period or period of enrollment for
                          which a return of funds is required.
                              ``(iii) To other assistance awarded under this
                          title for which a return of funds is required.

        ``(c) Withdrawal Date.--
                ``(1) In general.--In this section, the term `day the
            student withdrew'--
                        ``(A) is the date that the institution determines--
                              ``(i) the student began the withdrawal process
                          prescribed by the institution;
                              ``(ii) the student otherwise provided official
                          notification to the institution of the intent to
                          withdraw; or
                              ``(iii) in the case of a student who does not
                          begin the withdrawal process or otherwise notify
                          the institution of the intent to withdraw, the
                          date that is the mid-point of the payment period
                          for which assistance under this title was
                          disbursed or a later date documented by the
                          institution; or
                        ``(B) for institutions required to take attendance,
                    is determined by the institution from such attendance
                    records.
                ``(2) Special rule.--Notwithstanding paragraph (1), if the
            institution determines that a student did not begin the
            withdrawal process, or otherwise notify the institution of the
            intent to withdraw, due to illness, accident, grievous personal
            loss, or other such circumstances beyond the student's control,
            the institution may determine the appropriate withdrawal date.

        ``(d) Percentage of the Payment Period or Period of Enrollment
    Completed.--For purposes of subsection (a)(3)(B)(i), the percentage of
    the payment period or period of enrollment for which assistance was
    awarded that was completed, is determined--
                ``(1) in the case of a program that is measured in credit
            hours, by dividing the total number of calendar days comprising
            the payment period or period of enrollment for which assistance
            is awarded into the number of calendar days completed in that
            period as of the day the student withdrew; and
                ``(2) in the case of a program that is measured in clock
            hours, by dividing the total number of clock hours comprising

    [[Page 112 STAT. 1741]]

            the payment period or period of enrollment for which assistance
            is awarded into the number of clock hours--
                        ``(A) completed by the student in that period as of
                    the day the student withdrew; or
                        ``(B) <<NOTE: Regulations.>>  scheduled to be
                    completed as of the day the student withdrew, if the
                    clock hours completed in the period are not less than a
                    percentage, to be determined by the Secretary in
                    regulations, of the hours that were scheduled to be
                    completed by the student in the period.

        ``(e) Effective Date.--The provisions of this section shall take
    effect 2 years after the date of enactment of the Higher Education
    Amendments of 1998. An institution of higher education may choose to
    implement such provisions prior to that date.''.

    SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR
                STUDENTS.

        (a) Information Dissemination Activities.--Section 485(a) (20 U.S.C.
    1092(a)) is amended--
                (1) in paragraph (1)--
                        (A) in the second sentence, by striking ``, through
                    appropriate publications and mailings, to all current
                    students, and to any prospective student upon request''
                    and inserting ``upon request, through appropriate
                    publications, mailings, and electronic media, to an
                    enrolled student and to any prospective student'';
                        (B) by inserting after the second sentence the
                    following: ``Each eligible institution shall, on an
                    annual basis, provide to all enrolled students a list of
                    the information that is required to be provided by
                    institutions to students by this section and section 444
                    of the General Education Provisions Act (also referred
                    to as the Family Educational Rights and Privacy Act of
                    1974), together with a statement of the procedures
                    required to obtain such information.'';
                        (C) by amending subparagraph (F) to read as follows:
                ``(F) a statement of--
                        ``(i) the requirements of any refund policy with
                    which the institution is required to comply;
                        ``(ii) the requirements under section 484B for the
                    return of grant or loan assistance provided under this
                    title; and
                        ``(iii) the requirements for officially withdrawing
                    from the institution;''; and
                        (D) by striking ``and'' at the end of subparagraph
                    (M);
                        (E) by striking the period at the end of
                    subparagraph (N) and inserting ``; and''; and
                        (F) by adding at the end the following:
                ``(O) the campus crime report prepared by the institution
            pursuant to subsection (f ), including all required reporting
            categories.'';
                (2) in paragraph (3), by amending subparagraph (A) to read
            as follows:
                ``(A) shall be made available by July 1 each year to
            enrolled students and prospective students prior to the students
            enrolling or entering into any financial obligation; and''; and
                (3) by adding at the end the following:

        ``(6) Each institution may provide supplemental information to
    enrolled and prospective students showing the completion or

    [[Page 112 STAT. 1742]]

    graduation rate for students described in paragraph (4) or for students
    transferring into the institution or information showing the rate at
    which students transfer out of the institution.''.
        (b) Exit Counseling for Borrowers.--Section 485(b) (20 U.S.C.
    1092(b)) is amended--
                (1) in paragraph (1)(A), by striking ``(individually or in
            groups)''; and
                (2) in paragraph (2), by adding at the end the following:

        ``(C) Nothing in this subsection shall be construed to prohibit an
    institution of higher education from utilizing electronic means to
    provide personalized exit counseling.''.
        (c) Departmental Publications.--Section 485(d) is amended--
                (1) by striking ``(1) assist'' and inserting ``(A) assist'';
                (2) by striking ``(2) assist'' and inserting ``(B) assist'';
                (3) by inserting ``(1)'' before ``The Secretary'' the first
            place the term appears; and
                (4) by adding at the end the following:

        ``(2) <<NOTE: Records.>>  The Secretary, to the extent the
    information is available, shall compile information describing State and
    other prepaid tuition programs and savings programs and disseminate such
    information to States, eligible institutions, students, and parents in
    departmental publications.

        ``(3) <<NOTE: Internet.>> The Secretary, to the extent practicable,
    shall update the Department's Internet site to include direct links to
    databases that contain information on public and private financial
    assistance programs. The Secretary shall only provide direct links to
    databases that can be accessed without charge and shall make reasonable
    efforts to verify that the databases included in a direct link are not
    providing fraudulent information. The Secretary shall prominently
    display adjacent to any such direct link a disclaimer indicating that a
    direct link to a database does not constitute an endorsement or
    recommendation of the database, the provider of the database, or any
    services or products of such provider. The Secretary shall provide
    additional direct links to information resources from which students may
    obtain information about fraudulent and deceptive practices in the
    provision of services related to student financial aid.''.

        (d) Disclosures.--Section 485(e) is amended--
                (1) in paragraph (2)--
                        (A) by striking ``his parents, his guidance'' and
                    inserting ``the student's parents, guidance''; and
                        (B) by adding at the end the following: ``If the
                    institution is a member of a national collegiate
                    athletic association that compiles graduation rate data
                    on behalf of the association's member institutions that
                    the Secretary determines is substantially comparable to
                    the information described in paragraph (1), the
                    distribution of the compilation of such data to all
                    secondary schools in the United States shall fulfill the
                    responsibility of the institution to provide information
                    to a prospective student athlete's guidance counselor
                    and coach.''; and
                (2) by amending paragraph (9) to read as follows:

        ``(9) <<NOTE: Reports. Deadline.>> The reports required by this
    subsection shall be due each July 1 and shall cover the 1-year period
    ending August 31 of the preceding year.''.

        (e) Disclosure of Campus Security Policy and Campus Crime
    Statistics.--Section 485(f ) (20 U.S.C. 1092(f )) is amended--

    [[Page 112 STAT. 1743]]

                (1) in paragraph (1)--
                        (A) by amending subparagraph (F) to read as follows:
                ``(F) Statistics concerning the occurrence on campus, in or
            on noncampus buildings or property, and on public property
            during the most recent calendar year, and during the 2 preceding
            calendar years for which data are available--
                        ``(i) of the following criminal offenses reported to
                    campus security authorities or local police agencies:
                              ``(I) murder;
                              ``(II) sex offenses, forcible or nonforcible;
                              ``(III) robbery;
                              ``(IV) aggravated assault;
                              ``(V) burglary;
                              ``(VI) motor vehicle theft;
                              ``(VII) manslaughter;
                              ``(VIII) arson; and
                              ``(IX) arrests or persons referred for campus
                          disciplinary action for liquor law violations,
                          drug-related violations, and weapons possession;
                          and
                        ``(ii) of the crimes described in subclauses (I)
                    through (VIII) of clause (i), and other crimes involving
                    bodily injury to any person in which the victim is
                    intentionally selected because of the actual or
                    perceived race, gender, religion, sexual orientation,
                    ethnicity, or disability of the victim that are reported
                    to campus security authorities or local police agencies,
                    which data shall be collected and reported according to
                    category of prejudice.'';
                        (B) by striking subparagraph (H); and
                        (C) by redesignating subparagraph (I) as
                    subparagraph (H);
                (2) in paragraph (4)--
                        (A) by striking ``Upon request of the Secretary,
                    each'' and inserting ``On an annual basis, each'';
                        (B) by striking ``paragraphs (1)(F) and (1)(H)'' and
                    inserting ``paragraph (1)(F)'';
                        (C) by striking ``and Labor'' and inserting ``and
                    the Workforce'';
                        (D) by striking ``1995'' and inserting ``2000'';
                        (E) by striking ``and'' at the end of subparagraph
                    (A);
                        (F) by redesignating subparagraph (B) as
                    subparagraph (C); and
                        (G) by inserting after subparagraph (A) the
                    following:
                ``(B) <<NOTE: Public information.>> make copies of the
            statistics submitted to the Secretary available to the public;
            and'';
                (3) by amending paragraph (5)(A) to read as follows:

        ``(5)(A) In this subsection:
                ``(i) The term `campus' means--
                        ``(I) any building or property owned or controlled
                    by an institution of higher education within the same
                    reasonably contiguous geographic area of the institution
                    and used by the institution in direct support of, or in
                    a manner related to, the institution's educational
                    purposes, including residence halls; and
                        ``(II) property within the same reasonably
                    contiguous geographic area of the institution that is
                    owned by the institution but controlled by another
                    person, is used by

    [[Page 112 STAT. 1744]]

                    students, and supports institutional purposes (such as a
                    food or other retail vendor).
                ``(ii) The term `noncampus building or property' means--
                        ``(I) any building or property owned or controlled
                    by a student organization recognized by the institution;
                    and
                        ``(II) any building or property (other than a branch
                    campus) owned or controlled by an institution of higher
                    education that is used in direct support of, or in
                    relation to, the institution's educational purposes, is
                    used by students, and is not within the same reasonably
                    contiguous geographic area of the institution.
                ``(iii) The term `public property' means all public property
            that is within the same reasonably contiguous geographic area of
            the institution, such as a sidewalk, a street, other
            thoroughfare, or parking facility, and is adjacent to a facility
            owned or controlled by the institution if the facility is used
            by the institution in direct support of, or in a manner related
            to the institution's educational purposes.'';
                (4) in paragraph (6)--
                        (A) by striking ``paragraphs (1)(F) and (1)(H)'' and
                    inserting ``paragraph (1)(F)''; and
                        (B) by adding at the end the following: ``Such
                    statistics shall not identify victims of crimes or
                    persons accused of crimes.'';
                (5) by redesignating paragraphs (4) through (7) as
            paragraphs (5) through (8), respectively;
                (6) by inserting after paragraph (3) the following:

        ``(4)(A) <<NOTE: Records.>> Each institution participating in any
    program under this title that maintains a police or security department
    of any kind shall make, keep, and maintain a daily log, written in a
    form that can be easily understood, recording all crimes reported to
    such police or security department, including--
                ``(i) the nature, date, time, and general location of each
            crime; and
                ``(ii) the disposition of the complaint, if known.

        ``(B)(i) <<NOTE: Public information.>> All entries that are required
    pursuant to this paragraph shall, except where disclosure of such
    information is prohibited by law or such disclosure would jeopardize the
    confidentiality of the victim, be open to public inspection within two
    business days of the initial report being made to the department or a
    campus security authority.

        ``(ii) <<NOTE: Deadline.>> If new information about an entry into a
    log becomes available to a police or security department, then the new
    information shall be recorded in the log not later than two business
    days after the information becomes available to the police or security
    department.

        ``(iii) If there is clear and convincing evidence that the release
    of such information would jeopardize an ongoing criminal investigation
    or the safety of an individual, cause a suspect to flee or evade
    detection, or result in the destruction of evidence, such information
    may be withheld until that damage is no longer likely to occur from the
    release of such information.''; and
                (7) by adding at the end the following:

        ``(9) The Secretary shall provide technical assistance in complying
    with the provisions of this section to an institution of higher
    education who requests such assistance.

    [[Page 112 STAT. 1745]]

        ``(10) Nothing in this section shall be construed to require the
    reporting or disclosure of privileged information.
        ``(11) <<NOTE: Reports.>> The Secretary shall report to the
    appropriate committees of Congress each institution of higher education
    that the Secretary determines is not in compliance with the reporting
    requirements of this subsection.

        ``(12) For purposes of reporting the statistics with respect to
    crimes described in paragraph (1)(F), an institution of higher education
    shall distinguish, by means of separate categories, any criminal
    offenses that occur--
                ``(A) on campus;
                ``(B) in or on a noncampus building or property;
                ``(C) on public property; and
                ``(D) in dormitories or other residential facilities for
            students on campus.

        ``(13) Upon a determination pursuant to section 487(c)(3)(B) that an
    institution of higher education has substantially misrepresented the
    number, location, or nature of the crimes required to be reported under
    this subsection, the Secretary shall impose a civil penalty upon the
    institution in the same amount and pursuant to the same procedures as a
    civil penalty is imposed under section 487(c)(3)(B).
        ``(14)(A) Nothing in this subsection may be construed to--
                ``(i) create a cause of action against any institution of
            higher education or any employee of such an institution for any
            civil liability; or
                ``(ii) establish any standard of care.

        ``(B) Notwithstanding any other provision of law, evidence regarding
    compliance or noncompliance with this subsection shall not be admissible
    as evidence in any proceeding of any court, agency, board, or other
    entity, except with respect to an action to enforce this subsection.
        ``(15) <<NOTE: Short title.>> This subsection may be cited as the
    `Jeanne Clery Disclosure of Campus Security Policy and Campus Crime
    Statistics Act'.''.

        (f ) Data Required.--Section 485(g) is amended-- <<NOTE: 20 USC
    1092.>>
                (1) in paragraph (1), by adding at the end the following:
                        ``(I)(i) The total revenues, and the revenues from
                    football, men's basketball, women's basketball, all
                    other men's sports combined and all other women's sports
                    combined, derived by the institution from the
                    institution's intercollegiate athletics activities.
                        ``(ii) For the purpose of clause (i), revenues from
                    intercollegiate athletics activities allocable to a
                    sport shall include (without limitation) gate receipts,
                    broadcast revenues, appearance guarantees and options,
                    concessions, and advertising, but revenues such as
                    student activities fees or alumni contributions not so
                    allocable shall be included in the calculation of total
                    revenues only.
                        ``(J)(i) The total expenses, and the expenses
                    attributable to football, men's basketball, women's
                    basketball, all other men's sports combined, and all
                    other women's sports combined, made by the institution
                    for the institution's intercollegiate athletics
                    activities.
                        ``(ii) For the purpose of clause (i), expenses for
                    intercollegiate athletics activities allocable to a
                    sport shall include (without limitation) grants-in-aid,
                    salaries, travel, equipment, and supplies, but expenses
                    such as general

    [[Page 112 STAT. 1746]]

                    and administrative overhead not so allocable shall be
                    included in the calculation of total expenses only.'';
                    and
                (2) by striking paragraph (5);
                (3) by redesignating paragraph (4) as paragraph (5); and
                (4) by inserting after paragraph (3) the following:
                ``(4) <<NOTE: Deadlines.>> Submission; report; information
            availability.--(A) On an annual basis, each institution of
            higher education described in paragraph (1) shall provide to the
            Secretary, within 15 days of the date that the institution makes
            available the report under paragraph (1), the information
            contained in the report.
                ``(B) The Secretary shall prepare a report regarding the
            information received under subparagraph (A) and submit such
            report to the Committee on Education and the Workforce of the
            House of Representatives and the Committee on Labor and Human
            Resources of the Senate by April 1, 2000. The report shall--
                        ``(i) summarize the information and identify trends
                    in the information;
                        ``(ii) aggregate the information by divisions of the
                    National Collegiate Athletic Association; and
                        ``(iii) contain information on each individual
                    institution of higher education.
                ``(C) <<NOTE: Public information.>> The Secretary shall
            ensure that the reports described in subparagraph (A) and the
            report to Congress described in subparagraph (B) are made
            available to the public within a reasonable period of time.
                ``(D) <<NOTE: Deadline. Notification.>> Not later than 180
            days after the date of enactment of the Higher Education
            Amendments of 1998, the Secretary shall notify all secondary
            schools in all States regarding the availability of the
            information reported under subparagraph (B) and the information
            made available under paragraph (1), and how such information may
            be accessed.''.

    SEC. 487. NATIONAL STUDENT LOAN DATA SYSTEM.

        Section 485B(a) (20 U.S.C. 1092b(a)) is amended by inserting before
    the period at the end of the third sentence the following: ``not later
    than one year after the date of enactment of the Higher Education
    Amendments of 1998''.

    SEC. 488. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

        Section 486 (20 U.S.C. 1083) <<NOTE: 20 USC 1093.>> is amended to
    read as follows:

    ``SEC. 486. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

        ``(a) Purpose.--It is the purpose of this section--
                ``(1) to allow demonstration programs that are strictly
            monitored by the Department of Education to test the quality and
            viability of expanded distance education programs currently
            restricted under this Act;
                ``(2) to provide for increased student access to higher
            education through distance education programs; and
                ``(3) to help determine--
                        ``(A) the most effective means of delivering quality
                    education via distance education course offerings;
                        ``(B) the specific statutory and regulatory
                    requirements which should be altered to provide greater
                    access to high quality distance education programs; and

    [[Page 112 STAT. 1747]]

                        ``(C) the appropriate level of Federal assistance
                    for students enrolled in distance education programs.

        ``(b) Demonstration Programs Authorized.--
                ``(1) In general.--In accordance with the provisions of
            subsection (d), the Secretary is authorized to select
            institutions of higher education, systems of such institutions,
            or consortia of such institutions for voluntary participation in
            a Distance Education Demonstration Program that provides
            participating institutions with the ability to offer distance
            education programs that do not meet all or a portion of the
            sections or regulations described in paragraph (2).
                ``(2) Waivers.--The Secretary is authorized to waive for any
            institution of higher education, system of institutions of
            higher education, or consortium participating in a Distance
            Education Demonstration Program, the requirements of section
            472(5) as the section relates to computer costs, sections 481(a)
            and 481(b) as such sections relate to requirements for a minimum
            number of weeks of instruction, sections 102(a)(3)(A),
            102(a)(3)(B), and 484(l)(1), or one or more of the regulations
            prescribed under this part or part F which inhibit the operation
            of quality distance education programs.
                ``(3) Eligible applicants.--
                        ``(A) Eligible institutions.--Except as provided in
                    subparagraphs (B), (C), and (D), only an institution of
                    higher education that is eligible to participate in
                    programs under this title shall be eligible to
                    participate in the demonstration program authorized
                    under this section.
                        ``(B) Prohibition.--An institution of higher
                    education described in section 102(a)(1)(C) shall not be
                    eligible to participate in the demonstration program
                    authorized under this section.
                        ``(C) Special rule.--Subject to subparagraph (B), an
                    institution of higher education that meets the
                    requirements of subsection (a) of section 102, other
                    than the requirement of paragraph (3)(A) or (3)(B) of
                    such subsection, and that provides a 2-year or 4-year
                    program of instruction for which the institution awards
                    an associate or baccalaureate degree, shall be eligible
                    to participate in the demonstration program authorized
                    under this section.
                        ``(D) Requirement.--Notwithstanding any other
                    provision of this paragraph, Western Governors
                    University shall be considered eligible to participate
                    in the demonstration program authorized under this
                    section. In addition to the waivers described in
                    paragraph (2), the Secretary may waive the provisions of
                    title I and parts G and H of this title for such
                    university that the Secretary determines to be
                    appropriate because of the unique characteristics of
                    such university. In carrying out the preceding sentence,
                    the Secretary shall ensure that adequate program
                    integrity and accountability measures apply to such
                    university's participation in the demonstration program
                    authorized under this section.

        ``(c) Application.--
                ``(1) In general.--Each institution, system, or consortium
            of institutions desiring to participate in a demonstration
            program under this section shall submit an application to the

    [[Page 112 STAT. 1748]]

            Secretary at such time and in such manner as the Secretary may
            require.
                ``(2) Contents.--Each application shall include--
                        ``(A) a description of the institution, system, or
                    consortium's consultation with a recognized accrediting
                    agency or association with respect to quality assurances
                    for the distance education programs to be offered;
                        ``(B) a description of the statutory and regulatory
                    requirements described in subsection (b)(2) or, if
                    applicable, subsection (b)(3)(D) for which a waiver is
                    sought and the reasons for which the waiver is sought;
                        ``(C) a description of the distance education
                    programs to be offered;
                        ``(D) a description of the students to whom distance
                    education programs will be offered;
                        ``(E) an assurance that the institution, system, or
                    consortium will offer full cooperation with the ongoing
                    evaluations of the demonstration program provided for in
                    this section; and
                        ``(F) such other information as the Secretary may
                    require.

        ``(d) Selection.--
                ``(1) In general.--For the first year of the demonstration
            program authorized under this section, the Secretary is
            authorized to select for participation in the program not more
            than 15 institutions, systems of institutions, or consortia of
            institutions. For the third year of the demonstration program
            authorized under this section, the Secretary may select not more
            than 35 institutions, systems, or consortia, in addition to the
            institutions, systems, or consortia selected pursuant to the
            preceding sentence, to participate in the demonstration program
            if the Secretary determines that such expansion is warranted
            based on the evaluations conducted in accordance with
            subsections (f ) and (g).
                ``(2) Considerations.--In selecting institutions to
            participate in the demonstration program in the first or
            succeeding years of the program, the Secretary shall take into
            account--
                        ``(A) the number and quality of applications
                    received;
                        ``(B) the Department's capacity to oversee and
                    monitor each institution's participation;
                        ``(C) an institution's--
                              ``(i) financial responsibility;
                              ``(ii) administrative capability; and
                              ``(iii) program or programs being offered via
                          distance education; and
                        ``(D) ensuring the participation of a diverse group
                    of institutions with respect to size, mission, and
                    geographic distribution.

        ``(e) Notification.--The Secretary shall make available to the
    public and to the Committee on Labor and Human Resources of the Senate
    and the Committee on Education and the Workforce of the House of
    Representatives a list of institutions, systems or consortia selected to
    participate in the demonstration program authorized by this section.
    Such notice shall include a listing of the specific statutory and
    regulatory requirements being waived for each institution, system or
    consortium and a description of the distance education courses to be
    offered.

    [[Page 112 STAT. 1749]]

        ``(f ) Evaluations and Reports.--
                ``(1) Evaluation.--The Secretary shall evaluate the
            demonstration programs authorized under this section on an
            annual basis. Such evaluations specifically shall review--
                        ``(A) the extent to which the institution, system or
                    consortium has met the goals set forth in its
                    application to the Secretary, including the measures of
                    program quality assurance;
                        ``(B) the number and types of students participating
                    in the programs offered, including the progress of
                    participating students toward recognized certificates or
                    degrees and the extent to which participation in such
                    programs increased;
                        ``(C) issues related to student financial assistance
                    for distance education;
                        ``(D) effective technologies for delivering distance
                    education course offerings; and
                        ``(E) the extent to which statutory or regulatory
                    requirements not waived under the demonstration program
                    present difficulties for students or institutions.
                ``(2) Policy analysis.--The Secretary shall review current
            policies and identify those policies that present impediments to
            the development and use of distance education and other
            nontraditional methods of expanding access to education.
                ``(3) Reports.--
                        ``(A) <<NOTE: Deadline.>> In general.--Within 18
                    months of the initiation of the demonstration program,
                    the Secretary shall report to the Committee on Labor and
                    Human Resources of the Senate and the Committee on
                    Education and the Workforce of the House of
                    Representatives with respect to--
                              ``(i) the evaluations of the demonstration
                          programs authorized under this section; and
                              ``(ii) any proposed statutory changes designed
                          to enhance the use of distance education.
                        ``(B) Additional reports.--The Secretary shall
                    provide additional reports to the Committee on Labor and
                    Human Resources of the Senate and the Committee on
                    Education and the Workforce of the House of
                    Representatives on an annual basis regarding--
                              ``(i) the demonstration programs authorized
                          under this section; and
                              ``(ii) the number and types of students
                          receiving assistance under this title for
                          instruction leading to a recognized certificate,
                          as provided for in section 484(l)(1), including
                          the progress of such students toward recognized
                          certificates and the degree to which participation
                          in such programs leading to such certificates
                          increased.

        ``(g) Oversight.--In conducting the demonstration program authorized
    under this section, the Secretary shall, on a continuing basis--
                ``(1) assure compliance of institutions, systems or
            consortia with the requirements of this title (other than the
            sections and regulations that are waived under subsections
            (b)(2) and (b)(3)(D));
                ``(2) provide technical assistance;

    [[Page 112 STAT. 1750]]

                ``(3) monitor fluctuations in the student population
            enrolled in the participating institutions, systems or
            consortia; and
                ``(4) consult with appropriate accrediting agencies or
            associations and appropriate State regulatory authorities.

        ``(h) Definition.--For the purpose of this section, the term
    `distance education' means an educational process that is characterized
    by the separation, in time or place, between instructor and student.
    Such term may include courses offered principally through the use of--
                ``(1) television, audio, or computer transmission, such as
            open broadcast, closed circuit, cable, microwave, or satellite
            transmission;
                ``(2) audio or computer conferencing;
                ``(3) video cassettes or discs; or
                ``(4) correspondence.''.

    SEC. 489. PROGRAM PARTICIPATION AGREEMENTS.

        (a) Required Content.--Section 487(a) (20 U.S.C. 1094(a)) is
    amended--
                (1) in paragraph (3)--
                        (A) by striking subparagraph (B); and
                        (B) by redesignating subparagraphs (C) and (D) as
                    subparagraphs (B) and (C), respectively;
                (2) in paragraph (4), by striking ``subsection (b)'' and
            inserting ``subsection (c)'';
                (3) in paragraph (9), by striking ``part B'' and inserting
            ``part B or D'';
                (4) in paragraph (14)--
                        (A) in subparagraph (A), by striking ``part B'' and
                    inserting ``part B or D''; and
                        (B) in subparagraph (B), by striking ``part B'' and
                    inserting ``part B or D''; and
                        (C) by adding at the end the following:
                ``(C) This paragraph shall not apply in the case of an
            institution in which (i) neither the parent nor the subordinate
            institution has a cohort default rate in excess of 10 percent,
            and (ii) the new owner of such parent or subordinate institution
            does not, and has not, owned any other institution with a cohort
            default rate in excess of 10 percent.'';
                (5) in paragraph (15), by striking ``State review entities''
            and inserting ``the State agencies'';
                (6) by amending paragraph (18) to read as follows:
                ``(18) The institution will meet the requirements
            established pursuant to section 485(g).''; and
                (7) by amending paragraph (21) to read as follows:
                ``(21) The institution will meet the requirements
            established by the Secretary and accrediting agencies or
            associations, and will provide evidence to the Secretary that
            the institution has the authority to operate within a State.''.

        (b) Provision of Voter Registration Forms.--
                (1) Program participation requirement.--Section 487(a) (20
            U.S.C. 1094(a)) is amended by adding at the end the
            following:
                ``(23)(A) The institution, if located in a State to which
            section 4(b) of the National Voter Registration Act (42 U.S.C.
            1973gg-2(b)) does not apply, will make a good faith effort to
            distribute a mail voter registration form, requested and

    [[Page 112 STAT. 1751]]

            received from the State, to each student enrolled in a degree or
            certificate program and physically in attendance at the
            institution, and to make such forms widely available to students
            at the institution.
                ``(B) The institution shall request the forms from the State
            120 days prior to the deadline for registering to vote within
            the State. If an institution has not received a sufficient
            quantity of forms to fulfill this section from the State within
            60 days prior to the deadline for registering to vote in the
            State, the institution shall not be held liable for not meeting
            the requirements of this section during that election year.
                ``(C) <<NOTE: Applicability.>> This paragraph shall apply to
            elections as defined in section 301(1) of the Federal Election
            Campaign Act of 1971 (2 U.S.C. 431(1)), and includes the
            election for Governor or other chief executive within such
            State).''.
                (2) <<NOTE: 20 USC 1094 note.>> Regulation prohibited.--No
            officer of the executive branch is authorized to instruct the
            institution in the manner in which the amendment made by this
            subsection is carried out.

        (c) Audits; Financial Responsibility.--Section 487(c) <<NOTE: 20 USC
    1094.>> is amended--
                (1) in paragraph (1)(A)--
                        (A) in clause (i)--
                              (i) by striking ``clause (ii)'' and inserting
                          ``clauses (ii) and (iii)'';
                              (ii) by striking ``State review entities
                          referred to in'' and inserting ``appropriate State
                          agency notifying the Secretary under''; and
                              (iii) by striking ``or'' after the semicolon;
                        (B) in clause (ii), by inserting ``or'' after the
                    semicolon; and
                        (C) by adding at the end the following:
                ``(iii) at the discretion of the Secretary, with regard to
            an eligible institution (other than an eligible institution
            described in section 102(a)(1)(C)) that has obtained less than
            $200,000 in funds under this title during each of the 2 award
            years that precede the audit period and submits a letter of
            credit payable to the Secretary equal to not less than \1/2\ of
            the annual potential liabilities of such institution as
            determined by the Secretary, deeming an audit conducted every 3
            years to satisfy the requirements of clause (i), except for the
            award year immediately preceding renewal of the institution's
            eligibility under section 498(g);'';
                (2) in paragraph (4), by striking ``, after consultation
            with each State review entity designated under subpart 1 of part
            H,''; and
                (3) in paragraph (5), by striking ``State review entities
            designated'' and inserting ``State agencies notifying the
            Secretary''.

    SEC. 490. REGULATORY RELIEF AND IMPROVEMENT.

        Section 487A (20 U.S.C. 1094a) is amended to read as follows:

    ``SEC. 487A. REGULATORY RELIEF AND IMPROVEMENT.

        ``(a) Quality Assurance Program.--
                ``(1) In general.--The Secretary is authorized to select
            institutions for voluntary participation in a Quality Assurance

    [[Page 112 STAT. 1752]]

            Program that provides participating institutions with an
            alternative management approach through which individual schools
            develop and implement their own comprehensive systems, related
            to processing and disbursement of student financial aid,
            verification of student financial aid application data, and
            entrance and exit interviews, thereby enhancing program
            integrity within the student aid delivery system.
                ``(2) Criteria and consideration.--The Quality Assurance
            Program authorized by this section shall be based on criteria
            that include demonstrated institutional performance, as
            determined by the Secretary, and shall take into consideration
            current quality assurance goals, as determined by the Secretary.
            The selection criteria shall ensure the participation of a
            diverse group of institutions of higher education with respect
            to size, mission, and geographical distribution.
                ``(3) Waiver.--The Secretary is authorized to waive for any
            institution participating in the Quality Assurance Program any
            regulations dealing with reporting or verification requirements
            in this title that are addressed by the institution's
            alternative management system, and may substitute such quality
            assurance reporting as the Secretary determines necessary to
            ensure accountability and compliance with the purposes of the
            programs under this title. The Secretary shall not modify or
            waive any statutory requirements pursuant to this paragraph.
                ``(4) Determination.--The Secretary is authorized to
            determine--
                        ``(A) when an institution that is unable to
                    administer the Quality Assurance Program shall be
                    removed from such program; and
                        ``(B) when institutions desiring to cease
                    participation in such program will be required to
                    complete the current award year under the requirements
                    of the Quality Assurance Program.
                ``(5) Review and evaluation.--The Secretary shall review and
            evaluate the Quality Assurance Program conducted by each
            participating institution and, on the basis of that evaluation,
            make recommendations regarding amendments to this Act that will
            streamline the administration and enhance the integrity of
            Federal student assistance programs. Such recommendations shall
            be submitted to the Committee on Labor and Human Resources of
            the Senate and the Committee on Education and the Workforce of
            the House of Representatives.

        ``(b) Regulatory Improvement and Streamlining Experiments.--
                ``(1) In general.--The Secretary may continue any
            experimental sites in existence on the date of enactment of the
            Higher Education Amendments of 1998. <<NOTE: Termination
            date.>> Any activities approved by the Secretary prior to such
            date that are inconsistent with this section shall be
            discontinued not later than June 30, 1999.
                ``(2) <<NOTE: Deadline.>> Report.--The Secretary shall
            review and evaluate the experience of institutions participating
            as experimental sites during the period of 1993 through 1998
            under this section (as such section was in effect on the day
            before the date of enactment of the Higher Education Amendments
            of 1998), and shall submit a report based on this review and
            evaluation to the Committee on Labor and Human Resources of the
            Senate and the Committee on Education and the Workforce of the

    [[Page 112 STAT. 1753]]

            House of Representatives not later than 6 months after the
            enactment of the Higher Education Amendments of 1998. Such
            report shall include--
                        ``(A) a list of participating institutions and the
                    specific statutory or regulatory waivers granted to each
                    institution;
                        ``(B) the findings and conclusions reached regarding
                    each of the experiments conducted; and
                        ``(C) recommendations for amendments to improve and
                    streamline this Act, based on the results of the
                    experiment.
                ``(3) Selection.--
                        ``(A) In general.--Upon the submission of the report
                    required by paragraph (2), the Secretary is authorized
                    to select a limited number of additional institutions
                    for voluntary participation as experimental sites to
                    provide recommendations to the Secretary on the impact
                    and effectiveness of proposed regulations or new
                    management initiatives.
                        ``(B) Consultation.--Prior to approving any
                    additional experimental sites, the Secretary shall
                    consult with the Committee on Labor and Human Resources
                    of the Senate and the Committee on Education and the
                    Workforce of the House of Representatives and shall
                    provide to such Committees--
                              ``(i) <<NOTE: Records.>> a list of
                          institutions proposed for participation in the
                          experiment and the specific statutory or
                          regulatory waivers proposed to be granted to each
                          institution;
                              ``(ii) a statement of the objectives to be
                          achieved through the experiment; and
                              ``(iii) an identification of the period of
                          time over which the experiment is to be conducted.
                        ``(C) Waivers.--The Secretary is authorized to
                    waive, for any institution participating as an
                    experimental site under subparagraph (A), any
                    requirements in this title, or regulations prescribed
                    under this title, that will bias the results of the
                    experiment, except that the Secretary shall not waive
                    any provisions with respect to award rules, grant and
                    loan maximum award amounts, and need analysis
                    requirements.

        ``(c) Definitions.--For purposes of this section, the term `current
    award year' means the award year during which the participating
    institution indicates the institution's intention to cease
    participation.''.

    SEC. 490A. GARNISHMENT REQUIREMENTS.

        Section 488A (20 U.S.C. 1095a) is amended--
                (1) by redesignating subsection (d) as subsection (e); and
                (2) by inserting after subsection (c) the following:

        ``(d) No Attachment of Student Assistance.--Except as authorized in
    this section, notwithstanding any other provision of Federal or State
    law, no grant, loan, or work assistance awarded under this title, or
    property traceable to such assistance, shall be subject to garnishment
    or attachment in order to satisfy any debt owed by the student awarded
    such assistance, other than a debt owed to the Secretary and arising
    under this title.''.

    [[Page 112 STAT. 1754]]

    SEC. 490B. ADMINISTRATIVE SUBPOENA AUTHORITY.

        Part G of title IV is further amended by inserting immediately after
    section 490 (20 U.S.C. 1097) the following:

    ``SEC. 490A. ADMINISTRATIVE SUBPOENAS. <<NOTE: 20 USC 1097a.>>

        ``(a) Authority.--To assist the Secretary in the conduct of
    investigations of possible violations of the provisions of this title,
    the Secretary is authorized to require by subpoena the production of
    information, documents, reports, answers, records, accounts, papers, and
    other documentary evidence pertaining to participation in any program
    under this title. The production of any such records may be required
    from any place in a State.
        ``(b) Enforcement.--In case of contumacy by, or refusal to obey a
    subpoena issued to, any person, the Secretary may request the Attorney
    General to invoke the aid of any court of the United States where such
    person resides or transacts business for a court order for the
    enforcement of this section.''.

    SEC. 490C. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

        Section 491 (20 U.S.C. 1098) is amended--
                (1) in subsection (b)--
                        (A) in the second sentence, by striking ``and
                    expenditures'' and inserting ``, expenditures and
                    staffing levels''; and
                        (B) by inserting after the third sentence the
                    following: ``Reports, publications, and other documents
                    of the Advisory Committee, including such reports,
                    publications, and documents in electronic form, shall
                    not be subject to review by the Secretary.'';
                (2) in subsection (e)--
                        (A) by redesignating paragraphs (3), (4), and (5),
                    as paragraphs (4), (5), and (6), respectively; and
                        (B) by inserting after paragraph (2) the following:

        ``(3) No officers or full-time employees of the Federal Government
    shall serve as members of the Advisory Committee.'';
                (3) in subsection (g), by striking ``(1) Members'' and all
            that follows through ``of the United States may each'' and
            inserting ``Members of the Advisory Committee may each'';
                (4) in subsection (h)(1)--
                        (A) by inserting ``determined'' after ``as may be'';
                    and
                        (B) by adding at the end the following: ``The
                    Advisory Committee may appoint not more than 1 full-time
                    equivalent, nonpermanent, consultant without regard to
                    the provisions of title 5, United States Code. The
                    Advisory Committee shall not be required by the
                    Secretary to reduce personnel to meet agency personnel
                    reduction goals.'';
                (5) in subsection (i), by striking ``$750,000'' and
            inserting ``$800,000'';
                (6) by amending subsection ( j) to read as follows:

        ``( j) Special Analyses and Activities.--The Advisory
    Committee shall--
                ``(1) <<NOTE: Reports.>> monitor and evaluate the
            modernization of student financial aid systems and delivery
            processes, including the implementation of a performance-based
            organization within the

    [[Page 112 STAT. 1755]]

            Department, and report to Congress regarding such modernization
            on not less than an annual basis, including recommendations for
            improvement;
                ``(2) assess the adequacy of current methods for
            disseminating information about programs under this title and
            recommend improvements, as appropriate, regarding early needs
            assessment and information for first-year secondary school
            students;
                ``(3) assess and make recommendations concerning the
            feasibility and degree of use of appropriate technology in the
            application for, and delivery and management of, financial
            assistance under this title, as well as policies that promote
            use of such technology to reduce cost and enhance service and
            program integrity, including electronic application and
            reapplication, just-in-time delivery of funds, reporting of
            disbursements and reconciliation;
                ``(4) assess the implications of distance education on
            student eligibility and other requirements for financial
            assistance under this title, and make recommendations that will
            enhance access to postsecondary education through distance
            education while maintaining access, through on-campus
            instruction at eligible institutions, and program integrity; and
                ``(5) make recommendations to the Secretary regarding
            redundant or outdated provisions of and regulations under this
            Act, consistent with the Secretary's requirements under section
            498B.'';
                (7) in subsection (k), by striking ``1998'' and inserting
            ``2004''; and
                (8) by repealing subsection (l).

    SEC. 490D. MEETINGS AND NEGOTIATED RULEMAKING.

        (a) Meetings.--Section 492(a) (20 U.S.C. 1098a) is amended--
                (1) in paragraph (1)--
                        (A) by striking ``convene regional meetings to'';
                        (B) by striking ``parts B, G, and H of this title,''
                    and inserting ``this title;''; and
                        (C) by striking ``Such meetings shall include'' and
                    inserting ``The Secretary shall obtain the advice of and
                    recommendations from''; and
                (2) in paragraph (2)--
                        (A) by striking ``During such meetings the'' and
                    inserting ``The'';
                        (B) by striking ``parts B, G, and H'' and inserting
                    ``this title'';
                        (C) by striking ``1992'' and inserting ``1998
                    through such mechanisms as regional meetings and
                    electronic exchanges of information''; and
                        (D) by striking ``at such meetings'' and inserting
                    ``through such mechanisms''.

        (b) Draft Regulations.--Section 492(b) is amended--
                (1) by striking ``After'' and inserting the following:
                ``(1) In general.--After'';
                (2) in paragraph (1) (as redesignated by paragraph (1))--
                        (A) by striking ``holding regional meetings'' and
                    inserting ``obtaining the advice and recommendations
                    described in subsection (a)(1)'';
                        (B) by striking ``parts B, G, and H of this title''
                    and inserting ``this title'';

    [[Page 112 STAT. 1756]]

                        (C) by striking ``1992'' and inserting ``1998'';
                        (D) by striking ``The Secretary shall follow the
                    guidance provided in sections 305.82-4 and 305.85-5 of
                    chapter 1, Code of Federal Regulations, and any
                    successor recommendation, regulation, or law.'';
                        (E) by striking ``participating in the regional
                    meetings'';
                        (F) by striking ``240-day'' and inserting ``360-
                    day''; and
                        (G) by striking ``section 431(g)'' and inserting
                    ``section 437(e)''; and
                (3) by adding at the end the following:
                ``(2) <<NOTE: Federal Register, publication.>> Expansion of
            negotiated rulemaking.--All regulations pertaining to this title
            that are promulgated after the date of enactment of this
            paragraph shall be subject to a negotiated rulemaking (including
            the selection of the issues to be negotiated), unless the
            Secretary determines that applying such a requirement with
            respect to given regulations is impracticable, unnecessary, or
            contrary to the public interest (within the meaning of section
            553(b)(3)(B) of title 5, United States Code), and publishes the
            basis for such determination in the Federal Register at the same
            time as the proposed regulations in question are first
            published. All published proposed regulations shall conform to
            agreements resulting from such negotiated rulemaking unless the
            Secretary reopens the negotiated rulemaking process or provides
            a written explanation to the participants in that process why
            the Secretary has decided to depart from such agreements. Such
            negotiated rulemaking shall be conducted in accordance with the
            provisions of paragraph (1), and the Secretary shall ensure that
            a clear and reliable record of agreements reached during the
            negotiations process is maintained.''.

    SEC. 490E. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT OF
                EDUCATION.

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

    ``SEC. 493A. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT. <<NOTE: 20 USC
                1098c.>>

        ``(a) Preparations for Year 2000.--In order to ensure that the
    processing, delivery, and administration of grant, loan, and work
    assistance provided under this title is not interrupted due to
    operational problems related to the inability of computer systems to
    indicate accurately dates after December 31, 1999, the Secretary of
    Education shall--
                ``(1) take such actions as are necessary to ensure that all
            internal and external systems, hardware, and data exchange
            infrastructure administered by the Department that are necessary
            for the processing, delivery, and administration of the grant,
            loan, and work assistance are Year 2000 compliant by March 31,
            1999, such that there will be no business interruption after
            December 31, 1999;
                ``(2) ensure that the Robert T. Stafford Federal Student
            Loan Program and the William D. Ford Federal Direct Loan Program
            are equal in level of priority with respect to addressing, and
            that resources are managed to equally provide for successful
            resolution of, the Year 2000 computer problem in both programs
            by December 31, 1999;
                ``(3) <<NOTE: Reports. Deadline.>>  work with the
            Department's various data exchange partners under this title to
            fully test all data exchange routes

    [[Page 112 STAT. 1757]]

            for Year 2000 compliance via end-to-end testing, and submit a
            report describing the parameters and results of such tests to
            the Comptroller General not later than March 31, 1999;
                ``(4) <<NOTE: Publication. Public information. Deadline.>>
            ensure that the Inspector General of the Department (or an
            external, independent entity selected by the Inspector General)
            performs and publishes a risk assessment of the systems and
            hardware under the Department's management, that has been
            reviewed by an independent entity, and make such assessment
            publicly available not later than 60 days after the date of
            enactment of the Higher Education Amendments of 1998;
                ``(5) <<NOTE: Deadline. Reports.>>  not later than June 30,
            1999, ensure that the Inspector General (or an external,
            independent entity selected by the Inspector General) conducts a
            review of the Department's Year 2000 compliance for the
            processing, delivery, and administration of grant, loan, and
            work assistance, and submits a report reflecting the results of
            that review to the Chairperson of the Committee on Labor and
            Human Resources of the Senate and the Chairperson of the
            Committee on Education and the Workforce of the House of
            Representatives;
                ``(6) develop a contingency plan to ensure the programs
            under this title will continue to run uninterrupted in the event
            of widespread disruptions in the flow of accurate computerized
            data, which contingency plan shall include a prioritization of
            mission critical systems and strategies to allow data partners
            to transfer data through alternate means; and
                ``(7) alert Congress at the earliest possible time if
            mission critical deadlines will not be met.

        ``(b) Postponement Authority for the Year 2000.--
                ``(1) Purpose.--It is the purpose of this subsection to
            provide the Secretary with the flexibility necessary to--
                        ``(A) ensure that the resources and capabilities of
                    institutions, lenders, and guaranty agencies are not
                    overburdened by the combination of student aid
                    processing and delivery requirements added or modified
                    by the amendments made by the Higher Education
                    Amendments of 1998 and by the changes required to ensure
                    that the systems of the institutions, lenders and
                    guaranty agencies are Year 2000 compliant; and
                        ``(B) avoid the disruption of grant, loan, or work
                    assistance funds awarded to students because of Year
                    2000 compliance problems at a substantial number of
                    institutions, lenders, and guaranty agencies.
                ``(2) Authority to postpone.--The Secretary may postpone,
            for a period of time described in paragraph (3), the
            implementation of any requirements under part B, D, E, or G that
            are added or modified by the amendments made by the Higher
            Education Amendments of 1998 related to the processing or
            delivery of grant, loan, and work assistance (which shall not
            include the determination of need for such assistance) provided
            under this title, if the Secretary--
                        ``(A) determines that--
                              ``(i) implementation of such requirements
                          would require extensive changes to the existing
                          systems of institutions, lenders, or guaranty
                          agencies; and
                              ``(ii) postponement is necessary to avoid
                          jeopardizing the ability of a substantial number
                          of institutions,

    [[Page 112 STAT. 1758]]

                          lenders, or guaranty agencies to ensure that all
                          of the systems of the institutions, lenders, or
                          guaranty agencies related to the processing or
                          delivery of such assistance function successfully
                          after December 31, 1999; and
                        ``(B) <<NOTE: Federal Register,
                    publication. Records. Notification.>> promptly publishes
                    in the Federal Register a list of, and notifies Congress
                    of, any provisions, the implementation of which the
                    Secretary intends to postpone, with the reasons for such
                    postponement.
                ``(3) Exceptions to authority.--The Secretary may not
            postpone the implementation of one or more provisions described
            in this subsection longer than the earlier of--
                        ``(A) the period of time that the Secretary
                    determines necessary to ensure that the processing and
                    delivery systems of the institutions, lenders, and
                    guaranty agencies referred to in paragraph (1)(A)(ii)
                    are capable of functioning successfully after December
                    31, 1999; or
                        ``(B) one award year after the effective date
                    applicable to such provision under the Higher Education
                    Amendments of 1998.''.

    SEC. 490F. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR ELIGIBLE
                DISABLED VETERANS.

        Part G of title IV (20 U.S.C. 1088 et seq.) is amended by adding
    after section 493A (as added by section 490E) the following:

    ``SEC. 493B. <<NOTE: 20 USC 1098d.>> PROCEDURES FOR CANCELLATIONS AND
                DEFERMENTS FOR ELIGIBLE DISABLED VETERANS.

        ``The Secretary, in consultation with the Secretary of Veterans
    Affairs, shall develop and implement a procedure to permit Department of
    Veterans Affairs physicians to provide the certifications and affidavits
    needed to enable disabled veterans enrolled in the Department of
    Veterans Affairs health care system to document such veterans'
    eligibility for deferments or cancellations of student loans made,
    insured, or guaranteed under this
    title. <<NOTE: Deadline. Reports.>> Not later than 6 months after the
    date of enactment of the Higher Education Amendments of 1998, the
    Secretary and the Secretary of Veterans Affairs jointly shall report to
    Congress on the progress made in developing and implementing the
    procedure.''.

                            PART H--PROGRAM INTEGRITY

    SEC. 491. STATE ROLE AND RESPONSIBILITIES.

        Part H of title IV (20 U.S.C. 1099a et seq.) is amended by--
                (1) striking the heading of such part and inserting the
            following:

                         ``PART H--PROGRAM INTEGRITY'';

                and
                (2) by amending subpart 1 (20 U.S.C. 1099a et seq.) to read
            as follows:

    [[Page 112 STAT. 1759]]

                             ``Subpart 1--State Role

    ``SEC. 495. STATE RESPONSIBILITIES. <<NOTE: 20 USC 1099a.>>

        ``(a) <<NOTE: Notification.>> State Responsibilities.--As part of
    the integrity program authorized by this part, each State, through one
    State agency or several State agencies selected by the State, shall--
                ``(1) furnish the Secretary, upon request, information with
            respect to the process for licensing or other authorization for
            institutions of higher education to operate within the State;
                ``(2) notify the Secretary promptly whenever the State
            revokes a license or other authority to operate an institution
            of higher education; and
                ``(3) notify the Secretary promptly whenever the State has
            credible evidence that an institution of higher education within
            the State--
                        ``(A) has committed fraud in the administration of
                    the student assistance programs authorized by this
                    title; or
                        ``(B) has substantially violated a provision of this
                    title.

        ``(b) Institutional Responsibility.--Each institution of higher
    education shall provide evidence to the Secretary that the institution
    has authority to operate within a State at the time the institution is
    certified under subpart 3.''.

    SEC. 492. ACCREDITING AGENCY RECOGNITION.

        (a) Recognition.--
                (1) Subpart heading.--The heading of subpart 2 of part H is
            amended by striking ``Approval'' and inserting ``Recognition''.
                (2) Section 496 heading.--The heading of section
            496 <<NOTE: 20 USC 1099b.>> is amended by striking ``approval''
            and inserting ``recognition''.

        (b) Standards.--Section 496(a) (20 U.S.C. 1099b(a)) is
    amended--
                (1) in the subsection heading, by striking ``Standards'' and
            inserting ``Criteria'';
                (2) in the matter preceding paragraph (1), by striking
            ``standards'' each place the term appears and inserting
            ``criteria'';
                (3) in paragraph (4)--
                        (A) by striking ``at the institution'' and inserting
                    ``offered by the institution''; and
                        (B) by inserting ``, including distance education
                    courses or programs,'' after ``higher education''; and
                (4) in paragraph (5)--
                        (A) by striking ``of accreditation'' and inserting
                    ``for accreditation'';
                        (B) by striking subparagraphs (H), (I), and (J);
                        (C) by redesignating subparagraphs (A) through (G)
                    as subparagraphs (B) through (H), respectively;
                        (D) by redesignating subparagraphs (K) and (L) as
                    subparagraphs (I) and (J), respectively;
                        (E) by inserting before subparagraph (B) the
                    following:
                        ``(A) success with respect to student achievement in
                    relation to the institution's mission, including, as
                    appropriate, consideration of course completion, State
                    licensing examinations, and job placement rates;'';

    [[Page 112 STAT. 1760]]

                        (F) in subparagraph (H) (as redesignated by
                    subparagraph (C)), by striking ``program length and
                    tuition and fees in relation to the subject matters
                    taught'' and inserting ``measures of program length'';
                        (G) in subparagraph (J) (as redesignated by
                    subparagraph (D))--
                              (i) by inserting ``record of'' before
                          ``compliance'';
                              (ii) by striking ``Act, including any'' and
                          inserting ``Act based on the most recent student
                          loan default rate data provided by the Secretary,
                          the''; and
                              (iii) by inserting ``any'' after ``reviews,
                          and''; and
                        (H) in the matter following subparagraph (J) (as
                    redesignated by subparagraph (D)), by striking ``(G),
                    (H), (I), (J), and (L)'' and inserting ``(A), (H), and
                    (J)'';
                (5) in paragraph (7), by striking ``State postsecondary
            review entity'' and inserting ``State licensing or authorizing
            agency''; and
                (6) in paragraph (8), by striking ``State postsecondary''
            and everything that follows through ``is located'' and inserting
            ``State licensing or authorizing agency''.

        (c) Operating Procedures.--Section 496(c) <<NOTE: 20 USC 1099b.>> is
    amended--
                (1) by striking ``approved by the Secretary'' and inserting
            ``recognized by the Secretary''; and
                (2) in paragraph (1), by striking ``(at least'' and
            everything that follows through ``unannounced),'' and inserting
            ``(which may include unannounced site visits)''.

        (d) Conforming Amendments.--Section 496 is further
    amended--
                (1) in subsection (d)--
                        (A) by striking ``Approval'' in the heading of such
                    subsection and inserting ``Recognition''; and
                        (B) by striking ``approved'' and inserting
                    ``recognized'';
                (2) in subsection (f ), by striking ``approved'' and
            inserting ``recognized'';
                (3) in subsection (g)--
                        (A) in the heading of such subsection, by striking
                    ``Standards'' and inserting ``Criteria''; and
                        (B) by striking ``standards'' the first place such
                    term appears and inserting ``criteria'';
                (4) in subsection (k)--
                        (A) in the matter preceding paragraph (1), by
                    striking ``section 481'' and inserting ``section 102'';
                    and
                        (B) in paragraph (2), by striking ``standards'' and
                    inserting ``criteria'';
                (5) in subsection (l), by striking everything preceding
            paragraph (2) and inserting the following:

        ``(l) Limitation, Suspension, or Termination of Recognition.--(1) If
    the Secretary determines that an accrediting agency or association has
    failed to apply effectively the criteria in this section, or is
    otherwise not in compliance with the requirements of this section, the
    Secretary shall--
                ``(A) <<NOTE: Notice.>> after notice and opportunity for a
            hearing, limit, suspend, or terminate the recognition of the
            agency or association; or
                ``(B) require the agency or association to take appropriate
            action to bring the agency or association into compliance with

    [[Page 112 STAT. 1761]]

            such requirements within a timeframe specified by the Secretary,
            except that--
                        ``(i) such timeframe shall not exceed 12 months
                    unless the Secretary extends such period for good cause;
                    and
                        ``(ii) <<NOTE: Notice.>> if the agency or
                    association fails to bring the agency or association
                    into compliance within such timeframe, the Secretary
                    shall, after notice and opportunity for a hearing,
                    limit, suspend, or terminate the recognition of the
                    agency or association.''; and
                (6) in subsection (n)--
                        (A) by striking ``standards'' each place the term
                    appears and inserting ``criteria'';
                        (B) in paragraph (3)--
                              (i) by striking ``approval process'' and
                          inserting ``recognition process'';
                              (ii) by striking ``approval or disapproval''
                          and inserting ``recognition or denial of
                          recognition''; and
                              (iii) by adding at the end the following:
                          ``When the Secretary decides to recognize an
                          accrediting agency or association, the Secretary
                          shall determine the agency or association's scope
                          of recognition. If the agency or association
                          reviews institutions offering distance education
                          courses or programs and the Secretary determines
                          that the agency or association meets the
                          requirements of this section, then the agency
                          shall be recognized and the scope of recognition
                          shall include accreditation of institutions
                          offering distance education courses or
                          programs.''; and
                        (C) by striking paragraph (4) and inserting the
                    following:

        ``(4) <<NOTE: Records. Public information.>> The Secretary shall
    maintain sufficient documentation to support the conclusions reached in
    the recognition process, and, if the Secretary does not recognize any
    accreditation agency or association, shall make publicly available the
    reason for denying recognition, including reference to the specific
    criteria under this section which have not been fulfilled.''.

    SEC. 493. ELIGIBILITY AND CERTIFICATION PROCEDURES.

        (a) Single Application Form.--Section 498(b) (20 U.S.C. 1099c(b)) is
    amended--
                (1) in paragraph (1), by striking ``and capability'' and
            inserting ``financial responsibility, and administrative
            capability'';
                (2) by amending paragraph (3) to read as follows:
                ``(3) requires--
                        ``(A) a description of the third party servicers of
                    an institution of higher education; and
                        ``(B) the institution to maintain a copy of any
                    contract with a financial aid service provider or loan
                    servicer, and provide a copy of any such contract to the
                    Secretary upon request;'';
                (3) in paragraph (4), by striking the period and inserting
            ``; and''; and
                (4) by adding at the end the following:
                ``(5) provides, at the option of the institution, for
            participation in one or more of the programs under part B or
            D.''.

        (b) Financial Responsibility Standards.--Section 498(c) is amended--

    [[Page 112 STAT. 1762]]

                (1) in paragraph (2)--
                        (A) in the first sentence, by striking ``with
                    respect to operating losses, net worth, asset to
                    liabilities ratios, or operating fund deficits'' and
                    inserting ``regarding ratios that demonstrate financial
                    responsibility,''; and
                        (B) in the second sentence, by inserting ``,
                    public,'' after ``for profit'';
                (2) in paragraph (3)(A), by inserting ``that the Secretary
            determines are reasonable'' after ``guarantees''; and
                (3) in paragraph (4)--
                        (A) in the matter preceding subparagraph (A), by
                    striking ``ratio of current assets to current
                    liabilities'' and inserting ``criteria''; and
                        (B) in subparagraph (C), by striking ``current
                    operating ratio requirement'' and inserting
                    ``criteria''.

        (c) Financial Guarantees From Owners.--
                (1) Amendment.--Section 498(e) <<NOTE: 20 USC 1099c.>> is
            amended by adding at the end the following:

        ``(6) Notwithstanding any other provision of law, any individual
    who--
                ``(A) the Secretary determines, in accordance with paragraph
            (2), exercises substantial control over an institution
            participating in, or seeking to participate in, a program under
            this title;
                ``(B) is required to pay, on behalf of a student or
            borrower, a refund of unearned institutional charges to a
            lender, or to the Secretary; and
                ``(C) willfully fails to pay such refund or willfully
            attempts in any manner to evade payment of such refund,

    shall, in addition to other penalties provided by law, be liable to the
    Secretary for the amount of the refund not paid, to the same extent with
    respect to such refund that such an individual would be liable as a
    responsible person for a penalty under section 6672(a) of Internal
    Revenue Code of 1986 with respect to the nonpayment of taxes.''.
                (2) <<NOTE: 20 USC 1099c note.>> Effective date.--The
            amendment made by paragraph (1) shall be effective with respect
            to any unpaid refunds that were first required to be paid to a
            lender or to the Secretary on or after 90 days after the date of
            enactment of this Act.

        (d) Applications and Site Visits.--Section 498(f ) is
    amended--
                (1) in the subsection heading, by striking ``; Site Visits
            and Fees'' and inserting ``and Site Visits'';
                (2) in the second sentence, by striking ``shall'' and
            inserting ``may'';
                (3) in the third sentence--
                        (A) by striking ``may establish'' and insert ``shall

                    establish''; and
                        (B) by striking ``may coordinate'' and inserting
                    ``shall, to the extent practicable, coordinate''; and
                (4) by striking the fourth sentence.

        (e) Time Limitations on, and Renewal of, Eligibility.--Subsection
    (g) of section 498 is amended to read as follows:
        ``(g) Time Limitations on, and Renewal of, Eligibility.--
                ``(1) General rule.--After the expiration of the
            certification of any institution under the schedule prescribed
            under this section (as this section was in effect prior to the
            enactment

    [[Page 112 STAT. 1763]]

            of the Higher Education Act Amendments of 1998), or upon request
            for initial certification from an institution not previously
            certified, the Secretary may certify the eligibility for the
            purposes of any program authorized under this title of each such
            institution for a period not to exceed 6 years.
                ``(2) <<NOTE: Deadline.>> Notification.--The Secretary shall
            notify each institution of higher education not later than 6
            months prior to the date of the expiration of the institution's
            certification.
                ``(3) <<NOTE: Regulations.>> Institutions outside the united
            states.--The
            Secretary shall promulgate regulations regarding the
            recertification requirements applicable to an institution of
            higher education outside of the United States that meets the
            requirements of section 102(a)(1)(C) and received less than
            $500,000 in funds under part B for the most recent year for
            which data are available.''.

        (f ) Provisional Certification.--Section 498(h)(2) is <<NOTE: 20 USC
    1099c.>>
    amended--
                (1) by striking ``the approval'' and inserting ``the
            recognition''; and
                (2) by striking ``of approval'' and inserting ``of
            recognition''.

        (g) Change in Ownership.--Section 498(i) is amended by
    adding at the end the following:
        ``(4)(A) The Secretary may provisionally certify an institution
    seeking approval of a change in ownership based on the preliminary
    review by the Secretary of a materially complete application that is
    received by the Secretary within 10 business days of the transaction for
    which the approval is sought.
        ``(B) <<NOTE: Termination date.>> A provisional certification under
    this paragraph shall expire not later than the end of the month
    following the month in which the transaction occurred, except that if
    the Secretary has not issued a decision on the application for the
    change of ownership within that period, the Secretary may continue such
    provisional certification on a month-to-month basis until such decision
    has been issued.''.

        (h) Treatment of Branches.--The second sentence of section 498(
    j)(1) is amended by inserting ``after the branch is certified by the
    Secretary as a branch campus participating in a program under this
    title,'' after ``2 years''.

    SEC. 494. PROGRAM REVIEW AND DATA.

        Section 498A (20 U.S.C. 1099c-1) is amended--
                (1) in subsection (a)--
                        (A) in paragraph (2)--
                              (i) in the matter preceding subparagraph (A),
                          by striking ``may'' and inserting ``shall'';
                              (ii) by amending subparagraph (C) to read as
                          follows:
                        ``(C) institutions with a significant fluctuation in
                    Federal Stafford Loan volume, Federal Direct Stafford/
                    Ford Loan volume, or Federal Pell Grant award volume, or
                    any combination thereof, in the year for which the
                    determination is made, compared to the year prior to
                    such year, that are not accounted for by changes in the
                    Federal Stafford Loan program, the Federal Direct
                    Stafford/Ford Loan program, or the Pell Grant program,
                    or any combination thereof;'';

    [[Page 112 STAT. 1764]]

                              (iii) by amending subparagraph (D) to read as
                          follows:
                        ``(D) institutions reported to have deficiencies or
                    financial aid problems by the State licensing or
                    authorizing agency, or by the appropriate accrediting
                    agency or association;'';
                              (iv) in subparagraph (E), by inserting ``and''
                          after the semicolon; and
                              (v) by striking subparagraphs (F) and (G) and
                          inserting the following:
                        ``(F) such other institutions that the Secretary
                    determines may pose a significant risk of failure to
                    comply with the administrative capability or financial
                    responsibility provisions of this title; and''; and
                        (B) in paragraph (3)(A), by inserting ``relevant''
                    after ``all''; and
                (2) by amending subsection (b) to read as follows:

        ``(b) Special Administrative Rules.--In carrying out paragraphs (1)
    and (2) of subsection (a) and any other relevant provisions of this
    title, the Secretary shall--
                ``(1) establish guidelines designed to ensure uniformity of
            practice in the conduct of program reviews of institutions of
            higher education;
                ``(2) make available to each institution participating in
            programs authorized under this title complete copies of all
            review guidelines and procedures used in program reviews;
                ``(3) permit the institution to correct or cure an
            administrative, accounting, or recordkeeping error if the error
            is not part of a pattern of error and there is no evidence of
            fraud or misconduct related to the error;
                ``(4) base any civil penalty assessed against an institution
            of higher education resulting from a program review or audit on
            the gravity of the violation, failure, or misrepresentation; and
                ``(5) inform the appropriate State and accrediting agency or
            association whenever the Secretary takes action against an
            institution of higher education under this section, section 498,
            or section 432.''.

    SEC. 495. REVIEW OF REGULATIONS.

        Part H of title IV is further amended by adding at the end the
    following:

    ``SEC. 498B. REVIEW OF REGULATIONS. <<NOTE: 20 USC 1099c-2.>>

        ``(a) Review Required.--The Secretary shall review each regulation
    issued under this title that is in effect at the time of the review and
    applies to the operations or activities of any participant in the
    programs assisted under this title. The review shall include a
    determination of whether the regulation is duplicative, or is no longer
    necessary. The review may involve one or more of the following:
                ``(1) An assurance of the uniformity of interpretation and
            application of such regulations.
                ``(2) The establishment of a process for ensuring that
            eligibility and compliance issues, such as institutional audit,
            program review, and recertification, are considered
            simultaneously.
                ``(3) A determination of the extent to which unnecessary
            costs are imposed on institutions of higher education as a

    [[Page 112 STAT. 1765]]

            consequence of the applicability to the facilities and equipment
            of such institutions of regulations prescribed for purposes of
            regulating industrial and commercial enterprises.

        ``(b) Regulatory and Statutory Relief for Small Volume
    Institutions.--The Secretary shall review and evaluate ways in which
    regulations under and provisions of this Act affecting institution of
    higher education (other than institutions described in section
    102(a)(1)(C)), that have received in each of the two most recent award
    years prior to the date of the enactment of the Higher Education
    Amendments of 1998 less than $200,000 in funds through this title, may
    be improved, streamlined, or eliminated.
        ``(c) Consultation.--In carrying out subsections (a) and (b), the
    Secretary shall consult with relevant representatives of institutions
    participating in the programs authorized by this title.
        ``(d) Reports to Congress.-- <<NOTE: Deadlines.>>
                ``(1) In general.--The Secretary shall submit, not later
            than 1 year after the date of the enactment of the Higher
            Education Amendments of 1998, a report to the Committee on Labor
            and Human Resources of the Senate and the Committee on Education
            and the Workforce of the House of Representatives detailing the
            Secretary's findings and recommendations based on the reviews
            conducted under subsections (a) and (b), including a timetable
            for implementation of any recommended changes in regulations and
            a description of any recommendations for legislative changes.
                ``(2) Additional reports.--Not later than January 1, 2003,
            the Secretary shall submit a report to the Committee on Labor
            and Human Resources of the Senate and the Committee on Education
            and the Workforce of the House of Representatives detailing the
            Secretary's findings and recommendations based on the review
            conducted under subsection (a), including a timetable for
            implementation of any recommended changes in regulations and a
            description of any recommendations for legislative changes.''.

                        TITLE V--DEVELOPING INSTITUTIONS

    SEC. 501. ESTABLISHMENT OF NEW TITLE V.

        Title V (20 U.S.C. 1101 et seq.) is amended to read as follows:

                       ``TITLE V--DEVELOPING INSTITUTIONS

                     ``PART A--HISPANIC-SERVING INSTITUTIONS

    ``SEC. 501. FINDINGS; PURPOSE; AND PROGRAM AUTHORITY. <<NOTE: 20 USC
                1101.>>

        ``(a) Findings.--Congress makes the following findings:
                ``(1) Hispanic Americans are at high risk of not enrolling
            or graduating from institutions of higher education.
                ``(2) Disparities between the enrollment of non-Hispanic
            white students and Hispanic students in postsecondary education
            are increasing. Between 1973 and 1994, enrollment of white
            secondary school graduates in 4-year institutions of higher
            education increased at a rate two times higher than that of
            Hispanic secondary school graduates.

    [[Page 112 STAT. 1766]]

                ``(3) Despite significant limitations in resources,
            Hispanic-serving institutions provide a significant proportion
            of postsecondary opportunities for Hispanic students.
                ``(4) Relative to other institutions of higher education,
            Hispanic-serving institutions are underfunded. Such institutions
            receive significantly less in State and local funding, per full-
            time equivalent student, than other institutions of higher
            education.
                ``(5) Hispanic-serving institutions are succeeding in
            educating Hispanic students despite significant resource
            problems that--
                        ``(A) limit the ability of such institutions to
                    expand and improve the academic programs of such
                    institutions; and
                        ``(B) could imperil the financial and administrative
                    stability of such institutions.
                ``(6) There is a national interest in remedying the
            disparities described in paragraphs (2) and (4) and ensuring
            that Hispanic students have an equal opportunity to pursue
            postsecondary opportunities.

        ``(b) Purpose.--The purpose of this title is to--
                ``(1) expand educational opportunities for, and improve the
            academic attainment of, Hispanic students; and
                ``(2) expand and enhance the academic offerings, program
            quality, and institutional stability of colleges and
            universities that are educating the majority of Hispanic college
            students and helping large numbers of Hispanic students and
            other low-income individuals complete postsecondary degrees.

        ``(c) Program Authority.--The Secretary shall provide grants and
    related assistance to Hispanic-serving institutions to enable such
    institutions to improve and expand their capacity to serve Hispanic
    students and other low-income individuals.

    ``SEC. 502. DEFINITIONS; ELIGIBILITY. <<NOTE: 20 USC 1101a.>>

        ``(a) Definitions.--For the purpose of this title:
                ``(1) Educational and general expenditures.--The term
            `educational and general expenditures' means the total amount
            expended by an institution for instruction, research, public
            service, academic support (including library expenditures),
            student services, institutional support, scholarships and
            fellowships, operation and maintenance expenditures for the
            physical plant, and any mandatory transfers that the institution
            is required to pay by law.
                ``(2) Eligible institution.--The term `eligible institution'
            means--
                        ``(A) an institution of higher education--
                              ``(i) that has an enrollment of needy students
                          as required by subsection (b);
                              ``(ii) except as provided in section 512(b),
                          the average educational and general expenditures
                          of which are low, per full-time equivalent
                          undergraduate student, in comparison with the
                          average educational and general expenditures per
                          full-time equivalent undergraduate student of
                          institutions that offer similar instruction;
                              ``(iii) that is--

    [[Page 112 STAT. 1767]]

                                        ``(I) legally authorized to provide,
                                    and provides within the State, an
                                    educational program for which the
                                    institution awards a bachelor's degree;
                                    or
                                        ``(II) a junior or community
                                    college;
                              ``(iv) that is accredited by a nationally
                          recognized accrediting agency or association
                          determined by the Secretary to be reliable
                          authority as to the quality of training offered or
                          that is, according to such an agency or
                          association, making reasonable progress toward
                          accreditation;
                              ``(v) that meets such other requirements as
                          the Secretary may prescribe; and
                              ``(vi) that is located in a State; and
                        ``(B) any branch of any institution of higher
                    education described under subparagraph (A) that by
                    itself satisfies the requirements contained in clauses
                    (i) and (ii) of such subparagraph.
            For purposes of the determination of whether an institution is
            an eligible institution under this paragraph, the factor
            described under subparagraph (A)(i) shall be given twice the
            weight of the factor described under subparagraph (A)(ii).
                ``(3) Endowment fund.--The term `endowment fund' means a
            fund that--
                        ``(A) is established by State law, by a Hispanic-
                    serving institution, or by a foundation that is exempt
                    from Federal income taxation;
                        ``(B) is maintained for the purpose of generating
                    income for the support of the institution; and
                        ``(C) does not include real estate.
                ``(4) Full-time equivalent students.--The term `full-time
            equivalent students' means the sum of the number of students
            enrolled full time at an institution, plus the full-time
            equivalent of the number of students enrolled part time
            (determined on the basis of the quotient of the sum of the
            credit hours of all part-time students divided by 12) at such
            institution.
                ``(5) Hispanic-serving institution.--The term `Hispanic-
            serving institution' means an institution of higher education
            that--
                        ``(A) is an eligible institution;
                        ``(B) at the time of application, has an enrollment
                    of undergraduate full-time equivalent students that is
                    at least 25 percent Hispanic students; and
                        ``(C) provides assurances that not less than 50
                    percent of the institution's Hispanic students are low-
                    income individuals.
                ``(6) Junior or community college.--The term `junior or
            community college' means an institution of higher education--
                        ``(A) that admits as regular students persons who
                    are beyond the age of compulsory school attendance in
                    the State in which the institution is located and who
                    have the ability to benefit from the training offered by
                    the institution;
                        ``(B) that does not provide an educational program
                    for which the institution awards a bachelor's degree (or
                    an equivalent degree); and
                        ``(C) that--

    [[Page 112 STAT. 1768]]

                              ``(i) provides an educational program of not
                          less than 2 years in duration that is acceptable
                          for full credit toward such a degree; or
                              ``(ii) offers a 2-year program in engineering,
                          mathematics, or the physical or biological
                          sciences, designed to prepare a student to work as
                          a technician or at the semiprofessional level in
                          engineering, scientific, or other technological
                          fields requiring the understanding and application
                          of basic engineering, scientific, or mathematical
                          principles of knowledge.
                ``(7) Low-income individual.--The term `low-income
            individual' means an individual from a family whose taxable
            income for the preceding year did not exceed 150 percent of an
            amount equal to the poverty level determined by using criteria
            of poverty established by the Bureau of the Census.

        ``(b) Enrollment of Needy Students.--For the purpose of this title,
    the term `enrollment of needy students' means an enrollment at an
    institution with respect to which--
                ``(1) at least 50 percent of the degree students so enrolled
            are receiving need-based assistance under title IV in the second
            fiscal year preceding the fiscal year for which the
            determination is made (other than loans for which an interest
            subsidy is paid pursuant to section 428); or
                ``(2) a substantial percentage of the students so enrolled
            are receiving Federal Pell Grants in the second fiscal year
            preceding the fiscal year for which determination is made,
            compared to the percentage of students receiving Federal Pell
            Grants at all such institutions in the second fiscal year
            preceding the fiscal year for which the determination is made,
            unless the requirement of this paragraph is waived under section
            512(a).

    ``SEC. 503. AUTHORIZED ACTIVITIES. <<NOTE: 20 USC 1101b.>>

        ``(a) Types of Activities Authorized.--Grants awarded under this
    title shall be used by Hispanic-serving institutions of higher education
    to assist the institutions to plan, develop, undertake, and carry out
    programs to improve and expand the institutions' capacity to serve
    Hispanic students and other low-income students.
        ``(b) Authorized Activities.--Grants awarded under this section
    shall be used for one or more of the following activities:
                ``(1) Purchase, rental, or lease of scientific or laboratory
            equipment for educational purposes, including instructional and
            research purposes.
                ``(2) Construction, maintenance, renovation, and improvement
            in classrooms, libraries, laboratories, and other instructional
            facilities.
                ``(3) Support of faculty exchanges, faculty development,
            curriculum development, academic instruction, and faculty
            fellowships to assist in attaining advanced degrees in the
            fellow's field of instruction.
                ``(4) Purchase of library books, periodicals, and other
            educational materials, including telecommunications program
            material.
                ``(5) Tutoring, counseling, and student service programs
            designed to improve academic success.

    [[Page 112 STAT. 1769]]

                ``(6) Funds management, administrative management, and
            acquisition of equipment for use in strengthening funds
            management.
                ``(7) Joint use of facilities, such as laboratories and
            libraries.
                ``(8) Establishing or improving a development office to
            strengthen or improve contributions from alumni and the private
            sector.
                ``(9) Establishing or improving an endowment fund.
                ``(10) Creating or improving facilities for Internet or
            other distance learning academic instruction capabilities,
            including purchase or rental of telecommunications technology
            equipment or services.
                ``(11) Establishing or enhancing a program of teacher
            education designed to qualify students to teach in public
            elementary schools and secondary schools.
                ``(12) Establishing community outreach programs that will
            encourage elementary school and secondary school students to
            develop the academic skills and the interest to pursue
            postsecondary education.
                ``(13) Expanding the number of Hispanic and other
            underrepresented graduate and professional students that can be
            served by the institution by expanding courses and institutional
            resources.
                ``(14) Other activities proposed in the application
            submitted pursuant to section 504 that--
                        ``(A) contribute to carrying out the purposes of
                    this title; and
                        ``(B) are approved by the Secretary as part of the
                    review and acceptance of such application.

        ``(c) Endowment Fund Limitations.--
                ``(1) Portion of grant.--A Hispanic-serving institution may
            not use more than 20 percent of the grant funds provided under
            this title for any fiscal year for establishing or improving an
            endowment fund.
                ``(2) Matching required.--A Hispanic-serving institution
            that uses any portion of the grant funds provided under this
            title for any fiscal year for establishing or improving an
            endowment fund shall provide from non-Federal funds an amount
            equal to or greater than the portion.
                ``(3) Comparability.--The provisions of part C of title III
            regarding the establishment or increase of an endowment fund,
            that the Secretary determines are not inconsistent with this
            subsection, shall apply to funds used under paragraph (1).

    ``SEC. 504. DURATION OF GRANT. <<NOTE: 20 USC 1101c.>>

        ``(a) Award Period.--
                ``(1) In general.--The Secretary may award a grant to a
            Hispanic-serving institution under this title for 5 years.
                ``(2) Waitout period.--A Hispanic-serving institution shall
            not be eligible to secure a subsequent 5-year grant award under
            this title until 2 years have elapsed since the expiration of
            the institution's most recent 5-year grant award under this
            title, except that for the purpose of this subsection a grant
            under section 514(a) shall not be considered a grant under this
            title.

        ``(b) Planning Grants.--Notwithstanding subsection (a), the
    Secretary may award a grant to a Hispanic-serving institution

    [[Page 112 STAT. 1770]]

    under this title for a period of 1 year for the purpose of preparation
    of plans and applications for a grant under this title.

    ``SEC. 505. SPECIAL RULE. <<NOTE: 20 USC 1101d.>>

        ``No Hispanic-serving institution that is eligible for and receives
    funds under this title may receive funds under part A or B of title III
    during the period for which funds under this title are awarded.

                          ``PART B--GENERAL PROVISIONS

    ``SEC. 511. ELIGIBILITY; APPLICATIONS. <<NOTE: 20 USC 1103.>>

        ``(a) Institutional Eligibility.--Each Hispanic-serving institution
    desiring to receive assistance under this title shall submit to the
    Secretary such enrollment data as may be necessary to demonstrate that
    the institution is a Hispanic-serving institution as defined in section
    502, along with such other data and information as the Secretary may by
    regulation require.
        ``(b) Applications.--
                ``(1) Applications required.--Any institution which is
            eligible for assistance under this title shall submit to the
            Secretary an application for assistance at such time, in such
            form, and containing such information, as may be necessary to
            enable the Secretary to evaluate the institution's need for
            assistance. Subject to the availability of appropriations to
            carry out this title, the Secretary may approve an application
            for a grant under this title only if the Secretary determines
            that--
                        ``(A) the application meets the requirements of
                    subsection (b); and
                        ``(B) the institution is eligible for assistance in
                    accordance with the provisions of this title under which
                    the assistance is sought.
                ``(2) Preliminary applications.--In carrying out paragraph
            (1), the Secretary may develop a preliminary application for use
            by Hispanic-serving institutions applying under this title prior
            to the submission of the principal application.

        ``(c) Contents.--A Hispanic-serving institution, in the
    institution's application for a grant, shall--
                ``(1) set forth, or describe how the institution will
            develop, a comprehensive development plan to strengthen the
            institution's academic quality and institutional management, and
            otherwise provide for institutional self-sufficiency and growth
            (including measurable objectives for the institution and the
            Secretary to use in monitoring the effectiveness of activities
            under this title);
                ``(2) include a 5-year plan for improving the assistance
            provided by the Hispanic-serving institution to Hispanic
            students and other low-income individuals;
                ``(3) set forth policies and procedures to ensure that
            Federal funds made available under this title for any fiscal
            year will be used to supplement and, to the extent practical,
            increase the funds that would otherwise be made available for
            the purposes of section 501(b), and in no case supplant those
            funds;
                ``(4) set forth policies and procedures for evaluating the
            effectiveness in accomplishing the purpose of the activities for
            which a grant is sought under this title;

    [[Page 112 STAT. 1771]]

                ``(5) provide for such fiscal control and fund accounting
            procedures as may be necessary to ensure proper disbursement of
            and accounting for funds made available to the institution under
            this title;
                ``(6) provide that the institution will comply with the
            limitations set forth in section 516;
                ``(7) describe in a comprehensive manner any proposed
            project for which funds are sought under the application and
            include--
                        ``(A) a description of the various components of the
                    proposed project, including the estimated time required
                    to complete each such component;
                        ``(B) in the case of any development project that
                    consists of several components (as described by the
                    institution pursuant to subparagraph (A)), a statement
                    identifying those components which, if separately
                    funded, would be sound investments of Federal funds and
                    those components which would be sound investments of
                    Federal funds only if funded under this title in
                    conjunction with other parts of the development project
                    (as specified by the institution);
                        ``(C) an evaluation by the institution of the
                    priority given any proposed project for which funds are
                    sought in relation to any other projects for which funds
                    are sought by the institution under this title, and a
                    similar evaluation regarding priorities among the
                    components of any single proposed project (as described
                    by the institution pursuant to subparagraph (A));
                        ``(D) a detailed budget showing the manner in which
                    funds for any proposed project would be spent by the
                    institution; and
                        ``(E) a detailed description of any activity which
                    involves the expenditure of more than $25,000, as
                    identified in the budget referred to in subparagraph
                    (D);
                ``(8) <<NOTE: Reports.>> provide for making reports, in such
            form and containing such information, as the Secretary may
            require to carry out the Secretary's functions under this title,
            including not less than one report annually setting forth the
            institution's progress toward achieving the objectives for which
            the funds were awarded and for keeping such records and
            affording such access to such records, as the Secretary may find
            necessary to assure the correctness and verification of such
            reports; and
                ``(9) include such other information as the Secretary may
            prescribe.

        ``(d) Priority.--With respect to applications for assistance under
    this section, the Secretary shall give priority to an application that
    contains satisfactory evidence that the Hispanic-serving institution has
    entered into or will enter into a collaborative arrangement with at
    least one local educational agency or community-based organization to
    provide such agency or organization with assistance (from funds other
    than funds provided under this title) in reducing dropout rates for
    Hispanic students, improving rates of academic achievement for Hispanic
    students, and increasing the rates at which Hispanic secondary school
    graduates enroll in higher education.
        ``(e) Eligibility Data.--The Secretary shall use the most recent and
    relevant data concerning the number and percentage of students receiving
    need-based assistance under title IV in making

    [[Page 112 STAT. 1772]]

    eligibility determinations and shall advance the base-year for the
    determinations forward following each annual grant cycle.

    ``SEC. 512. WAIVER AUTHORITY AND REPORTING REQUIREMENT. <<NOTE: 20 USC
                1103a.>>

        ``(a) Waiver Requirements; Need-Based Assistance Students.--The
    Secretary may waive the requirements set forth in section
    502(a)(2)(A)(i) in the case of an institution--
                ``(1) that is extensively subsidized by the State in which
            the institution is located and charges low or no tuition;
                ``(2) that serves a substantial number of low-income
            students as a percentage of the institution's total student
            population;
                ``(3) that is contributing substantially to increasing
            higher education opportunities for educationally disadvantaged,
            underrepresented, or minority students, who are low-income
            individuals;
                ``(4) which is substantially increasing higher educational
            opportunities for individuals in rural or other isolated areas
            which are unserved by postsecondary institutions; or
                ``(5) wherever located, if the Secretary determines that the
            waiver will substantially increase higher education
            opportunities appropriate to the needs of Hispanic Americans.

        ``(b) Waiver Determinations; Expenditures.--
                ``(1) Waiver determinations.--The Secretary may waive the
            requirements set forth in section 502(a)(2)(A)(ii) if the
            Secretary determines, based on persuasive evidence submitted by
            the institution, that the institution's failure to meet the
            requirements is due to factors which, when used in the
            determination of compliance with the requirements, distort such
            determination, and that the institution's designation as an
            eligible institution under part A is otherwise consistent with
            the purposes of this title.
                ``(2) <<NOTE: Reports.>> Expenditures.--The Secretary shall
            submit to Congress every other year a report concerning the
            institutions that, although not satisfying the requirements of
            section 502(a)(2)(A)(ii), have been determined to be eligible
            institutions under part A. Such report shall--
                        ``(A) identify the factors referred to in paragraph
                    (1) that were considered by the Secretary as factors
                    that distorted the determination of compliance with
                    clauses (i) and (ii) of section 502(a)(2)(A); and
                        ``(B) <<NOTE: Records.>>  contain a list of each
                    institution determined to be an eligible institution
                    under part A including a statement of the reasons for
                    each such determination.

    ``SEC. 513. APPLICATION REVIEW PROCESS. <<NOTE: 20 USC 1103b.>>

        ``(a) Review Panel.--All applications submitted under this title by
    Hispanic-serving institutions shall be read by a panel of readers
    composed of individuals who are selected by the Secretary and who
    include individuals representing Hispanic-serving institutions. The
    Secretary shall ensure that no individual assigned under this section to
    review any application has any conflict of interest with regard to the
    application that might impair the impartiality with which the individual
    conducts the review under this section.
        ``(b) Instruction.--All readers selected by the Secretary shall
    receive thorough instruction from the Secretary regarding the evaluation
    process for applications submitted under this title that are consistent
    with the provisions of this title, including--

    [[Page 112 STAT. 1773]]

                ``(1) an enumeration of the factors to be used to determine
            the quality of applications submitted under this title; and
                ``(2) an enumeration of the factors to be used to determine
            whether a grant should be awarded for a project under this
            title, the amount of any such grant, and the duration of any
            such grant.

        ``(c) Recommendations of Panel.--In awarding grants under this
    title, the Secretary shall take into consideration the recommendations
    of the panel made under subsection (a).
        ``(d) <<NOTE: Deadline.>> Notification.--Not later than June 30 of
    each year, the Secretary shall notify each Hispanic-serving institution
    making an application under this title of--
                ``(1) the scores given the institution by the panel pursuant
            to this section;
                ``(2) the recommendations of the panel with respect to such
            application; and
                ``(3) the reasons for the decision of the Secretary in
            awarding or refusing to award a grant under this title, and any
            modifications, if any, in the recommendations of the panel made
            by the Secretary.

    ``SEC. 514. COOPERATIVE ARRANGEMENTS. <<NOTE: 20 USC 1103c.>>

        ``(a) General Authority.--The Secretary may make grants to encourage
    cooperative arrangements with funds available to carry out this title,
    between Hispanic-serving institutions eligible for assistance under this
    title, and between such institutions and institutions not receiving
    assistance under this title, for the activities described in section 503
    so that the resources of the cooperating institutions might be combined
    and shared in order to achieve the purposes of this title, to avoid
    costly duplicative efforts, and to enhance the development of Hispanic-
    serving institutions.
        ``(b) Priority.--The Secretary shall give priority to grants for the
    purposes described under subsection (a) whenever the Secretary
    determines that the cooperative arrangement is geographically and
    economically sound or will benefit the applicant Hispanic-serving
    institution.
        ``(c) Duration.--Grants to Hispanic-serving institutions having a
    cooperative arrangement may be made under this section for a period
    determined under section 505.

    ``SEC. 515. ASSISTANCE TO INSTITUTIONS UNDER OTHER PROGRAMS. <<NOTE: 20
                USC 1103d.>>

        ``(a) Assistance Eligibility.--Each Hispanic-serving institution
    that the Secretary determines to be an institution eligible under this
    title may be eligible for waivers in accordance with subsection (b).
        ``(b) Waiver Applicability.--
                ``(1) In general.--Subject to, and in accordance with,
            regulations promulgated for the purpose of this section, in the
            case of any application by a Hispanic-serving institution
            referred to in subsection (a) for assistance under any programs
            specified in paragraph (2), the Secretary is authorized, if such
            application is otherwise approvable, to waive any requirement
            for a non-Federal share of the cost of the program or project,
            or, to the extent not inconsistent with other law, to give, or
            require to be given, priority consideration of the application
            in relation to applications from other institutions.
                ``(2) Programs.--The provisions of this section shall apply
            to any program authorized by title IV or section 604.

    [[Page 112 STAT. 1774]]

        ``(c) Limitation.--The Secretary shall not waive, under subsection
    (b), the non-Federal share requirement for any program for applications
    which, if approved, would require the expenditure of more than 10
    percent of the appropriations for the program for any fiscal year.

    ``SEC. 516. LIMITATIONS. <<NOTE: 20 USC 1103e.>>

        ``The funds appropriated under section 518 may not be used--
                ``(1) for a school or department of divinity or any
            religious worship or sectarian activity;
                ``(2) for an activity that is inconsistent with a State plan
            for desegregation of higher education applicable to a Hispanic-
            serving institution;
                ``(3) for an activity that is inconsistent with a State plan
            of higher education applicable to a Hispanic-serving
            institution; or
                ``(4) for purposes other than the purposes set forth in the
            approved application under which the funds were made available
            to a Hispanic-serving institution.

    ``SEC. 517. PENALTIES. <<NOTE: 20 USC 1103f.>>

        ``Whoever, being an officer, director, agent, or employee of, or
    connected in any capacity with, any recipient of Federal financial
    assistance or grant pursuant to this title embezzles, willfully
    misapplies, steals, or obtains by fraud any of the funds that are the
    subject of such grant or assistance, shall be fined not more than
    $10,000 or imprisoned for not more than 2 years, or both.

    ``SEC. 518. AUTHORIZATIONS OF APPROPRIATIONS. <<NOTE: 20 USC 1103g.>>

        ``(a) Authorizations.--There are authorized to be appropriated to
    carry out this title $62,500,000 for fiscal year 1999 and such sums as
    may be necessary for each of the 4 succeeding fiscal years.
        ``(b) Use of Multiple Year Awards.--In the event of a multiple year
    award to any Hispanic-serving institution under this title, the
    Secretary shall make funds available for such award from funds
    appropriated for this title for the fiscal year in which such funds are
    to be used by the institution.''.

                   TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

    SEC. 601. INTERNATIONAL AND FOREIGN LANGUAGE STUDIES.

        Part A of title VI (20 U.S.C. 1121 et seq.) is amended to read as
    follows:

              ``PART A--INTERNATIONAL AND FOREIGN LANGUAGE STUDIES

    ``SEC. 601. FINDINGS AND PURPOSES. <<NOTE: 20 USC 1121.>>

        ``(a) Findings.--Congress finds as follows:
                ``(1) The security, stability, and economic vitality of the
            United States in a complex global era depend upon American
            experts in and citizens knowledgeable about world regions,
            foreign languages, and international affairs, as well as upon a
            strong research base in these areas.

    [[Page 112 STAT. 1775]]

                ``(2) Advances in communications technology and the growth
            of regional and global problems make knowledge of other
            countries and the ability to communicate in other languages more
            essential to the promotion of mutual understanding and
            cooperation among nations and their peoples.
                ``(3) Dramatic post-Cold War changes in the world's
            geopolitical and economic landscapes are creating needs for
            American expertise and knowledge about a greater diversity of
            less commonly taught foreign languages and nations of the world.
                ``(4) Systematic efforts are necessary to enhance the
            capacity of institutions of higher education in the United
            States for--
                        ``(A) producing graduates with international and
                    foreign language expertise and knowledge; and
                        ``(B) research regarding such expertise and
                    knowledge.
                ``(5) Cooperative efforts among the Federal Government,
            institutions of higher education, and the private sector are
            necessary to promote the generation and dissemination of
            information about world regions, foreign languages, and
            international affairs throughout education, government,
            business, civic, and nonprofit sectors in the United States.

        ``(b) Purposes.--The purposes of this part are--
                ``(1)(A) to support centers, programs, and fellowships in
            institutions of higher education in the United States for
            producing increased numbers of trained personnel and research in
            foreign languages, area studies, and other international
            studies;
                ``(B) to develop a pool of international experts to meet
            national needs;
                ``(C) to develop and validate specialized materials and
            techniques for foreign language acquisition and fluency,
            emphasizing (but not limited to) the less commonly taught
            languages;
                ``(D) to promote access to research and training overseas;
            and
                ``(E) to advance the internationalization of a variety of
            disciplines throughout undergraduate and graduate education;
                ``(2) to support cooperative efforts promoting access to and
            the dissemination of international and foreign language
            knowledge, teaching materials, and research, throughout
            education, government, business, civic, and nonprofit sectors in
            the United States, through the use of advanced technologies; and
                ``(3) to coordinate the programs of the Federal Government
            in the areas of foreign language, area studies, and other
            international studies, including professional international
            affairs education and research.

    ``SEC. <<NOTE: 20 USC 1122.>> 602. GRADUATE AND UNDERGRADUATE LANGUAGE
                AND AREA CENTERS AND PROGRAMS.

        ``(a) National Language and Area Centers and Programs Authorized.--
                ``(1) Centers and programs.--
                        ``(A) In general.--The Secretary is authorized--
                              ``(i) to make grants to institutions of higher
                          education, or combinations thereof, for the
                          purpose of establishing, strengthening, and
                          operating comprehensive foreign language and area
                          or international studies centers and programs; and

    [[Page 112 STAT. 1776]]

                              ``(ii) to make grants to such institutions or
                          combinations for the purpose of establishing,
                          strengthening, and operating a diverse network of
                          undergraduate foreign language and area or
                          international studies centers and programs.
                        ``(B) National resources.--The centers and programs
                    referred to in paragraph (1) shall be national resources
                    for--
                              ``(i) teaching of any modern foreign language;
                              ``(ii) instruction in fields needed to provide
                          full understanding of areas, regions, or countries
                          in which such language is commonly used;
                              ``(iii) research and training in international
                          studies, and the international and foreign
                          language aspects of professional and other fields
                          of study; and
                              ``(iv) instruction and research on issues in
                          world affairs that concern one or more countries.
                ``(2) Authorized activities.--Any such grant may be used to
            pay all or part of the cost of establishing or operating a
            center or program, including the cost of--
                        ``(A) teaching and research materials;
                        ``(B) curriculum planning and development;
                        ``(C) establishing and maintaining linkages with
                    overseas institutions of higher education and other
                    organizations that may contribute to the teaching and
                    research of the center or program;
                        ``(D) bringing visiting scholars and faculty to the
                    center to teach or to conduct research;
                        ``(E) professional development of the center's
                    faculty and staff;
                        ``(F) projects conducted in cooperation with other
                    centers addressing themes of world regional, cross-
                    regional, international, or global importance;
                        ``(G) summer institutes in the United States or
                    abroad designed to provide language and area training in
                    the center's field or topic; and
                        ``(H) support for faculty, staff, and student travel
                    in foreign areas, regions, or countries, and for the
                    development and support of educational programs abroad
                    for students.
                ``(3) Grants to maintain library collections.--The Secretary
            may make grants to centers described in paragraph (1) having
            important library collections, as determined by the Secretary,
            for the maintenance of such collections.
                ``(4) Outreach grants and summer institutes.--The
            Secretary may make additional grants to centers described in
            paragraph (1) for any one or more of the following purposes:
                        ``(A) Programs of linkage or outreach between
                    foreign language, area studies, or other international
                    fields, and professional schools and colleges.
                        ``(B) Programs of linkage or outreach with 2- and 4-
                    year colleges and universities.
                        ``(C) Programs of linkage or outreach with
                    departments or agencies of Federal and State
                    governments.
                        ``(D) Programs of linkage or outreach with the news
                    media, business, professional, or trade associations.
                        ``(E) Summer institutes in foreign area, foreign
                    language, and other international fields designed to
                    carry

    [[Page 112 STAT. 1777]]

                    out the programs of linkage and outreach described in
                    subparagraphs (A), (B), (C), and (D).

        ``(b) Graduate Fellowships for Foreign Language and Area or
    International Studies.--
                ``(1) In general.--The Secretary is authorized to make
            grants to institutions of higher education or combinations of
            such institutions for the purpose of paying stipends to
            individuals undergoing advanced training in any center or
            program approved by the Secretary.
                ``(2) Eligible students.--Students receiving stipends
            described in paragraph (1) shall be individuals who are engaged
            in an instructional program with stated performance goals for
            functional foreign language use or in a program developing such
            performance goals, in combination with area studies,
            international studies, or the international aspects of a
            professional studies program, including predissertation level
            studies, preparation for dissertation research, dissertation
            research abroad, and dissertation writing.

        ``(c) Special Rule With Respect to Travel.--No funds may be expended
    under this part for undergraduate travel except in accordance with rules
    prescribed by the Secretary setting forth policies and procedures to
    assure that Federal funds made available for such travel are expended as
    part of a formal program of supervised study.
        ``(d) Allowances.--Stipends awarded to graduate level recipients may
    include allowances for dependents and for travel for research and study
    in the United States and abroad.

    ``SEC. 603. LANGUAGE RESOURCE CENTERS.

        ``(a) <<NOTE: Contracts. 20 USC 1123.>>  Language Resource Centers
    Authorized.--The Secretary is authorized to make grants to and enter
    into contracts with institutions of higher education, or combinations of
    such institutions, for the purpose of establishing, strengthening, and
    operating a small number of national language resource and training
    centers, which shall serve as resources to improve the capacity to teach
    and learn foreign languages effectively.

        ``(b) Authorized Activities.--The activities carried out by the
    centers described in subsection (a)--
                ``(1) shall include effective dissemination efforts,
            whenever appropriate; and
                ``(2) may include--
                        ``(A) the conduct and dissemination of research on
                    new and improved teaching methods, including the use of
                    advanced educational technology;
                        ``(B) the development and dissemination of new
                    teaching materials reflecting the use of such research
                    in effective teaching strategies;
                        ``(C) the development, application, and
                    dissemination of performance testing appropriate to an
                    educational setting for use as a standard and comparable
                    measurement of skill levels in all languages;
                        ``(D) the training of teachers in the administration
                    and interpretation of performance tests, the use of
                    effective teaching strategies, and the use of new
                    technologies;
                        ``(E) a significant focus on the teaching and
                    learning needs of the less commonly taught languages,
                    including an assessment of the strategic needs of the
                    United States,

    [[Page 112 STAT. 1778]]

                    the determination of ways to meet those needs
                    nationally, and the publication and dissemination of
                    instructional materials in the less commonly taught
                    languages;
                        ``(F) the development and dissemination of materials
                    designed to serve as a resource for foreign language
                    teachers at the elementary and secondary school levels;
                    and
                        ``(G) the operation of intensive summer language
                    institutes to train advanced foreign language students,
                    to provide professional development, and to improve
                    language instruction through preservice and inservice
                    language training for teachers.

        ``(c) Conditions for Grants.--Grants under this section shall be
    made on such conditions as the Secretary determines to be necessary to
    carry out the provisions of this section.

    ``SEC. 604. <<NOTE: 20 USC 1124.>> UNDERGRADUATE INTERNATIONAL STUDIES
                AND FOREIGN LANGUAGE PROGRAMS.

        ``(a) Incentives for the Creation of New Programs and the
    Strengthening of Existing Programs in Undergraduate International
    Studies and Foreign Language Programs.--
                ``(1) Authority.--The Secretary is authorized to make grants
            to institutions of higher education, combinations of such
            institutions, or partnerships between nonprofit educational
            organizations and institutions of higher education, to assist
            such institutions, combinations or partnerships in planning,
            developing, and carrying out programs to improve undergraduate
            instruction in international studies and foreign languages. Such
            grants shall be awarded to institutions, combinations or
            partnerships seeking to create new programs or to strengthen
            existing programs in foreign languages, area studies, and other
            international fields.
                ``(2) Use of funds.--Grants made under this section may be
            used for Federal share of the cost of projects and activities
            which are an integral part of such a program, such as--
                        ``(A) planning for the development and expansion of
                    undergraduate programs in international studies and
                    foreign languages;
                        ``(B) teaching, research, curriculum development,
                    faculty training in the United States or abroad, and
                    other related activities, including--
                              ``(i) the expansion of library and teaching
                          resources; and
                              ``(ii) preservice and inservice teacher
                          training;
                        ``(C) expansion of opportunities for learning
                    foreign languages, including less commonly taught
                    languages;
                        ``(D) programs under which foreign teachers and
                    scholars may visit institutions as visiting faculty;
                        ``(E) programs designed to develop or enhance
                    linkages between 2- and 4-year institutions of higher
                    education, or baccalaureate and post-baccalaureate
                    programs or institutions;
                        ``(F) the development of undergraduate educational
                    programs--
                              ``(i) in locations abroad where such
                          opportunities are not otherwise available or that
                          serve students for whom such opportunities are not
                          otherwise available; and

    [[Page 112 STAT. 1779]]

                              ``(ii) that provide courses that are closely
                          related to on-campus foreign language and
                          international curricula;
                        ``(G) the integration of new and continuing
                    education abroad opportunities for undergraduate
                    students into curricula of specific degree programs;
                        ``(H) the development of model programs to enrich or
                    enhance the effectiveness of educational programs
                    abroad, including predeparture and postreturn programs,
                    and the integration of educational programs abroad into
                    the curriculum of the home institution;
                        ``(I) the development of programs designed to
                    integrate professional and technical education with
                    foreign languages, area studies, and other international
                    fields;
                        ``(J) the establishment of linkages overseas with
                    institutions of higher education and organizations that
                    contribute to the educational programs assisted under
                    this subsection;
                        ``(K) the conduct of summer institutes in foreign
                    area, foreign language, and other international fields
                    to provide faculty and curriculum development, including
                    the integration of professional and technical education
                    with foreign area and other international studies, and
                    to provide foreign area and other international
                    knowledge or skills to government personnel or private
                    sector professionals in international activities;
                        ``(L) the development of partnerships between--
                              ``(i) institutions of higher education; and
                              ``(ii) the private sector, government, or
                          elementary and secondary education institutions,
                    in order to enhance international knowledge and skills;
                    and
                        ``(M) the use of innovative technology to increase
                    access to international education programs.
                ``(3) Non-federal share.--The non-Federal share of the cost
            of the programs assisted under this subsection--
                        ``(A) may be provided in cash from the private
                    sector corporations or foundations in an amount equal to
                    one-third of the total cost of the programs assisted
                    under this section; or
                        ``(B) may be provided as an in-cash or in-kind
                    contribution from institutional and noninstitutional
                    funds, including State and private sector corporation or
                    foundation contributions, equal to one-half of the total
                    cost of the programs assisted under this section.
                ``(4) Special rule.--The Secretary may waive or reduce the
            required non-Federal share for institutions that--
                        ``(A) are eligible to receive assistance under part
                    A or B of title III or under title V; and
                        ``(B) have submitted a grant application under this
                    section.
                ``(5) Priority.--In awarding grants under this section, the
            Secretary shall give priority to applications from institutions
            of higher education, combinations or partnerships that require
            entering students to have successfully completed at least 2
            years of secondary school foreign language instruction or that

    [[Page 112 STAT. 1780]]

            require each graduating student to earn 2 years of postsecondary
            credit in a foreign language (or have demonstrated equivalent
            competence in the foreign language) or, in the case of a 2-year
            degree granting institution, offer 2 years of postsecondary
            credit in a foreign language.
                ``(6) Grant conditions.--Grants under this subsection shall
            be made on such conditions as the Secretary determines to be
            necessary to carry out this subsection.
                ``(7) Application.--Each application for assistance under
            this subsection shall include--
                        ``(A) evidence that the applicant has conducted
                    extensive planning prior to submitting the application;
                        ``(B) an assurance that the faculty and
                    administrators of all relevant departments and programs
                    served by the applicant are involved in ongoing
                    collaboration with regard to achieving the stated
                    objectives of the application;
                        ``(C) an assurance that students at the applicant
                    institutions, as appropriate, will have equal access to,
                    and derive benefits from, the program assisted under
                    this subsection; and
                        ``(D) an assurance that each institution,
                    combination or partnership will use the Federal
                    assistance provided under this subsection to supplement
                    and not supplant non-Federal funds the institution
                    expends for programs to improve undergraduate
                    instruction in international studies and foreign
                    languages.
                ``(8) Evaluation.--The Secretary may establish requirements
            for program evaluations and require grant recipients to submit
            annual reports that evaluate the progress and performance of
            students participating in programs assisted under this
            subsection.

        ``(b) Programs of National Significance.--The Secretary may also
    award grants to public and private nonprofit agencies and organizations,
    including professional and scholarly associations, whenever the
    Secretary determines such grants will make an especially significant
    contribution to improving undergraduate international studies and
    foreign language programs.
        ``(c) Funding Support.--The Secretary may use not more than 10
    percent of the total amount appropriated for this part for carrying out
    the purposes of this section.

    ``SEC. 605. RESEARCH; STUDIES; ANNUAL REPORT. <<NOTE: 20 USC 1125.>>

        ``(a) Authorized Activities.--The Secretary may, directly or through
    grants or contracts, conduct research and studies that contribute to
    achieving the purposes of this part. Such research and studies may
    include--
                ``(1) studies and surveys to determine needs for increased
            or improved instruction in foreign language, area studies, or
            other international fields, including the demand for foreign
            language, area, and other international specialists in
            government, education, and the private sector;
                ``(2) studies and surveys to assess the utilization of
            graduates of programs supported under this title by
            governmental, educational, and private sector organizations and
            other studies assessing the outcomes and effectiveness of
            programs so supported;

    [[Page 112 STAT. 1781]]

                ``(3) evaluation of the extent to which programs assisted
            under this title that address national needs would not otherwise
            be offered;
                ``(4) comparative studies of the effectiveness of strategies
            to provide international capabilities at institutions of higher
            education;
                ``(5) research on more effective methods of providing
            instruction and achieving competency in foreign languages, area
            studies, or other international fields;
                ``(6) the development and publication of specialized
            materials for use in foreign language, area studies, and other
            international fields, or for training foreign language, area,
            and other international specialists;
                ``(7) studies and surveys of the uses of technology in
            foreign language, area studies, and international studies
            programs;
                ``(8) studies and evaluations of effective practices in the
            dissemination of international information, materials, research,
            teaching strategies, and testing techniques throughout the
            education community, including elementary and secondary schools;
            and
                ``(9) the application of performance tests and standards
            across all areas of foreign language instruction and classroom
            use.

        ``(b) <<NOTE: Publication.>> Annual Report.--The Secretary shall
    prepare, publish, and announce an annual report listing the books and
    research materials produced with assistance under this section.

    ``SEC. 606. <<NOTE: 20 USC 1126.>> TECHNOLOGICAL INNOVATION AND
                COOPERATION FOR FOREIGN INFORMATION ACCESS.

        ``(a) Authority.--The Secretary is authorized to make grants to
    institutions of higher education, public or nonprofit private libraries,
    or consortia of such institutions or libraries, to develop innovative
    techniques or programs using new electronic technologies to collect,
    organize, preserve, and widely disseminate information on world regions
    and countries other than the United States that address our Nation's
    teaching and research needs in international education and foreign
    languages.
        ``(b) Authorized Activities.--Grants under this section may be
    used--
                ``(1) to facilitate access to or preserve foreign
            information resources in print or electronic forms;
                ``(2) to develop new means of immediate, full-text document
            delivery for information and scholarship from abroad;
                ``(3) to develop new means of shared electronic access to
            international data;
                ``(4) to support collaborative projects of indexing,
            cataloging, and other means of bibliographic access for scholars
            to important research materials published or distributed outside
            the United States;
                ``(5) to develop methods for the wide dissemination of
            resources written in non-Roman language alphabets;
                ``(6) to assist teachers of less commonly taught languages
            in acquiring, via electronic and other means, materials suitable
            for classroom use; and
                ``(7) to promote collaborative technology based projects in
            foreign languages, area studies, and international studies among
            grant recipients under this title.

    [[Page 112 STAT. 1782]]

        ``(c) Application.--Each institution or consortium desiring a grant
    under this section shall submit an application to the Secretary at such
    time, in such manner, and accompanied by such information and assurances
    as the Secretary may reasonably require.
        ``(d) Match Required.--The Federal share of the total cost of
    carrying out a program supported by a grant under this section shall not
    be more than 66\2/3\ percent. The non-Federal share of such cost may be
    provided either in-kind or in cash, and may include contributions from
    private sector corporations or foundations.''.

    ``SEC. 607. SELECTION OF CERTAIN GRANT RECIPIENTS. <<NOTE: 20 USC
                1127.>>

        ``(a) Competitive Grants.--The Secretary shall award grants under
    section 602 competitively on the basis of criteria that
    separately, but not less rigorously, evaluates the applications for
    comprehensive and undergraduate language and area centers and programs.
        ``(b) Selection Criteria.--The Secretary shall set criteria for
    grants awarded under section 602 by which a determination of excellence
    shall be made to meet the differing objectives of graduate and
    undergraduate institutions.
        ``(c) Equitable Distribution of Grants.--The Secretary shall, to the
    extent practicable, award grants under this part (other than section
    602) in such manner as to achieve an equitable distribution of the grant
    funds throughout the United States, based on the merit of a proposal as
    determined pursuant to a peer review process involving broadly
    representative professionals.

    ``SEC. 608. EQUITABLE DISTRIBUTION OF CERTAIN FUNDS. <<NOTE: 20 USC
                1128.>>

        ``(a) Selection Criteria.--The Secretary shall make excellence the
    criterion for selection of grants awarded under section 602.
        ``(b) Equitable Distribution.--To the extent practicable and
    consistent with the criterion of excellence, the Secretary shall award
    grants under this part (other than section 602) in such a manner as will
    achieve an equitable distribution of funds throughout the United States.
        ``(c) Support for Undergraduate Education.--The Secretary shall also
    award grants under this part in such manner as to ensure that an
    appropriate portion of the funds appropriated for this part (as
    determined by the Secretary) are used to support undergraduate
    education.

    ``SEC. 609. AMERICAN OVERSEAS RESEARCH CENTERS. <<NOTE: 20 USC 1128a.>>

        ``(a) <<NOTE: Contracts.>>  Centers Authorized.--The Secretary is
    authorized to make grants to and enter into contracts with any American
    overseas research center that is a consortium of institutions of higher
    education (hereafter in this section referred to as a ``center'') to
    enable such center to promote postgraduate research, exchanges and area
    studies.

        ``(b) Use of Grants.--Grants made and contracts entered into
    pursuant to this section may be used to pay all or a portion of the cost
    of establishing or operating a center or program,
    including--
                ``(1) the cost of faculty and staff stipends and salaries;
                ``(2) the cost of faculty, staff, and student travel;
                ``(3) the cost of the operation and maintenance of overseas
            facilities;
                ``(4) the cost of teaching and research materials;

    [[Page 112 STAT. 1783]]

                ``(5) the cost of acquisition, maintenance, and preservation
            of library collections;
                ``(6) the cost of bringing visiting scholars and faculty to
            a center to teach or to conduct research;
                ``(7) the cost of organizing and managing conferences; and
                ``(8) the cost of publication and dissemination of material
            for the scholarly and general public.

        ``(c) Limitation.--The Secretary shall only award grants to and
    enter into contracts with centers under this section that--
                ``(1) receive more than 50 percent of their funding from
            public or private United States sources;
                ``(2) have a permanent presence in the country in which the
            center is located; and
                ``(3) are organizations described in section 501(c)(3) of
            the Internal Revenue Code of 1986 which are exempt from taxation
            under section 501(a) of such Code.

        ``(d) Development Grants.--The Secretary is authorized to make
    grants for the establishment of new centers. The grants may be used to
    fund activities that, within 1 year, will result in the creation of a
    center described in subsection (c).

    ``SEC. 610. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1128b.>>

        ``There are authorized to be appropriated to carry out this part
    $80,000,000 for fiscal year 1999, and such sums as may be necessary for
    each of the 4 succeeding fiscal years.''.

    SEC. 602. BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS.

        (a) Amendment to Heading.--The heading for section 611 (20 U.S.C.
    1130) is amended to read as follows:

    ``SEC. 611. FINDINGS AND PURPOSES.''.

        (b) Centers.--Section 612 (20 U.S.C. 1130-1) is amended--
                (1) in subsection (c)--
                        (A) in paragraph (1)--
                              (i) in subparagraph (B), by striking
                          ``advanced''; and
                              (ii) in subparagraph (C), by striking
                          ``evening or summer''; and
                        (B) in paragraph (2)(C), by inserting ``foreign
                    language studies,'' after ``area studies,''; and
                (2) in subsection (d)(2)(G), by inserting ``, such as a
            representative of a community college in the region served by
            the center'' before the period.

        (c) Authorization of Appropriations.--Section 614 (20 U.S.C. 1130b)
    is amended--
                (1) in subsection (a), by striking ``1993'' and inserting
            ``1999''; and
                (2) in subsection (b), by striking ``1993'' and inserting
            ``1999''.

    SEC. 603. INSTITUTE FOR INTERNATIONAL PUBLIC POLICY.

        (a) Minority Foreign Service Professional Development Program.--
    Section 621(e) (20 U.S.C. 1131(e)) is amended by striking ``one-fourth''
    and inserting ``one-half''.
        (b) Institutional Development.--Part C of title VI (20 U.S.C. 1131
    et seq.) is amended--

    [[Page 112 STAT. 1784]]

                (1) by redesignating sections 622 through 627 (20 U.S.C.
            1131a through 1131f) as sections 623 through 628, respectively;
            and
                (2) by inserting after section 621 (20 U.S.C. 1131) the
            following:

    ``SEC. 622. INSTITUTIONAL DEVELOPMENT. <<NOTE: Minorities. 20 USC 1131-
                1.>>

        ``(a) In General.--The Institute shall award grants, from amounts
    available to the Institute for each fiscal year, to historically Black
    colleges and universities, Hispanic-serving institutions, Tribally
    Controlled Colleges or Universities, and minority institutions, to
    enable such colleges, universities, and institutions to strengthen
    international affairs programs.
        ``(b) Application.--No grant may be made by the Institute unless an
    application is made by the college, university, or institution at such
    time, in such manner, and accompanied by such information as the
    Institute may require.
        ``(c) Definitions.--In this section--
                ``(1) the term `historically Black college and university'
            has the meaning given the term in section 322;
                ``(2) the term `Hispanic-serving institution' has the
            meaning given the term in section 502;
                ``(3) the term `Tribally Controlled College or University'
            has the meaning given the term in section 2 of the Tribally
            Controlled College or University Assistance Act of 1978 (25
            U.S.C. 1801); and
                ``(4) the term `minority institution' has the meaning given
            the term in section 365.''.

        (c) Study Abroad Program.--Section 623 (as redesignated by
    subsection(b)(1)) (20 U.S.C. 1131a)--
                (1) in the section heading, by striking ``junior year'' and
            inserting ``study'';
                (2) in subsection (b)(2)--
                        (A) by inserting ``, or completing the third year of
                    study in the case of a summer abroad program,'' after
                    ``study''; and
                        (B) by striking ``junior year'' and inserting
                    ``study''; and
                (3) in subsection (c)--
                        (A) in the matter preceding paragraph (1), by
                    striking ``junior year'' and inserting ``study'';
                        (B) in paragraph (1), by striking ``junior year''
                    and inserting ``study''; and
                        (C) in paragraph (2)--
                              (i) by striking ``one-half'' and inserting
                          ``one-third''; and
                              (ii) by striking ``junior year'' and inserting
                          ``study''.

        (d) Internships.--Section 625 <<NOTE: 20 USC 1131c.>> (as
    redesignated by subsection (b)(1)) (20 U.S.C. 1132c)--
                (1) by striking ``The Institute'' and inserting ``(a) In
            General.--The Institute''; and
                (2) by adding at the end the following:

        ``(b) <<NOTE: Contracts.>> Postbaccalaureate Internships.--The
    Institute shall enter into agreements with institutions of higher
    education described in the first sentence of subsection (a) to conduct
    internships for students who have completed study for a baccalaureate

    [[Page 112 STAT. 1785]]

    degree. The internship program authorized by this subsection shall--
                ``(1) assist the students to prepare for a master's degree
            program;
                ``(2) be carried out with the assistance of the Woodrow
            Wilson International Center for Scholars;
                ``(3) contain work experience for the students designed to
            contribute to the students' preparation for a master's degree
            program; and
                ``(4) be assisted by the Interagency Committee on Minority
            Careers in International Affairs established under subsection
            (c).

        ``(c) Interagency Committee on Minority Careers in International
    Affairs.--
                ``(1) Establishment.--There is established in the executive
            branch of the Federal Government an Interagency Committee on
            Minority Careers in International Affairs composed of not less
            than 7 members, including--
                        ``(A) the Under Secretary for Farm and Foreign
                    Agricultural Services of the Department of Agriculture,
                    or the Under Secretary's designee;
                        ``(B) the Assistant Secretary and Director General,
                    of the United States and Foreign Commercial Service of
                    the Department of Commerce, or the Assistant Secretary
                    and Director General's designee;
                        ``(C) the Under Secretary of Defense for Personnel
                    and Readiness of the Department of Defense, or the Under
                    Secretary's designee;
                        ``(D) the Assistant Secretary for Postsecondary
                    Education in the Department of Education, or the
                    Assistant Secretary's designee;
                        ``(E) the Director General of the Foreign Service of
                    the Department of State, or the Director General's
                    designee;
                        ``(F) the General Counsel of the Agency for
                    International Development, or the General Counsel's
                    designee; and
                        ``(G) the Associate Director for Educational and
                    Cultural Affairs of the United States Information
                    Agency, or the Associate Director's designee.
                ``(2) Functions.--The Interagency Committee established by
            this section shall--
                        ``(A) on an annual basis inform the Secretary and
                    the Institute regarding ways to advise students
                    participating in the internship program assisted under
                    this section with respect to goals for careers in
                    international affairs;
                        ``(B) locate for students potential internship
                    opportunities in the Federal Government related to
                    international affairs; and
                        ``(C) promote policies in each department and agency
                    participating in the Committee that are designed to
                    carry out the objectives of this part.''.

        (f ) Conforming Amendment.--Section 627 (as redesignated by
    subsection (b)(1)) (20 U.S.C. 1131e) is amended by striking ``625'' and
    inserting ``626''.

    [[Page 112 STAT. 1786]]

        (g) Authorization of Appropriations.--Section 628 (as redesignated
    by subsection (b)(1)) (20 U.S.C. 1131f ), by striking ``1993'' and
    inserting ``1999''.

    SEC. 604. GENERAL PROVISIONS.

        (a) Definitions.--Section 631(a) (20 U.S.C. 1132(a)) is
    amended--
                (1) by striking ``and'' at the end of paragraph (7);
                (2) by striking the period at the end of paragraph (8) and
            inserting ``; and''; and
                (3) by inserting after paragraph (8) the following:
                ``(9) the term `educational programs abroad' means programs
            of study, internships, or service learning outside the United
            States which are part of a foreign language or other
            international curriculum at the undergraduate or graduate
            education levels.''.

        (b) Repeal.--Section 632 (20 U.S.C. 1132-1) is repealed.

           TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

    SEC. 701. REVISION OF TITLE VII.

        Title VII (20 U.S.C. 1132a et seq.) is amended to read as follows:

          ``TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

    ``SEC. 700. PURPOSE. <<NOTE: 20 USC 1133.>>

        ``It is the purpose of this title--
                ``(1) to authorize national graduate fellowship programs--
                        ``(A) in order to attract students of superior
                    ability and achievement, exceptional promise, and
                    demonstrated financial need, into high-quality graduate
                    programs and provide the students with the financial
                    support necessary to complete advanced degrees; and
                        ``(B) that are designed to--
                              ``(i) sustain and enhance the capacity for
                          graduate education in areas of national need; and
                              ``(ii) encourage talented students to pursue
                          scholarly careers in the humanities, social
                          sciences, and the arts; and
                ``(2) to promote postsecondary programs.

                      ``PART A--GRADUATE EDUCATION PROGRAMS

                 ``Subpart 1--Jacob K. Javits Fellowship Program

    ``SEC. 701. AWARD OF JACOB K. JAVITS FELLOWSHIPS. <<NOTE: 20 USC
                1134.>>

        ``(a) Authority and Timing of Awards.--The Secretary is authorized
    to award fellowships in accordance with the provisions

    [[Page 112 STAT. 1787]]

    of this subpart for graduate study in the arts, humanities, and social
    sciences by students of superior ability selected on the basis of
    demonstrated achievement, financial need, and exceptional promise. The
    fellowships shall be awarded to students who are eligible to receive any
    grant, loan, or work assistance pursuant to section 484 and intend to
    pursue a doctoral degree, except that fellowships may be granted to
    students pursuing a master's degree in those fields in which the
    master's degree is the terminal highest degree awarded in the area of
    study. All funds appropriated in a fiscal year shall be obligated and
    expended to the students for fellowships for use in the academic year
    beginning after July 1 of the fiscal year following the fiscal year for
    which the funds were appropriated. The fellowships shall be awarded for
    only 1 academic year of study and shall be renewable for a period not to
    exceed 4 years of study.
        ``(b) Designation of Fellows.--Students receiving awards under this
    subpart shall be known as `Jacob K. Javits Fellows'.
        ``(c) Interruptions of Study.--The institution of higher education
    may allow a fellowship recipient to interrupt periods of study for a
    period not to exceed 12 months for the purpose of work, travel, or
    independent study away from the campus, if such independent study is
    supportive of the fellowship recipient's academic program and shall
    continue payments for those 12-month periods during which the student is
    pursuing travel or independent study supportive of the recipient's
    academic program.
        ``(d) <<NOTE: Deadlines.>> Process and Timing of Competition.--The
    Secretary shall make applications for fellowships under this part
    available not later than October 1 of the academic year preceding the
    academic year for which fellowships will be awarded, and shall announce
    the recipients of fellowships under this section not later than March 1
    of the academic year preceding the academic year for which the
    fellowships are awarded.

        ``(e) Authority To Contract.--The Secretary is authorized to enter
    into a contract with a nongovernmental agency to administer the program
    assisted under this part if the Secretary determines that entering into
    the contract is an efficient means of carrying out the program.

    ``SEC. 702. ALLOCATION OF FELLOWSHIPS. <<NOTE: 20 USC 1134a.>>

        ``(a) Fellowship Board.--
                ``(1) Appointment.--The Secretary shall appoint a Jacob K.
            Javits Fellows Program Fellowship Board (hereinafter in this
            subpart referred to as the `Board') consisting of 9 individuals
            representative of both public and private institutions of higher
            education who are especially qualified to serve on the Board. In
            making appointments, the Secretary shall give due consideration
            to the appointment of individuals who are highly respected in
            the academic community. The Secretary shall assure that
            individuals appointed to the Board are broadly representative of
            a range of disciplines in graduate education in arts,
            humanities, and social sciences.
                ``(2) Duties.--The Board shall--
                        ``(A) establish general policies for the program
                    established by this subpart and oversee the program's
                    operation;
                        ``(B) establish general criteria for the award of
                    fellowships in academic fields identified by the Board,
                    or, in the event that the Secretary enters into a
                    contract with

    [[Page 112 STAT. 1788]]

                    a nongovernmental entity to administer the program
                    assisted under this subpart, by such nongovernmental
                    entity;
                        ``(C) appoint panels of academic scholars with
                    distinguished backgrounds in the arts, humanities, and
                    social sciences for the purpose of selecting fellows,
                    except that, in the event that the Secretary enters into
                    a contract with a nongovernmental entity to administer
                    the program, such panels may be appointed by such
                    nongovernmental entity; and
                        ``(D) <<NOTE: Reports.>> prepare and submit to the
                    Congress at least once in every 3-year period a report
                    on any modifications in the program that the Board
                    determines are appropriate.
                ``(3) Consultations.--In carrying out its responsibilities,
            the Board shall consult on a regular basis with representatives
            of the National Science Foundation, the National Endowment for
            the Humanities, the National Endowment for the Arts, and
            representatives of institutions of higher education and
            associations of such institutions, learned societies, and
            professional organizations.
                ``(4) Term.--The term of office of each member of the Board
            shall be 4 years, except that any member appointed to fill a
            vacancy shall serve for the remainder of the term for which the
            predecessor of the member was appointed. No member may serve for
            a period in excess of 6 years.
                ``(5) Initial meeting; vacancy.--The Secretary shall call
            the first meeting of the Board, at which the first order of
            business shall be the election of a Chairperson and a Vice
            Chairperson, who shall serve until 1 year after the date of the
            appointment of the Chairperson and Vice Chairperson. Thereafter
            each officer shall be elected for a term of 2 years. In case a
            vacancy occurs in either office, the Board shall elect an
            individual from among the members of the Board to fill such
            vacancy.
                ``(6) Quorum; additional meetings.--(A) A majority of the
            members of the Board shall constitute a quorum.
                ``(B) The Board shall meet at least once a year or more
            frequently, as may be necessary, to carry out the Board's
            responsibilities.
                ``(7) Compensation.--Members of the Board, while serving on
            the business of the Board, shall be entitled to receive
            compensation at rates fixed by the Secretary, but not exceeding
            the rate of basic pay payable for level IV of the Executive
            Schedule, including travel time, and while so serving away from
            their homes or regular places of business, the members may be
            allowed travel expenses, including per diem in lieu of
            subsistence, as authorized by section 5703 of title 5, United
            States Code, for persons in Government service employed
            intermittently.

        ``(b) Use of Selection Panels.--The recipients of fellowships shall
    be selected in each designated field from among all applicants
    nationwide in each field by distinguished panels appointed by the Board
    to make such selections under criteria established by the Board, except
    that, in the event that the Secretary enters into a contract with a
    nongovernmental entity to administer the program, such panels may be
    appointed by such nongovernmental entity. The number of recipients in
    each field in each year shall

    [[Page 112 STAT. 1789]]

    not exceed the number of fellows allocated to that field for that year
    by the Board.
        ``(c) Fellowship Portability.--Each recipient shall be entitled to
    use the fellowship in a graduate program at any accredited institution
    of higher education in which the recipient may decide to enroll.

    ``SEC. 703. STIPENDS. <<NOTE: 20 USC 1134b.>>

        ``(a) Award by Secretary.--The Secretary shall pay to individuals
    awarded fellowships under this subpart such stipends as the Secretary
    may establish, reflecting the purpose of this program to encourage
    highly talented students to undertake graduate study as described in
    this subpart. In the case of an individual who receives such
    individual's first stipend under this subpart in academic year 1999-2000
    or any succeeding academic year, such stipend shall be set at a level of
    support equal to that provided by the National Science Foundation
    graduate fellowships, except such amount shall be adjusted as necessary
    so as not to exceed the fellow's demonstrated level of need determined
    in accordance with part F of title IV.
        ``(b) Institutional Payments.--
                ``(1) In general.--(A) The Secretary shall (in addition to
            stipends paid to individuals under this subpart) pay to the
            institution of higher education, for each individual awarded a
            fellowship under this subpart at such institution, an
            institutional allowance. Except as provided in subparagraph (B),
            such allowance shall be, for 1999-2000 and succeeding academic
            years, the same amount as the institutional payment made for
            1998-1999 under section 933(b) (as such section was in effect on
            the day before the date of enactment of the Higher Education
            Amendments of 1998) adjusted for 1999-2000 and annually
            thereafter in accordance with inflation as determined by the
            Department of Labor's Consumer Price Index for the previous
            calendar year.
                ``(B) The institutional allowance paid under subparagraph
            (A) shall be reduced by the amount the institution charges and
            collects from a fellowship recipient for tuition and other
            expenses as part of the recipient's instructional program.
                ``(2) <<NOTE: Effective date.>> Special rules.--(A)
            Beginning March 1, 1992, any applicant for a fellowship under
            this subpart who has been notified in writing by the Secretary
            that such applicant has been selected to receive such a
            fellowship and is subsequently notified that the fellowship
            award has been withdrawn, shall receive such fellowship unless
            the Secretary subsequently makes a determination that such
            applicant submitted fraudulent information on the application.
                ``(B) Subject to the availability of appropriations, amounts
            payable to an institution by the Secretary pursuant to this
            subsection shall not be reduced for any purpose other than the
            purposes specified under paragraph (1).

    ``SEC. 704. FELLOWSHIP CONDITIONS. <<NOTE: 20 USC 1134c.>>

        ``(a) Requirements for Receipt.--An individual awarded a fellowship
    under the provisions of this subpart shall continue to receive payments
    provided in section 703 only during such periods as the Secretary finds
    that such individual is maintaining satisfactory proficiency in, and
    devoting essentially full time to, study or research in the field in
    which such fellowship was awarded,

    [[Page 112 STAT. 1790]]

    in an institution of higher education, and is not engaging in gainful
    employment other than part-time employment by such institution in
    teaching, research, or similar activities, approved by the Secretary.
        ``(b) Reports From Recipients.--The Secretary is authorized to
    require reports containing such information in such form and filed at
    such times as the Secretary determines necessary from any person awarded
    a fellowship under the provisions of this subpart. The reports shall be
    accompanied by a certificate from an appropriate official at the
    institution of higher education, library, archive, or other research
    center approved by the Secretary, stating that such individual is making
    satisfactory progress in, and is devoting essentially full time to the
    program for which the fellowship was awarded.

    ``SEC. 705. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1134d.>>

        ``There are authorized to be appropriated $30,000,000 for fiscal
    year 1999 and such sums as may be necessary for each of the 4 succeeding
    fiscal years to carry out this subpart.

           ``Subpart 2--Graduate Assistance in Areas of National Need

    ``SEC. 711. <<NOTE: 20 USC 1135.>> GRANTS TO ACADEMIC DEPARTMENTS AND
                PROGRAMS OF INSTITUTIONS.

        ``(a) Grant Authority.--
                ``(1) In general.--The Secretary shall make grants to
            academic departments, programs and other academic units of
            institutions of higher education that provide courses of study
            leading to a graduate degree in order to enable such
            institutions to provide assistance to graduate students in
            accordance with this subpart.
                ``(2) Additional grants.--The Secretary may also make grants
            to such departments, programs and other academic units of
            institutions of higher education granting graduate degrees which
            submit joint proposals involving nondegree granting institutions
            which have formal arrangements for the support of doctoral
            dissertation research with degree-granting institutions.
            Nondegree granting institutions eligible for awards as part of
            such joint proposals include any organization which--
                        ``(A) is described in section 501(c)(3) of the
                    Internal Revenue Code of 1986, and is exempt from tax
                    under section 501(a) of such Code;
                        ``(B) is organized and operated substantially to
                    conduct scientific and cultural research and graduate
                    training programs;
                        ``(C) is not a private foundation;
                        ``(D) has academic personnel for instruction and
                    counseling who meet the standards of the institution of
                    higher education in which the students are enrolled; and
                        ``(E) has necessary research resources not otherwise
                    readily available in such institutions to such students.

        ``(b) Award and Duration of Grants.--
                ``(1) Awards.--The principal criterion for the award of
            grants shall be the relative quality of the graduate programs
            presented in competing applications. Consistent with an
            allocation of awards based on quality of competing applications,

    [[Page 112 STAT. 1791]]

            the Secretary shall, in awarding such grants, promote an
            equitable geographic distribution among eligible public and
            private institutions of higher education.
                ``(2)Duration and Amount.--
                        ``(A) Duration.--The Secretary shall award a grant
                    under this subpart for a period of 3 years.
                        ``(B) Amount.--The Secretary shall award a grant to
                    an academic department, program or unit of an
                    institution of higher education under this subpart for a
                    fiscal year in an amount that is not less than $100,000
                    and not greater than $750,000.
                ``(3) Reallotment.--Whenever the Secretary determines that
            an academic department, program or unit of an institution of
            higher education is unable to use all of the amounts available
            to the department, program or unit under this subpart, the
            Secretary shall, on such dates during each fiscal year as the
            Secretary may fix, reallot the amounts not needed to academic
            departments, programs and units of institutions which can use
            the grants authorized by this subpart.

        ``(c) Preference To Continuing Grant Recipients.--
                ``(1) In general.--The Secretary shall make new grant awards
            under this subpart only to the extent that each previous grant
            recipient under this subpart has received continued funding in
            accordance with subsection (b)(2)(A).
                ``(2) Ratable reduction.--To the extent that appropriations
            under this subpart are insufficient to comply with paragraph
            (1), available funds shall be distributed by ratably reducing
            the amounts required to be awarded under subsection (b)(2)(A).

    ``SEC. 712. INSTITUTIONAL ELIGIBILITY. <<NOTE: 20 USC 1135a.>>

        ``(a) Eligibility Criteria.--Any academic department, program or
    unit of an institution of higher education that offers a program of
    postbaccalaureate study leading to a graduate degree in an area of
    national need (as designated under subsection (b)) may apply for a grant
    under this subpart. No department, program or unit shall be eligible for
    a grant unless the program of postbaccalaureate study has been in
    existence for at least 4 years at the time of application for assistance
    under this subpart.
        ``(b) Designation of Areas of National Need.--After consultation
    with appropriate Federal and nonprofit agencies and organizations, the
    Secretary shall designate areas of national need. In making such
    designations, the Secretary shall take into account the extent to which
    the interest in the area is compelling, the extent to which other
    Federal programs support postbaccalaureate study in the area concerned,
    and an assessment of how the program could achieve the most significant
    impact with available resources.

    ``SEC. 713. CRITERIA FOR APPLICATIONS. <<NOTE: 20 USC 1135b.>>

        ``(a) Selection of Applications.--The Secretary shall make grants to
    academic departments, programs and units of institutions of higher
    education on the basis of applications submitted in accordance with
    subsection (b). Applications shall be ranked on program quality by
    review panels of nationally recognized scholars and evaluated on the
    quality and effectiveness of the academic program and the achievement
    and promise of the students to be served. To the extent possible
    (consistent with other provisions of this

    [[Page 112 STAT. 1792]]

    section), the Secretary shall make awards that are consistent with
    recommendations of the review panels.
        ``(b) Contents of Applications.--An academic department, program or
    unit of an institution of higher education, in the department, program
    or unit's application for a grant, shall--
                ``(1) describe the current academic program of the applicant
            for which the grant is sought;
                ``(2) provide assurances that the applicant will provide,
            from other non-Federal sources, for the purposes of the
            fellowship program under this subpart an amount equal to at
            least 25 percent of the amount of the grant received under this
            subpart, which contribution may be in cash or in kind, fairly
            valued;
                ``(3) set forth policies and procedures to assure that, in
            making fellowship awards under this subpart, the institution
            will seek talented students from traditionally underrepresented
            backgrounds, as determined by the Secretary;
                ``(4) describe the number, types, and amounts of the
            fellowships that the applicant intends to offer with grant funds
            provided under this part;
                ``(5) set forth policies and procedures to assure that, in
            making fellowship awards under this subpart, the institution
            will make awards to individuals who--
                        ``(A) have financial need, as determined under part
                    F of title IV;
                        ``(B) have excellent academic records in their
                    previous programs of study; and
                        ``(C) plan to pursue the highest possible degree
                    available in their course of study;
                ``(6) set forth policies and procedures to ensure that
            Federal funds made available under this subpart for any fiscal
            year will be used to supplement and, to the extent practical,
            increase the funds that would otherwise be made available for
            the purpose of this subpart and in no case to supplant those
            funds;
                ``(7) provide assurances that, in the event that funds made
            available to the academic department, program or unit under this
            subpart are insufficient to provide the assistance due a student
            under the commitment entered into between the academic
            department, program or unit and the student, the academic
            department, program or unit will, from any funds available to
            the department, program or unit, fulfill the commitment to the
            student;
                ``(8) provide that the applicant will comply with the
            limitations set forth in section 715;
                ``(9) provide assurances that the academic department will
            provide at least 1 year of supervised training in instruction
            for students; and
                ``(10) include such other information as the Secretary may
            prescribe.

    ``SEC. 714. AWARDS TO GRADUATE STUDENTS. <<NOTE: 20 USC 1135c.>>

        ``(a) Commitments to Graduate Students.--
                ``(1) In general.--An academic department, program or unit
            of an institution of higher education shall make commitments to
            graduate students who are eligible students under section 484
            (including students pursuing a doctoral degree after having
            completed a master's degree program at an institution

    [[Page 112 STAT. 1793]]

            of higher education) at any point in their graduate study to
            provide stipends for the length of time necessary for a student
            to complete the course of graduate study, but in no case longer
            than 5 years.
                ``(2) Special rule.--No such commitments shall be made to
            students under this subpart unless the academic department,
            program or unit has determined adequate funds are available to
            fulfill the commitment from funds received or anticipated under
            this subpart, or from institutional funds.

        ``(b) Amount of Stipends.--The Secretary shall make payments to
    institutions of higher education for the purpose of paying stipends to
    individuals who are awarded fellowships under this subpart. The stipends
    the Secretary establishes shall reflect the purpose of the program under
    this subpart to encourage highly talented students to undertake graduate
    study as described in this subpart. In the case of an individual who
    receives such individual's first stipend under this subpart in academic
    year 1999-2000 or any succeeding academic year, such stipend shall be
    set at a level of support equal to that provided by the National Science
    Foundation graduate fellowships, except such amount shall be adjusted as
    necessary so as not to exceed the fellow's demonstrated level of need as
    determined under part F of title IV.
        ``(c) Treatment of Institutional Payments.--An institution of higher
    education that makes institutional payments for tuition and fees on
    behalf of individuals supported by fellowships under this subpart in
    amounts that exceed the institutional payments made by the Secretary
    pursuant to section 716(a) may count such excess toward the amounts the
    institution is required to provide pursuant to section 714(b)(2).
        ``(d) Academic Progress Required.--Notwithstanding the provisions of
    subsection (a), no student shall receive an award--
                ``(1) except during periods in which such student is
            maintaining satisfactory progress in, and devoting essentially
            full time to, study or research in the field in which such
            fellowship was awarded; or
                ``(2) if the student is engaging in gainful employment other
            than part-time employment involved in teaching, research, or
            similar activities determined by the institution to be in
            support of the student's progress towards a degree.

    ``SEC. 715. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION. <<NOTE: 20 USC
                1135d.>>

        ``(a) Institutional Payments.--
                ``(1) In general.--The Secretary shall (in addition to
            stipends paid to individuals under this subpart) pay to the
            institution of higher education, for each individual awarded a
            fellowship under this subpart at such institution, an
            institutional allowance. Except as provided in paragraph (2),
            such allowance shall be, for 1999-2000 and succeeding academic
            years, the same amount as the institutional payment made for
            1998-1999 adjusted annually thereafter in accordance with
            inflation as determined by the Department of Labor's Consumer
            Price Index for the previous calendar year.
                ``(2) Reduction.--The institutional allowance paid under
            paragraph (1) shall be reduced by the amount the institution
            charges and collects from a fellowship recipient for tuition and
            other expenses as part of the recipient's instructional program.

    [[Page 112 STAT. 1794]]

        ``(b) Use for Overhead Prohibited.--Funds made available pursuant to
    this subpart may not be used for the general operational overhead of the
    academic department or program.

    ``SEC. 716. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1135ee.>>

        ``There are authorized to be appropriated $35,000,000 for fiscal
    year 1999 and such sums as may be necessary for each of the 4 succeeding
    fiscal years to carry out this subpart.

      ``Subpart 3--Thurgood Marshall Legal Educational Opportunity Program

    ``SEC. 721. LEGAL EDUCATIONAL OPPORTUNITY PROGRAM. <<NOTE: 20 USC
                1136.>>

        ``(a) Program Authority.--The Secretary shall carry out a program to
    be known as the `Thurgood Marshall Legal Educational Opportunity
    Program' designed to provide low-income, minority, or disadvantaged
    college students with the information, preparation, and financial
    assistance to gain access to and complete law school study.
        ``(b) Eligibility.--A college student is eligible for assistance
    under this section if the student is--
                ``(1) from a low-income family;
                ``(2) a minority; or
                ``(3) from an economically or otherwise disadvantaged
            background.

        ``(c) Contract or Grant Authorized.--The Secretary is authorized to
    enter into a contract with, or make a grant to, the Council on Legal
    Education Opportunity, for a period of not less than 5 years--
                ``(1) to identify college students who are from low-income
            families, are minorities, or are from disadvantaged backgrounds
            described in subsection (b)(3);
                ``(2) to prepare such students for study at accredited law
            schools;
                ``(3) to assist such students to select the appropriate law
            school, make application for entry into law school, and receive
            financial assistance for such study;
                ``(4) to provide support services to such students who are
            first-year law students to improve retention and success in law
            school studies; and
                ``(5) to motivate and prepare such students with respect to
            law school studies and practice in low-income communities.

        ``(d) Services Provided.--In carrying out the purposes described in
    subsection (c), the contract or grant shall provide for the delivery of
    services through prelaw information resource centers, summer institutes,
    midyear seminars, and other educational activities, conducted under this
    section. Such services may include--
                ``(1) information and counseling regarding--
                        ``(A) accredited law school academic programs,
                    especially tuition, fees, and admission requirements;
                        ``(B) course work offered and required for
                    graduation;
                        ``(C) faculty specialties and areas of legal
                    emphasis; and
                        ``(D) undergraduate preparatory courses and
                    curriculum selection;

    [[Page 112 STAT. 1795]]

                ``(2) tutoring and academic counseling, including assistance
            in preparing for bar examinations;
                ``(3) prelaw mentoring programs, involving law school
            faculty, members of State and local bar associations, and
            retired and sitting judges, justices, and magistrates;
                ``(4) assistance in identifying preparatory courses and
            material for the law school aptitude or admissions tests;
                ``(5) summer institutes for Thurgood Marshall Fellows that
            expose the Fellows to a rigorous curriculum that emphasizes
            abstract thinking, legal analysis, research, writing, and
            examination techniques; and
                ``(6) midyear seminars and other educational activities that
            are designed to reinforce reading, writing, and studying skills
            of Thurgood Marshall Fellows.

        ``(e) Duration of the Provision of Services.--The services described
    in subsection (d) may be provided--
                ``(1) prior to the period of law school study;
                ``(2) during the period of law school study; and
                ``(3) during the period following law school study and prior
            to taking a bar examination.

        ``(f ) Subcontracts and Subgrants.--For the purposes of planning,
    developing, or delivering one or more of the services described in
    subsection (d), the Council on Legal Education Opportunity shall enter
    into subcontracts with, and make subgrants to, institutions of higher
    education, law schools, public and private agencies and organizations,
    and combinations of such institutions, schools, agencies, and
    organizations.
        ``(g) Stipends.--The Secretary shall annually establish the maximum
    stipend to be paid (including allowances for participant travel and for
    the travel of the dependents of the participant) to Thurgood Marshall
    Fellows for the period of participation in summer institutes and midyear
    seminars. A Fellow may be eligible for such a stipend only if the
    Thurgood Marshall Fellow maintains satisfactory academic progress toward
    the Juris Doctor or Bachelor of Laws degree, as determined by the
    respective institutions.
        ``(h) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section $5,000,000 for fiscal year 1999
    and each of the 4 succeeding fiscal years.

                         ``Subpart 4--General Provisions

    ``SEC. 731. ADMINISTRATIVE PROVISIONS FOR SUBPARTS 1, 2, AND
                3. <<NOTE: 20 USC 1137.>>

        ``(a) Coordinated Administration.--In carrying out the purpose
    described in section 700(1), the Secretary shall provide for coordinated
    administration and regulation of graduate programs assisted under
    subparts 1, 2, and 3 with other Federal programs providing assistance
    for graduate education in order to minimize duplication and improve
    efficiency to ensure that the programs are carried out in a manner most
    compatible with academic practices and with the standard timetables for
    applications for, and notifications of acceptance to, graduate programs.
        ``(b) Hiring Authority.--For purposes of carrying out subparts 1, 2,
    and 3, the Secretary shall appoint, without regard to the provisions of
    title 5, United States Code, that govern appointments in the competitive
    service, such administrative and technical employees, with the
    appropriate educational background, as shall

    [[Page 112 STAT. 1796]]

    be needed to assist in the administration of such parts. The employees
    shall be paid without regard to the provisions of chapter 51 and
    subchapter III of chapter 53 of such title relating to classification
    and General Schedule pay rates.
        ``(c) Use for Religious Purposes Prohibited.--No institutional
    payment or allowance under section 703(b) or 715(a) shall be paid to a
    school or department of divinity as a result of the award of a
    fellowship under subpart 1 or 2, respectively, to an individual who is
    studying for a religious vocation.
        ``(d) Evaluation.--The Secretary shall evaluate the success of
    assistance provided to individuals under subpart 1, 2, or 3 with respect
    to graduating from their degree programs, and placement in faculty and
    professional positions.
        ``(e) Continuation Awards.--The Secretary, using funds appropriated
    to carry out subparts 1 and 2, and before awarding any assistance under
    such parts to a recipient that did not receive assistance under part C
    or D of title IX (as such parts were in effect prior to the date of
    enactment of the Higher Education Amendments of 1998) shall continue to
    provide funding to recipients of assistance under such part C or D (as
    so in effect), as the case may be, pursuant to any multiyear award of
    such assistance.

          ``PART B--FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION

    ``SEC. 741. <<NOTE: 20 USC 1138.>> FUND FOR THE IMPROVEMENT OF
                POSTSECONDARY
                EDUCATION.

        ``(a) Authority.--The Secretary is authorized to make grants to, or
    enter into contracts with, institutions of higher education,
    combinations of such institutions, and other public and private
    nonprofit institutions and agencies, to enable such institutions,
    combinations, and agencies to improve postsecondary education
    opportunities by--
                ``(1) encouraging the reform, innovation, and improvement of
            postsecondary education, and providing equal educational
            opportunity for all;
                ``(2) the creation of institutions, programs, and joint
            efforts involving paths to career and professional training, and
            combinations of academic and experiential learning;
                ``(3) the establishment of institutions and programs based
            on the technology of communications;
                ``(4) the carrying out, in postsecondary educational
            institutions, of changes in internal structure and operations
            designed to clarify institutional priorities and purposes;
                ``(5) the design and introduction of cost-effective methods
            of instruction and operation;
                ``(6) the introduction of institutional reforms designed to
            expand individual opportunities for entering and reentering
            institutions and pursuing programs of study tailored to
            individual needs;
                ``(7) the introduction of reforms in graduate education, in
            the structure of academic professions, and in the recruitment
            and retention of faculties; and
                ``(8) the creation of new institutions and programs for
            examining and awarding credentials to individuals, and the
            introduction of reforms in current institutional practices
            related thereto.

    [[Page 112 STAT. 1797]]

        ``(b) Planning Grants.--The Secretary is authorized to make planning
    grants to institutions of higher education for the development and
    testing of innovative techniques in postsecondary education. Such grants
    shall not exceed $20,000.

    ``SEC. 742. <<NOTE: 20 USC 1138a.>> BOARD OF THE FUND FOR THE
                IMPROVEMENT OF POSTSECONDARY EDUCATION.

        ``(a) Establishment.--There is established a National Board of the
    Fund for the Improvement of Postsecondary Education (in this part
    referred to as the `Board'). The Board shall consist of 15 members
    appointed by the Secretary for overlapping 3-year terms. A majority of
    the Board shall constitute a quorum. Any member of the Board who has
    served for 6 consecutive years shall thereafter be ineligible for
    appointment to the Board during a 2-year period following the expiration
    of such sixth year.
        ``(b) Membership.--
                ``(1) In general.--The Secretary shall designate one of the
            members of the Board as Chairperson of the Board. A majority of
            the members of the Board shall be public interest
            representatives, including students, and a minority shall be
            educational representatives. All members selected shall be
            individuals able to contribute an important perspective on
            priorities for improvement in postsecondary education and
            strategies of educational and institutional change.
                ``(2) Appointment of director.--The Secretary shall appoint
            the Director of the Fund for the Improvement of Postsecondary
            Education (hereafter in this part referred to as the
            `Director').

        ``(c) Duties.--The Board shall--
                ``(1) advise the Secretary and the Director on priorities
            for the improvement of postsecondary education and make such
            recommendations as the Board may deem appropriate for the
            improvement of postsecondary education and for the evaluation,
            dissemination, and adaptation of demonstrated improvements in
            postsecondary educational practice;
                ``(2) advise the Secretary and the Director on the operation
            of the Fund for the Improvement of Postsecondary Education,
            including advice on planning documents, guidelines, and
            procedures for grant competitions prepared by the Fund; and
                ``(3) meet at the call of the Chairperson, except that the
            Board shall meet whenever one-third or more of the members
            request in writing that a meeting be held.

        ``(d) Information and Assistance.--The Director shall make available
    to the Board such information and assistance as may be necessary to
    enable the Board to carry out its functions.

    ``SEC. 743. ADMINISTRATIVE PROVISIONS. <<NOTE: 20 USC 1138b.>>

        ``(a) Technical Employees.--The Secretary may appoint, for terms not
    to exceed 3 years, without regard to the provisions of title 5, United
    States Code, governing appointments in the competitive service, not more
    than 7 technical employees to administer this part who may be paid
    without regard to the provisions of chapter 51 and subchapter III of
    chapter 53 of such title relating to classification and General Schedule
    pay rates.
        ``(b) Procedures.--The Director shall establish procedures for
    reviewing and evaluating grants and contracts made or entered into under
    this part. Procedures for reviewing grant applications or contracts for
    financial assistance under this section may not

    [[Page 112 STAT. 1798]]

    be subject to any review outside of officials responsible for the
    administration of the Fund for the Improvement of Postsecondary
    Education.

    ``SEC. 744. SPECIAL PROJECTS. <<NOTE: 20 USC 1138c.>>

        ``(a) Grant Authority.--The Director is authorized to make grants to
    institutions of higher education, or consortia thereof, and such other
    public agencies and nonprofit organizations as the Director deems
    necessary for innovative projects concerning one or more areas of
    particular national need identified by the Director.
        ``(b) Application.--No grant shall be made under this part unless an
    application is made at such time, in such manner, and contains or is
    accompanied by such information as the Secretary may require.
        ``(c) Areas of National Need.--Areas of national need shall
    initially include, but shall not be limited to, the following:
                ``(1) Institutional restructuring to improve learning and
            promote productivity, efficiency, quality improvement, and cost
            and price control.
                ``(2) Articulation between 2- and 4-year institutions of
            higher education, including developing innovative methods for
            ensuring the successful transfer of students from 2- to 4-year
            institutions of higher education.
                ``(3) Evaluation and dissemination of model programs.
                ``(4) International cooperation and student exchange among
            postsecondary educational institutions.

    ``SEC. 745. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1138d.>>

        ``There are authorized to be appropriated to carry out this part
    $30,000,000 for fiscal year 1999 and such sums as may be necessary for
    each of the 4 succeeding fiscal years.

                        ``PART C--URBAN COMMUNITY SERVICE

    ``SEC. 751. FINDINGS. <<NOTE: 20 USC 1139.>>

        ``The Congress finds that--
                ``(1) the Nation's urban centers are facing increasingly
            pressing problems and needs in the areas of economic
            development, community infrastructure and service, social
            policy, public health, housing, crime, education, environmental
            concerns, planning and work force preparation;
                ``(2) there are, in the Nation's urban institutions, people
            with underutilized skills, knowledge, and experience who are
            capable of providing a vast range of services toward the
            amelioration of the problems described in paragraph (1);
                ``(3) the skills, knowledge and experience in these urban
            institutions, if applied in a systematic and sustained manner,
            can make a significant contribution to the solution of such
            problems; and
                ``(4) the application of such skills, knowledge and
            experience is hindered by the limited funds available to
            redirect attention to solutions to such urban problems.

    ``SEC. 752. PURPOSE; PROGRAM AUTHORIZED. <<NOTE: 20 USC 1139a.>>

        ``(a) Purpose.--It is the purpose of this part to provide incentives
    to urban academic institutions to enable such institutions

    [[Page 112 STAT. 1799]]

    to work with private and civic organizations to devise and implement
    solutions to pressing and severe problems in their communities.
        ``(b) Program Authorized.--The Secretary is authorized to carry out
    a program of providing assistance to eligible institutions to enable
    such institutions to carry out the activities described in section 754
    in accordance with the provisions of this part.

    ``SEC. 753. APPLICATION FOR URBAN COMMUNITY SERVICE GRANTS. <<NOTE: 20
                USC 1139b.>>

        ``(a) Application.--
                ``(1) In general.--An eligible institution seeking
            assistance under this part shall submit to the Secretary an
            application at such time, in such form, and containing or
            accompanied by such information and assurances as the Secretary
            may require by regulation.
                ``(2) Contents.--Each application submitted pursuant to
            paragraph (1) shall--
                        ``(A) describe the activities and services for which
                    assistance is sought; and
                        ``(B) include a plan that is agreed to by the
                    members of a consortium that includes, in addition to
                    the eligible institution, one or more of the following
                    entities:
                              ``(i) A community college.
                              ``(ii) An urban school system.
                              ``(iii) A local government.
                              ``(iv) A business or other employer.
                              ``(v) A nonprofit institution.
                ``(3) Waiver.--The Secretary may waive the consortium
            requirements described in paragraph (2) for any applicant who
            can demonstrate to the satisfaction of the Secretary that the
            applicant has devised an integrated and coordinated plan which
            meets the purpose of this part.

        ``(b) Priority in Selection of Applications.--The Secretary shall
    give priority to applications that propose to conduct joint projects
    supported by other local, State, and Federal programs. In addition, the
    Secretary shall give priority to eligible institutions submitting
    applications that demonstrate the eligible institution's commitment to
    urban community service.
        ``(c) <<NOTE: Regulations. Federal Register,
    publication.>> Selection Procedures.--The Secretary shall, by
    regulation, develop a formal procedure for the submission of
    applications under this part and shall publish in the Federal Register
    an announcement of that procedure and the availability of funds under
    this part.

    ``SEC. 754. ALLOWABLE ACTIVITIES. <<NOTE: 20 USC 1139c.>>

        ``Funds made available under this part shall be used to support
    planning, applied research, training, resource exchanges or technology
    transfers, the delivery of services, or other activities the purpose of
    which is to design and implement programs to assist urban communities to
    meet and address their pressing and severe problems, such as the
    following:
                ``(1) Work force preparation.
                ``(2) Urban poverty and the alleviation of such poverty.
                ``(3) Health care, including delivery and access.
                ``(4) Underperforming school systems and students.
                ``(5) Problems faced by the elderly and individuals with
            disabilities in urban settings.
                ``(6) Problems faced by families and children.

    [[Page 112 STAT. 1800]]

                ``(7) Campus and community crime prevention, including
            enhanced security and safety awareness measures as well as
            coordinated programs addressing the root causes of crime.
                ``(8) Urban housing.
                ``(9) Urban infrastructure.
                ``(10) Economic development.
                ``(11) Urban environmental concerns.
                ``(12) Other problem areas which participants in the
            consortium described in section 753(a)(2)(B) concur are of high
            priority in the urban area.
                ``(13)(A) Problems faced by individuals with disabilities
            regarding accessibility to institutions of higher education and
            other public and private community facilities.
                ``(B) Amelioration of existing attitudinal barriers that
            prevent full inclusion by individuals with disabilities in their
            community.
                ``(14) Improving access to technology in local communities.

    ``SEC. 755. PEER REVIEW. <<NOTE: 20 USC 1139d.>>

        ``The Secretary shall designate a peer review panel to review
    applications submitted under this part and make recommendations for
    funding to the Secretary. In selecting the peer review panel, the
    Secretary may consult with other appropriate Cabinet-level officials and
    with non-Federal organizations, to ensure that the panel will be
    geographically balanced and be composed of representatives from public
    and private institutions of higher education, labor, business, and State
    and local government, who have expertise in urban community service or
    in education.

    ``SEC. 756. DISBURSEMENT OF FUNDS. <<NOTE: 20 USC 1139e.>>

        ``(a) Multiyear Availability.--Subject to the availability of
    appropriations, grants under this part may be made on a multiyear basis,
    except that no institution, individually or as a participant in a
    consortium of such institutions, may receive such a grant for more than
    5 years.
        ``(b) Equitable Geographic Distribution.--The Secretary shall award
    grants under this part in a manner that achieves an equitable geographic
    distribution of such grants.
        ``(c) Matching Requirement.--An applicant under this part and the
    local governments associated with the application shall contribute to
    the conduct of the program supported by the grant an amount from non-
    Federal funds equal to at least one-fourth of the amount of the grant,
    which contribution may be in cash or in kind.

    ``SEC. 757. DESIGNATION OF URBAN GRANT INSTITUTIONS. <<NOTE: 20 USC
                1139f.>>

        ``The <<NOTE: Publication. Records. Establishment.>> Secretary shall
    publish a list of eligible institutions under this part and shall
    designate these institutions of higher education as `Urban Grant
    Institutions'. The Secretary shall establish a national network of Urban
    Grant Institutions so that the results of individual projects achieved
    in one metropolitan area can then be generalized, disseminated,
    replicated, and applied throughout the Nation. The information developed
    as a result of this section shall be made available to Urban Grant
    Institutions and to any other interested institution of higher education
    by any appropriate means.

    [[Page 112 STAT. 1801]]

    ``SEC. 758. DEFINITIONS. <<NOTE: 20 USC 1139g.>>

        ``As used in this part:
                ``(1) Urban area.--The term `urban area' means a
            metropolitan statistical area having a population of not less
            than 350,000, or two contiguous metropolitan statistical areas
            having a population of not less than 350,000, or, in any State
            which does not have a metropolitan statistical area which has
            such a population, the eligible entity in the State submitting
            an application under section 753, or, if no such entity submits
            an application, the Secretary, shall designate one urban area
            for the purposes of this part.
                ``(2) Eligible institution.--The term `eligible institution'
            means--
                        ``(A) a nonprofit municipal university, established
                    by the governing body of the city in which it is
                    located, and operating as of the date of enactment of
                    the Higher Education Amendments of 1992 under that
                    authority; or
                        ``(B) an institution of higher education, or a
                    consortium of such institutions any one of which meets
                    all of the requirements of this paragraph, which--
                              ``(i) is located in an urban area;
                              ``(ii) draws a substantial portion of its
                          undergraduate students from the urban area in
                          which such institution is located, or from
                          contiguous areas;
                              ``(iii) carries out programs to make
                          postsecondary educational opportunities more
                          accessible to residents of such urban area, or
                          contiguous areas;
                              ``(iv) has the present capacity to provide
                          resources responsive to the needs and priorities
                          of such urban area and contiguous areas;
                              ``(v) offers a range of professional,
                          technical, or graduate programs sufficient to
                          sustain the capacity of such institution to
                          provide such resources; and
                              ``(vi) has demonstrated and sustained a sense
                          of responsibility to such urban area and
                          contiguous areas and the people of such areas.

    ``SEC. 759. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1139h.>>

        ``There are authorized to be appropriated $20,000,000 for fiscal
    year 1999 and such sums as may be necessary for each of the 4 succeeding
    fiscal years to carry out this part.

     ``PART D--DEMONSTRATION PROJECTS TO ENSURE STUDENTS WITH DISABILITIES
                       RECEIVE A QUALITY HIGHER EDUCATION

    ``SEC. 761. PURPOSES. <<NOTE: 20 USC 1140.>>

        ``It is the purpose of this part to support model demonstration
    projects to provide technical assistance or professional development for
    faculty and administrators in institutions of higher education in order
    to provide students with disabilities a quality postsecondary education.

    ``SEC. 762. GRANTS AUTHORIZED. <<NOTE: 20 USC 1140a.>>

        ``(a) Competitive Grants Authorized.--The Secretary may award
    grants, contracts, and cooperative agreements, on a competitive basis,
    to institutions of higher education, of which at least

    [[Page 112 STAT. 1802]]

    two such grants shall be awarded to institutions that provide
    professional development and technical assistance in order for students
    with learning disabilities to receive a quality postsecondary education.
        ``(b) Duration; Activities.--
                ``(1) Duration.--Grants under this part shall be awarded for
            a period of 3 years.
                ``(2) Authorized activities.--Grants under this part shall
            be used to carry out one or more of the following activities:
                        ``(A) Teaching methods and strategies.--The
                    development of innovative, effective, and efficient
                    teaching methods and strategies to provide faculty and
                    administrators with the skills and supports necessary to
                    teach students with disabilities. Such methods and
                    strategies may include inservice training, professional
                    development, customized and general technical
                    assistance, workshops, summer institutes, distance
                    learning, and training in the use of assistive and
                    educational technology.
                        ``(B) Synthesizing research and information.--
                    Synthesizing research and other information related to
                    the provision of postsecondary educational services to
                    students with disabilities.
                        ``(C) Professional development and training
                    sessions.--Conducting professional development and
                    training sessions for faculty and administrators from
                    other institutions of higher education to enable the
                    faculty and administrators to meet the postsecondary
                    educational needs of students with disabilities.
                ``(3) Mandatory evaluation and dissemination.--Grants under
            this part shall be used for evaluation, and dissemination to
            other institutions of higher education, of the information
            obtained through the activities described in subparagraphs (A)
            through (C).

        ``(c) Considerations in Making Awards.--In awarding grants,
    contracts, or cooperative agreements under this section, the Secretary
    shall consider the following:
                ``(1) Geographic distribution.--Providing an equitable
            geographic distribution of such grants.
                ``(2) Rural and urban areas.--Distributing such grants to
            urban and rural areas.
                ``(3) Range and type of institution.--Ensuring that the
            activities to be assisted are developed for a range of types and
            sizes of institutions of higher education.
                ``(4) Prior experience or exceptional programs.--
            Institutions of higher education with demonstrated prior
            experience in, or exceptional programs for, meeting the
            postsecondary educational needs of students with disabilities.

    ``SEC. 763. APPLICATIONS. <<NOTE: 20 USC 1140b.>>

        ``Each institution of higher education desiring to receive a grant,
    contract, or cooperative agreement under this part shall submit an
    application to the Secretary at such time, in such manner, and
    accompanied by such information as the Secretary may require. Each
    application shall include--
                ``(1) a description of how such institution plans to address
            each of the activities required under this part;

    [[Page 112 STAT. 1803]]

                ``(2) a description of how the institution consulted with a
            broad range of people within the institution to develop
            activities for which assistance is sought; and
                ``(3) a description of how the institution will coordinate
            and collaborate with the office that provides services to
            students with disabilities within the institution.

    ``SEC. 764. RULE OF CONSTRUCTION. <<NOTE: 20 USC 1140c.>>

        ``Nothing in this part shall be construed to impose any additional
    duty, obligation, or responsibility on an institution of higher
    education or on the institution's faculty, administrators, or staff than
    are required by section 504 of the Rehabilitation Act of 1973 and the
    Americans with Disabilities Act of 1990.

    ``SEC. 765. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1140d.>>

        ``There are authorized to be appropriated for this part $10,000,000
    for fiscal year 1999 and such sums as may be necessary for each of the 4
    succeeding fiscal years.''.

    SEC. 702. REPEALS.

        Except as otherwise provided in section 301(a), titles VIII (20
    U.S.C. 1133 et seq.), IX (20 U.S.C. 1134 et seq.), X (20 U.S.C. 1135 et
    seq.), XI (20 U.S.C. 1136), and XII (20 U.S.C. 1141) are repealed.

               TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                                 PART A--STUDIES

    SEC. 801. <<NOTE: 20 USC 1018 note.>>  STUDY OF MARKET MECHANISMS IN
                FEDERAL STUDENT LOAN PROGRAMS.

        (a) Study Required.--The Comptroller General and the Secretary of
    Education shall convene a study group including the Secretary of the
    Treasury, the Director of the Office of Management and Budget, the
    Director of the Congressional Budget Office, representatives of entities
    making loans under part B of title IV of the Higher Education Act of
    1965, representatives of other entities in the financial services
    community, representatives of other participants in the student loan
    programs, and such other individuals as the Comptroller General and the
    Secretary may designate. The Comptroller General and Secretary, in
    consultation with the study group, shall design and conduct a study to
    identify and evaluate means of establishing a market mechanism for the
    delivery of loans made pursuant to such title IV.
        (b) Design of Study.--The study required under this section shall
    identify not fewer than 3 different market mechanisms for use in
    determining lender return on student loans while continuing to meet the
    other objectives of the programs under parts B and D of such title IV,
    including the provision of loans to all eligible students. Consideration
    may be given to the use of auctions and to the feasibility of
    incorporating income-contingent repayment options into the student loan
    system and requiring borrowers to repay through income tax withholding.
        (c) Evaluation of Market Mechanisms.--The mechanisms identified
    under subsection (b) shall be evaluated in terms of the following areas:

    [[Page 112 STAT. 1804]]

                (1) The cost or savings of loans to or for borrowers,
            including parent borrowers.
                (2) The cost or savings of the mechanism to the Federal
            Government.
                (3) The cost, effect, and distribution of Federal subsidies
            to or for participants in the program.
                (4) The ability of the mechanism to accommodate the
            potential distribution of subsidies to students through an
            income-contingent repayment option.
                (5) The effect on the simplicity of the program, including
            the effect of the plan on the regulatory burden on students,
            institutions, lenders, and other program participants.
                (6) The effect on investment in human capital and resources,
            loan servicing capability, and the quality of service to the
            borrower.
                (7) The effect on the diversity of lenders, including
            community-based lenders, originating and secondary market
            lenders.
                (8) The effect on program integrity.
                (9) The degree to which the mechanism will provide market
            incentives to encourage continuous improvement in the delivery
            and servicing of loans.
                (10) The availability of loans to students by region, income
            level, and by categories of institutions.
                (11) The proposed Federal and State role in the operation of
            the mechanism.
                (12) A description of how the mechanism will be administered
            and operated.
                (13) Transition procedures, including the effect on loan
            availability during a transition period.
                (14) Any other areas the study group may include.

        (d) <<NOTE: Deadlines. Public information.>> Preliminary Findings
    and Publication of Study.--Not later than November 15, 2000, the study
    group shall make the group's preliminary findings, including any
    additional or dissenting views, available to the public with a 60-day
    request for public comment. The study group shall review these comments
    and the Comptroller General and the Secretary shall transmit a final
    report, including any additional or dissenting views, to the Committee
    on Education and the Workforce of the House of Representatives, the
    Committee on Labor and Human Resources of the Senate, and the Committees
    on the Budget of the House of Representatives and the Senate not later
    than May 15, 2001.

    SEC. 802. STUDY OF THE FEASIBILITY OF ALTERNATIVE FINANCIAL INSTRUMENTS
                FOR DETERMINING LENDER YIELDS.

        (a) Study Required.--The Comptroller General and the Secretary of
    Education shall convene a study group including the Secretary of the
    Treasury, the Director of the Office of Management and Budget, the
    Director of the Congressional Budget Office, representatives of entities
    making loans under part B of title IV of the Higher Education Act of
    1965, representatives of other entities in the financial services
    community, representatives of other participants in the student loan
    programs, and such other individuals as the Comptroller General and the
    Secretary of Education may designate. The Comptroller General and the
    Secretary of Education, in consultation with the study group, shall
    evaluate the 91-day Treasury bill, 30-day and 90-day commercial paper,
    and

    [[Page 112 STAT. 1805]]

    the 90-day London Interbank Offered Rate (in this section referred to as
    ``LIBOR'') in terms of the following:
                (1) The historical liquidity of the market for each, and a
            historical comparison of the spread between: (A) the 30-day and
            90-day commercial paper rate, respectively, and the 91-day
            Treasury bill rate; and (B) the spread between the LIBOR and the
            91-day Treasury bill rate.
                (2) The historical volatility of the rates and projections
            of future volatility.
                (3) Recent changes in the liquidity of the market for each
            such instrument in a balanced Federal budget environment and a
            low-interest rate environment, and projections of future
            liquidity assuming the Federal budget remains in balance.
                (4) The cost or savings to lenders with small, medium, and
            large student loan portfolios of basing lender yield on either
            the 30-day or 90-day commercial paper rate or the LIBOR while
            continuing to base the borrower rate on the 91-day Treasury
            bill, and the effect of such change on the diversity of lenders
            participating in the program.
                (5) The cost or savings to the Federal Government of basing
            lender yield on either the 30-day or 90-day commercial paper
            rate or the LIBOR while continuing to base the borrower rate on
            the 91-day Treasury bill.
                (6) Any possible risks or benefits to the student loan
            programs under the Higher Education Act of 1965 and to student
            borrowers.
                (7) Any other areas the Comptroller General and the
            Secretary of Education agree to include.

        (b) <<NOTE: Deadline.>> Report Required.--Not later than 6 months
    after the date of enactment of this Act, the Comptroller General and the
    Secretary shall submit a final report regarding the findings of the
    study group to the Committee on Education and the Workforce of the House
    of Representatives and the Committee on Labor and Human Resources of the
    Senate.

    SEC. 803. STUDENT-RELATED DEBT STUDY REQUIRED. <<NOTE: 20 USC 1015
                note.>>

        (a) In General.--The Secretary of Education shall conduct a study
    that analyzes the distribution and increase in student-related debt in
    terms of--
                (1) demographic characteristics, such as race or ethnicity,
            and family income;
                (2) type of institution and whether the institution is a
            public or private institution;
                (3) loan source, such as Federal, State, institutional or
            other, and, if the loan source is Federal, whether the loan is
            or is not subsidized;
                (4) academic field of study;
                (5) parent loans, and whether the parent loans are federally
            guaranteed, private, or property-secured such as home equity
            loans; and
                (6) relation of student debt or anticipated debt to--
                        (A) students' decisions about whether and where to
                    enroll in college and whether or how much to borrow in
                    order to attend college;
                        (B) the length of time it takes students to earn
                    baccalaureate degrees;

    [[Page 112 STAT. 1806]]

                        (C) students' decisions about whether and where to
                    attend graduate school;
                        (D) graduates' employment decisions;
                        (E) graduates' burden of repayment as reflected by
                    the graduates' ability to save for retirement or invest
                    in a home; and
                        (F) students' future earnings.

        (b) <<NOTE: Deadline.>> Report.--After conclusion of the study
    required by subsection (a), the Secretary of Education shall submit a
    final report regarding the findings of the study 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 18
    months after the date of enactment of the Higher Education Amendments of
    1998.

        (c) Information.--After the study and report under this section are
    concluded, the Secretary of Education shall determine which information
    described in subsection (a) would be useful for families to know and
    shall include such information as part of the comparative information
    provided to families about the costs of higher education under the
    provisions of part C of title I.

    SEC. 804. STUDY OF TRANSFER OF CREDITS. <<NOTE: 20 USC 1099b note.>>

        (a) Study Required.--The Secretary of Education shall conduct a
    study to evaluate policies or practices instituted by recognized
    accrediting agencies or associations regarding the treatment of the
    transfer of credits from one institution of higher education to another,
    giving particular attention to--
                (1) adopted policies regarding the transfer of credits
            between institutions of higher education which are accredited by
            different agencies or associations and the reasons for such
            policies;
                (2) adopted policies regarding the transfer of credits
            between institutions of higher education which are accredited by
            national agencies or associations and institutions of higher
            education which are accredited by regional agencies and
            associations and the reasons for such policies;
                (3) the effect of the adoption of such policies on students
            transferring between such institutions of higher education,
            including time required to matriculate, increases to the student
            of tuition and fees paid, and increases to the student with
            regard to student loan burden;
                (4) the extent to which Federal financial aid is awarded to
            such students for the duplication of coursework already
            completed at another institution; and
                (5) the aggregate cost to the Federal Government of the
            adoption of such policies.

        (b) <<NOTE: Deadline.>> Report.--Not later than one year after the
    date of enactment of this Act, the Secretary of Education shall submit a
    report to the Chairman and Ranking Minority Member of the Committee on
    Education and the Workforce of the House of Representatives and the
    Committee on Labor and Human Resources of the Senate detailing the
    Secretary's findings regarding the study conducted under subsection (a).
    The Secretary's report shall include such recommendation with respect to
    the recognition of accrediting agencies or associations as the Secretary
    deems advisable.

    [[Page 112 STAT. 1807]]

    SEC. 805. STUDY OF <<NOTE: 20 USC 1001 note.>> OPPORTUNITIES FOR
                PARTICIPATION IN ATHLETICS PROGRAMS.

        (a) Study.--The Comptroller General shall conduct a study of the
    opportunities for participation in intercollegiate athletics. The study
    shall address issues including--
                (1) the extent to which the number of--
                        (A) secondary school athletic teams has increased or
                    decreased in the 20 years preceding 1998 (in aggregate
                    terms); and
                        (B) intercollegiate athletic teams has increased or
                    decreased in the 20 years preceding 1998 (in aggregate
                    terms) at 2-year and 4-year institutions of higher
                    education;
                (2) the extent to which participation by student-athletes in
            secondary school and intercollegiate athletics has increased or
            decreased in the 20 years preceding 1998 (in aggregate terms);
                (3) over the 20-year period preceding 1998, a list of the
            men's and women's secondary school and intercollegiate sports,
            ranked in order of the sports most affected by increases or
            decreases in levels of participation and numbers of teams (in
            the aggregate);
                (4) all factors that have influenced campus officials to add
            or discontinue sports teams at secondary schools and
            institutions of higher education, including--
                        (A) institutional mission and priorities;
                        (B) budgetary pressures;
                        (C) institutional reforms and restructuring;
                        (D) escalating liability insurance premiums;
                        (E) changing student and community interest in a
                    sport;
                        (F) advancement of diversity among students;
                        (G) lack of necessary level of competitiveness of
                    the sports program;
                        (H) club level sport achieving a level of
                    competitiveness to make the sport a viable varsity level
                    sport;
                        (I) injuries or deaths; and
                        (J) conference realignment;
                (5) the actions that institutions of higher education have
            taken when decreasing the level of participation in
            intercollegiate sports, or the number of teams, in terms of
            providing information, advice, scholarship maintenance,
            counseling, advance warning, and an opportunity for student-
            athletes to be involved in the decisionmaking process;
                (6) the administrative processes and procedures used by
            institutions of higher education when determining whether to
            increase or decrease intercollegiate athletic teams or
            participation by student-athletes;
                (7) the budgetary or fiscal impact, if any, of a decision by
            an institution of higher education--
                        (A) to increase or decrease the number of
                    intercollegiate athletic teams or the participation of
                    student-athletes; or
                        (B) to be involved in a conference realignment; and
                (8) the alternatives, if any, institutions of higher
            education have pursued in lieu of eliminating, or severely
            reducing the funding for, anintercollegiate sport, and the
            success of such alternatives.

    [[Page 112 STAT. 1808]]

        (b) Report.--The Comptroller General shall submit a report regarding
    the results of the study to the Committee on Labor and Human Resources
    of the Senate and the Committee on Education and the Workforce of the
    House of Representatives.

    SEC. 806. STUDY OF THE EFFECTIVENESS OF COHORT DEFAULT RATES FOR
                INSTITUTIONS WITH FEW STUDENT LOAN BORROWERS.

        (a) Study Required.--The Secretary of Education shall conduct a
    study of the effectiveness of cohort default rates as an indicator of
    administrative capability and program quality for institutions of higher
    education at which less than 15 percent of students eligible to borrow
    participate in the Federal student loan programs under title IV of the
    Higher Education Act of 1965 and fewer than 30 borrowers enter repayment
    in any fiscal year. At a minimum, the study shall include--
                (1) identification of the institutions included in the study
            and of the student populations the institutions serve;
                (2) analysis of cohort default rates as indicators of
            administrative shortcomings and program quality at the
            institutions;
                (3) analysis of the effectiveness of cohort default rates as
            a means to prevent fraud and abuse in the programs assisted
            under such title;
                (4) analysis of the extent to which the institutions with
            high cohort default rates are no longer participants in the
            Federal student loan programs under such title; and
                (5) analysis of the costs incurred by the Department of
            Education for the calculation, publication, correction, and
            appeal of cohort default rates for the institutions in relation
            to any benefits to taxpayers.

        (b) Consultation.--In conducting the study described in subsection
    (a), the Secretary of Education shall consult with institutions of
    higher education.
        (c) <<NOTE: Deadline.>> Report to Congress.--The Secretary of
    Education shall report 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, 1999, regarding the
    results of the study described in subsection (a).

                  PART B--ADVANCED PLACEMENT INCENTIVE PROGRAM

    SEC. 810. ADVANCED PLACEMENT INCENTIVE PROGRAM. <<NOTE: 20 USC 1070a-11
                note.>>

        (a) Program Established.--The Secretary of Education is authorized
    to make grants to States having applications approved under subsection
    (c) to enable the States to reimburse low-income individuals to cover
    part or all of the cost of advanced placement test fees, if the low-
    income individuals--
                (1) are enrolled in an advanced placement class; and
                (2) plan to take an advanced placement test.

        (b) Information Dissemination.--The State educational agency shall
    disseminate information regarding the availability of test fee payments
    under this section to eligible individuals through secondary school
    teachers and guidance counselors.
        (c) Requirements for Approval of Applications.--In approving
    applications for grants the Secretary of Education shall--

    [[Page 112 STAT. 1809]]

                (1) require that each such application contain a description
            of the advanced placement test fees the State will pay on behalf
            of individual students;
                (2) require an assurance that any funds received under this
            section, other than funds used in accordance with subsection
            (d), shall be used only to pay advanced placement test fees;
                (3) contain such information as the Secretary may require to
            demonstrate that the State will ensure that a student is
            eligible for payments under this section, including the
            documentation required by chapter 1 of subpart 2 of part A of
            title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a-11
            et seq.); and
                (4) consider the number of children eligible to be counted
            under section 1124(c) of the Elementary and Secondary Education
            Act of 1965 in the State in relation to the number of such
            children in all the States in determining grant award amounts.

        (d) Funding Rules.--
                (1) Use of funds.--A State educational agency in a State in
            which no eligible low-income individual is required to pay more
            than a nominal fee to take advanced placement tests in core
            subjects may use any grant funds provided to that State
            educational agency, that remain after fees have been paid on
            behalf of all eligible low-income individuals, for activities
            directly related to increasing--
                        (A) the enrollment of low-income individuals in
                    advanced placement courses;
                        (B) the participation of low-income individuals in
                    advanced placement tests; and
                        (C) the availability of advanced placement courses
                    in schools serving high poverty areas.
                (2) Supplement, not supplant, rule.--Funds provided under
            this section shall supplement and not supplant other non-Federal
            funds that are available to assist low-income individuals in
            paying advanced placement test fees.

        (e) Regulations.--The Secretary of Education shall prescribe such
    regulations as are necessary to carry out this section.
        (f ) Report.--Each State annually shall report to the Secretary of
    Education regarding--
                (1) the number of low-income individuals in the State who
            receive assistance under this section; and
                (2) the activities described in subsection (d)(1), if
            applicable.

        (g) Definition.--In this section:
                (1) Advanced placement test.--The term ``advanced placement
            test'' includes only an advanced placement test approved by the
            Secretary of Education for the purposes of this section.
                (2) Low-income individual.--The term ``low-income
            individual'' has the meaning given the term in section
            402A(g)(2) of the Higher Education Act of 1965 (20 U.S.C. 1070a-
            11(g)(2)).

        (h) Authorization of Appropriations.--There are authorized to be
    appropriated $6,800,000 for fiscal year 1999 and such sums as may be
    necessary for each of the 4 succeeding fiscal years to carry out this
    section.

    [[Page 112 STAT. 1810]]

      PART C <<NOTE: Community Scholarship Mobilization Act.>> --COMMUNITY
    SCHOLARSHIP MOBILIZATION

    SEC. 811. SHORT TITLE. <<NOTE: 20 USC 1070 note.>>

        This part may be cited as the ``Community Scholarship Mobilization
    Act''.

    SEC. 812. FINDINGS. <<NOTE: 20 USC 1070 note.>>

        Congress finds that--
                (1) the local community, when properly organized and
            challenged, is one of the best sources of academic support,
            motivation toward achievement, and financial resources for
            aspiring postsecondary students;
                (2) local communities, working to complement or augment
            services currently offered by area schools and colleges, can
            raise the educational expectations and increase the rate of
            postsecondary attendance of their youth by forming locally-based
            organizations that provide both academic support (including
            guidance, counseling, mentoring, tutoring, encouragement, and
            recognition) and tangible, locally raised, effectively targeted,
            publicly recognized, financial assistance;
                (3) proven methods of stimulating these community efforts
            can be promoted through Federal support for the establishment of
            regional, State, or community program centers to organize and
            challenge community efforts to develop educational incentives
            and support for local students; and
                (4) using Federal funds to leverage private contributions to
            help students from low-income families attain educational and
            career goals is an efficient and effective investment of scarce
            taxpayer-provided resources.

    SEC. 813. DEFINITIONS. <<NOTE: 20 USC 1070 note.>>

        In this part:
                (1) Regional, state, or community program center.--The term
            ``regional, State, or community program center'' means an
            organization that--
                        (A) is a division or member of, responsible to, and
                    overseen by, a national organization; and
                        (B) is staffed by professionals trained to create,
                    develop, and sustain local entities in towns, cities,
                    and neighborhoods.
                (2) Local entity.--The term ``local entity'' means an
            organization that--
                        (A) is a nonprofit organization that is described in
                    section 501(c)(3) of the Internal Revenue Code of 1986,
                    and exempt from taxation under section 501(a) of such
                    Code (or shall meet this criteria through affiliation
                    with the national organization);
                        (B) is formed for the purpose of providing
                    educational scholarships and academic support for
                    residents of the local community served by such
                    organization;
                        (C) solicits broad-based community support in its
                    academic support and fund-raising activities;
                        (D) is broadly representative of the local community
                    in the structures of its volunteer-operated organization
                    and has a board of directors that includes leaders from
                    local neighborhood organizations and neighborhood
                    residents,

    [[Page 112 STAT. 1811]]

                    such as school or college personnel, parents, students,
                    community agency representatives, retirees, and
                    representatives of the business community;
                        (E) awards scholarships without regard to age, sex,
                    marital status, race, creed, color, religion, national
                    origin, or disability; and
                        (F) gives priority to awarding scholarships for
                    postsecondary education to deserving students from low-
                    income families in the local community.
                (3) National organization.--The term ``national
            organization'' means an organization that--
                        (A) has the capacity to create, develop and sustain
                    local entities and affiliated regional, State, or
                    community program centers;
                        (B) has the capacity to sustain newly created local
                    entities in towns, cities, and neighborhoods through
                    ongoing training support programs;
                        (C) is described in section 501(c)(3) of the
                    Internal Revenue Code of 1986, and exempt from taxation
                    under section 501(a) of such Code;
                        (D) is a publicly supported organization within the
                    meaning of section 170(b)(1)(A)(iv) of such Code;
                        (E) ensures that each of the organization's local
                    entities meet the criteria described in subparagraphs
                    (C) and (D); and
                        (F) has a program for or experience in cooperating
                    with secondary and postsecondary institutions in
                    carrying out the organization's scholarship and academic
                    support activities.
                (4) High poverty area.--The term ``high poverty area'' means
            a community with a higher percentage of children from low-income
            families than the national average of such percentage and a
            lower percentage of children pursuing postsecondary education
            than the national average of such percentage.
                (5) Secretary.--The term ``Secretary'' means the Secretary
            of Education.
                (6) Students from low-income families.--The term ``students
            from low-income families'' means students determined, pursuant
            to part F of title IV of the Higher Education Act of 1965 (20
            U.S.C. 1087kk et seq.), to be eligible for a Federal Pell Grant
            under subpart 1 of part A of title IV of such Act (20 U.S.C.
            1070a).

    SEC. 814. PURPOSE; ENDOWMENT GRANT AUTHORITY. <<NOTE: 20 USC 1070
                note.>>

        (a) Purpose.--It is the purpose of this part to establish and
    support regional, State or community program centers to enable such
    centers to foster the development of local entities in high poverty
    areas that promote higher education goals for students from low-income
    families by--
                (1) providing academic support, including guidance,
            counseling, mentoring, tutoring, and recognition; and
                (2) providing scholarship assistance for the cost of
            postsecondary education.

        (b) Endowment Grant Authority.--From the funds appropriated pursuant
    to the authority of section 816, the Secretary shall award an endowment
    grant, on a competitive basis, to a national organization to enable such
    organization to support the

    [[Page 112 STAT. 1812]]

    establishment or ongoing work of regional, State or community program
    centers that foster the development of local entities in high poverty
    areas to improve secondary school graduation rates and postsecondary
    attendance through the provision of academic support services and
    scholarship assistance for the cost of postsecondary education.

    SEC. 815. GRANT AGREEMENT AND REQUIREMENTS. <<NOTE: 20 USC 1070 note.>>

        (a) In General.--The Secretary shall award one or more endowment
    grants described in section 814(b) pursuant to an agreement between the
    Secretary and a national organization. Such agreement shall--
                (1) require a national organization to establish an
            endowment fund in the amount of the grant, the corpus of which
            shall remain intact and the interest income from which shall be
            used to support the activities described in paragraphs (2) and
            (3);
                (2) require a national organization to use 70 percent of the
            interest income from the endowment fund in any fiscal year to
            support the establishment or ongoing work of regional, State or
            community program centers to enable such centers to work with
            local communities to establish local entities in high poverty
            areas and provide ongoing technical assistance, training
            workshops, and other activities to help ensure the ongoing
            success of the local entities;
                (3) require a national organization to use 30 percent of the
            interest income from the endowment fund in any fiscal year to
            provide scholarships for postsecondary education to students
            from low-income families, which scholarships shall be matched on
            a dollar-for-dollar basis from funds raised by the local
            entities;
                (4) require that at least 50 percent of all the interest
            income from the endowment be allocated to establish new local
            entities or support regional, State or community program centers
            in high poverty areas;
                (5) require a national organization to submit, for each
            fiscal year in which such organization uses the interest from
            the endowment fund, a report to the Secretary that contains--
                        (A) a description of the programs and activities
                    supported by the interest on the endowment fund;
                        (B) the audited financial statement of the national
                    organization for the preceding fiscal year;
                        (C) a plan for the programs and activities to be
                    supported by the interest on the endowment fund as the
                    Secretary may require;
                        (D) an evaluation of the programs and activities
                    supported by the interest on the endowment fund as the
                    Secretary may require; and
                        (E) data indicating the number of students from low-
                    income families who receive scholarships from local
                    entities, and the amounts of such scholarships;
                (6) contain such assurances as the Secretary may require
            with respect to the management and operation of the endowment
            fund; and
                (7) contain an assurance that if the Secretary determines
            that such organization is not in substantial compliance with the
            provisions of this part, then the national organization shall

    [[Page 112 STAT. 1813]]

            pay to the Secretary an amount equal to the corpus of the
            endowment fund plus any accrued interest on such fund that is
            available to the national organization on the date of such
            determination.

        (b) Returned Funds.--All funds returned to the Secretary pursuant to
    subsection (a)(7) shall be available to the Secretary to carry out any
    scholarship or grant program assisted under title IV of the Higher
    Education Act of 1965 (20 U.S.C. 1070 et seq.).

    SEC. 816. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 1070 note.>>

        There are authorized to be appropriated to carry out this part
    $10,000,000 for fiscal year 2000.

    PART D--GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION TRAINING
                        FOR INCARCERATED YOUTH OFFENDERS

    SEC. 821. <<NOTE: 20 USC 1151.>> GRANTS TO STATES FOR WORKPLACE AND
                COMMUNITY TRANSITION TRAINING FOR INCARCERATED YOUTH
                OFFENDERS.

        (a) Findings.--Congress makes the following findings:
                (1) Over 150,000 youth offenders age 21 and younger are
            incarcerated in the Nation's jails, juvenile facilities, and
            prisons.
                (2) Most youth offenders who are incarcerated have been
            sentenced as first-time adult felons.
                (3) Approximately 75 percent of youth offenders are high
            school dropouts who lack basic literacy and life skills, have
            little or no job experience, and lack marketable skills.
                (4) The average incarcerated youth has attended school only
            through grade 10.
                (5) Most of these youths can be diverted from a life of
            crime into productive citizenship with available educational,
            vocational, work skills, and related service programs.
                (6) If not involved with educational programs while
            incarcerated, almost all of these youths will return to a life
            of crime upon release.
                (7) The average length of sentence for a youth offender is
            about 3 years. Time spent in prison provides a unique
            opportunity for education and training.
                (8) Even with quality education and training provided during
            incarceration, a period of intense supervision, support, and
            counseling is needed upon release to ensure effective
            reintegration of youth offenders into society.
                (9) Research consistently shows that the vast majority of
            incarcerated youths will not return to the public schools to
            complete their education.
                (10) There is a need for alternative educational
            opportunities during incarceration and after release.

        (b) Definition.--For purposes of this part, the term ``youth
    offender'' means a male or female offender under the age of 25, who is
    incarcerated in a State prison, including a prerelease facility.
        (c) Grant Program.--The Secretary of Education (in this section
    referred to as the ``Secretary'') shall establish a program in
    accordance with this section to provide grants to the State correctional
    education agencies in the States, from allocations for the

    [[Page 112 STAT. 1814]]

    States under subsection (i), to assist and encourage incarcerated youths
    to acquire functional literacy, life, and job skills, through the
    pursuit of a postsecondary education certificate, or an associate of
    arts or bachelor's degree while in prison, and employment counseling and
    other related services which start during incarceration and continue
    through prerelease and while on parole.
        (d) Application.--To be eligible for a grant under this section, a
    State correctional education agency shall submit to the Secretary a
    proposal for a youth offender program that--
                (1) identifies the scope of the problem, including the
            number of incarcerated youths in need of postsecondary education
            and vocational training;
                (2) lists the accredited public or private educational
            institution or institutions that will provide postsecondary
            educational services;
                (3) lists the cooperating agencies, public and private, or
            businesses that will provide related services, such as
            counseling in the areas of career development, substance abuse,
            health, and parenting skills;
                (4) describes the evaluation methods and performance
            measures that the State correctional education agency will
            employ, which methods and measures--
                        (A) shall be appropriate to meet the goals and
                    objectives of the proposal; and
                        (B) shall include measures of--
                              (i) program completion;
                              (ii) student academic and vocational skill
                          attainment;
                              (iii) success in job placement and retention;
                          and
                              (iv) recidivism;
                (5) describes how the proposed programs are to be integrated
            with existing State correctional education programs (such as
            adult education, graduate education degree programs, and
            vocational training) and State industry programs;
                (6) addresses the educational needs of youth offenders who
            are in alternative programs (such as boot camps); and
                (7) describes how students will be selected so that only
            youth offenders eligible under subsection (f ) will be enrolled
            in postsecondary programs.

        (e) Program Requirements.--Each State correctional education agency
    receiving a grant under this section shall--
                (1) integrate activities carried out under the grant with
            the objectives and activities of the school-to-work programs of
            such State, including--
                        (A) work experience or apprenticeship programs;
                        (B) transitional worksite job training for
                    vocational education students that is related to the
                    occupational goals of such students and closely linked
                    to classroom and laboratory instruction;
                        (C) placement services in occupations that the
                    students are preparing to enter;
                        (D) employment-based learning programs; and
                        (E) programs that address State and local labor
                    shortages;
                (2) <<NOTE: Reports.>> annually report to the Secretary and
            the Attorney
            General on the results of the evaluations conducted using the

    [[Page 112 STAT. 1815]]

            methods and performance measures contained in the proposal; and
                (3) provide to each State for each student eligible under
            subsection (f ) not more than $1,500 annually for tuition,
            books, and essential materials, and not more than $300 annually
            for related services such as career development, substance abuse
            counseling, parenting skills training, and health education, for
            each eligible incarcerated youth.

        (f ) Student Eligibility.--A youth offender shall be eligible for
    participation in a program receiving a grant under this section if the
    youth offender--
                (1) is eligible to be released within 5 years (including a
            youth offender who is eligible for parole within such time); and
                (2) is 25 years of age or younger.

        (g) Length of Participation.--A State correctional education agency
    receiving a grant under this section shall provide educational and
    related services to each participating youth offender for a period not
    to exceed 5 years, 1 year of which may be devoted to study in a graduate
    education degree program or to remedial education services for students
    who have obtained a secondary school diploma or its recognized
    equivalent. Educational and related services shall start during the
    period of incarceration in prison or prerelease and may continue during
    the period of parole.
        (h) Education Delivery Systems.--State correctional education
    agencies and cooperating institutions shall, to the extent practicable,
    use high-tech applications in developing programs to meet the
    requirements and goals of this section.
        (i) Allocation of Funds.--From the funds appropriated pursuant to
    subsection ( j) for each fiscal year, the Secretary shall allot to each
    State an amount that bears the same relationship to such funds as the
    total number of students eligible under subsection (f ) in such State
    bears to the total number of such students in all States.
        ( j) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section $17,000,000 for fiscal year 1999
    and such sums as may be necessary for each of the 4 succeeding fiscal
    years.

        PART E--GRANTS TO COMBAT VIOLENT CRIMES AGAINST WOMEN ON CAMPUSES

    SEC. 826. <<NOTE: 20 USC 1152.>> GRANTS TO COMBAT VIOLENT CRIMES AGAINST
                WOMEN ON CAMPUSES.

        (a) Grants Authorized.--
                (1) In general.--The Attorney General is authorized to make
            grants to institutions of higher education, for use by such
            institutions or consortia consisting of campus personnel,
            student organizations, campus administrators, security
            personnel, and regional crisis centers affiliated with the
            institution, to develop and strengthen effective security and
            investigation strategies to combat violent crimes against women
            on campuses, and to develop and strengthen victim services in
            cases involving violent crimes against women on campuses, which
            may include partnerships with local criminal justice authorities
            and community-based victim services agencies.

    [[Page 112 STAT. 1816]]

                (2) <<NOTE: Contracts.>> Award basis.--The Attorney General
            shall award grants and contracts under this section on a
            competitive basis.
                (3) Equitable participation.--The Attorney General shall
            make every effort to ensure--
                        (A) the equitable participation of private and
                    public institutions of higher education in the
                    activities assisted under this section; and
                        (B) the equitable geographic distribution of grants
                    under this section among the various regions of the
                    United States.

        (b) Use of Grant Funds.--Grant funds awarded under this section may
    be used for the following purposes:
                (1) To provide personnel, training, technical assistance,
            data collection, and other equipment with respect to the
            increased apprehension, investigation, and adjudication of
            persons committing violent crimes against women on campus.
                (2) To train campus administrators, campus security
            personnel, and personnel serving on campus disciplinary or
            judicial boards to more effectively identify and respond to
            violent crimes against women on campus, including the crimes of
            sexual assault, stalking, and domestic violence.
                (3) To implement and operate education programs for the
            prevention of violent crimes against women.
                (4) To develop, enlarge, or strengthen support services
            programs, including medical or psychological counseling, for
            victims of sexual offense crimes.
                (5) To create, disseminate, or otherwise provide assistance
            and information about victims' options on and off campus to
            bring disciplinary or other legal action.
                (6) To develop and implement more effective campus policies,
            protocols, orders, and services specifically devoted to prevent,
            identify, and respond to violent crimes against women on campus,
            including the crimes of sexual assault, stalking, and domestic
            violence.
                (7) To develop, install, or expand data collection and
            communication systems, including computerized systems, linking
            campus security to the local law enforcement for the purpose of
            identifying and tracking arrests, protection orders, violations
            of protection orders, prosecutions, and convictions with respect
            to violent crimes against women on campus, including the crimes
            of sexual assault, stalking, and domestic violence.
                (8) To develop, enlarge, or strengthen victim services
            programs for the campus and to improve delivery of victim
            services on campus.
                (9) To provide capital improvements (including improved
            lighting and communications facilities but not including the
            construction of buildings) on campuses to address violent crimes
            against women on campus, including the crimes of sexual assault,
            stalking, and domestic violence.
                (10) To support improved coordination among campus
            administrators, campus security personnel, and local law
            enforcement to reduce violent crimes against women on campus.

        (c) Applications.--
                (1) In general.--In order to be eligible to be awarded a
            grant under this section for any fiscal year, an institution of
            higher education shall submit an application to the Attorney

    [[Page 112 STAT. 1817]]

            General at such time and in such manner as the Attorney General
            shall prescribe.
                (2) Contents.--Each application submitted under paragraph
            (1) shall--
                        (A) describe the need for grant funds and the plan
                    for implementation for any of the purposes described in
                    subsection (b);
                        (B) describe how the campus authorities shall
                    consult and coordinate with nonprofit and other victim
                    services programs, including sexual assault and domestic
                    violence victim services programs;
                        (C) describe the characteristics of the population
                    being served, including type of campus, demographics of
                    the population, and number of students;
                        (D) provide measurable goals and expected results
                    from the use of the grant funds;
                        (E) provide assurances that the Federal funds made
                    available under this section shall be used to supplement
                    and, to the extent practical, increase the level of
                    funds that would, in the absence of Federal funds, be
                    made available by the institution for the purposes
                    described in subsection (b); and
                        (F) include such other information and assurances as
                    the Attorney General reasonably determines to be
                    necessary.
                (3) Compliance with campus crime reporting required.--No
            institution of higher education shall be eligible for a grant
            under this section unless such institution is in compliance with
            the requirements of section 485(f ) of the Higher Education Act
            of 1965.

        (d) General Terms and Conditions.--
                (1) Nonmonetary assistance.--In addition to the assistance
            provided under this section, the Attorney General may request
            any Federal agency to use the agency's authorities and the
            resources granted to the agency under Federal law (including
            personnel, equipment, supplies, facilities, and managerial,
            technical, and advisory services) in support of campus security,
            and investigation and victim service efforts.
                (2) Grantee reporting.--
                        (A) Annual report.--Each institution of higher
                    education receiving a grant under this section shall
                    submit an annual performance report to the Attorney
                    General. The Attorney General shall suspend funding
                    under this section for an institution of higher
                    education if the institution fails to submit an annual
                    performance report.
                        (B) Final report.--Upon completion of the grant
                    period under this section, the institution shall file a
                    performance report with the Attorney General and the
                    Secretary of Education explaining the activities carried
                    out under this section together with an assessment of
                    the effectiveness of those activities in achieving the
                    purposes described in subsection (b).
                (3) <<NOTE: Deadline.>> Report to congress.--Not later than
            180 days after the end of the fiscal year for which grants are
            awarded under this section, the Attorney General shall submit to
            the committees of the House of Representatives and the Senate
            responsible

    [[Page 112 STAT. 1818]]

            for issues relating to higher education and crime, a report that
            includes--
                        (A) the number of grants, and the amount of funds,
                    distributed under this section;
                        (B) a summary of the purposes for which the grants
                    were provided and an evaluation of the progress made
                    under the grant;
                        (C) a statistical summary of the persons served,
                    detailing the nature of victimization, and providing
                    data on age, sex, race, ethnicity, language, disability,
                    relationship to offender, geographic distribution, and
                    type of campus; and
                        (D) an evaluation of the effectiveness of programs
                    funded under this part, including information obtained
                    from reports submitted pursuant to section 485(f ) of
                    the Higher Education Act of 1965.
                (4) <<NOTE: Deadlines. Publications.>> Regulations or
            guidelines.--Not later than 120 days after the date of enactment
            of this section, the Attorney General, in consultation with the
            Secretary of Education, shall publish proposed regulations or
            guidelines implementing this section. Not later than 180 days
            after the date of enactment of this section, the Attorney
            General shall publish final regulations or guidelines
            implementing this section.

        (f ) Definitions.--In this section--
                (1) the term ``domestic violence'' includes acts or threats
            of violence, not including acts of self defense, committed by a
            current or former spouse of the victim, by a person with whom
            the victim shares a child in common, by a person who is
            cohabitating with or has cohabitated with the victim, by a
            person similarly situated to a spouse of the victim under the
            domestic or family violence laws of the jurisdiction, or by any
            other person against a victim who is protected from that
            person's acts under the domestic or family violence laws of the
            jurisdiction;
                (2) the term ``sexual assault'' means any conduct proscribed
            by chapter 109A of title 18, United States Code, whether or not
            the conduct occurs in the special maritime and territorial
            jurisdiction of the United States or in a Federal prison,
            including both assaults committed by offenders who are strangers
            to the victim and assaults committed by offenders who are known
            or related by blood or marriage to the victim; and
                (3) the term ``victim services'' means a nonprofit,
            nongovernmental organization that assists domestic violence or
            sexual assault victims, including campus women's centers, rape
            crisis centers, battered women's shelters, and other sexual
            assault or domestic violence programs, including campus
            counseling support and victim advocate organizations with
            domestic violence, stalking, and sexual assault programs,
            whether or not organized and staffed by students.

        (g) Authorization of Appropriations.--For the purpose of carrying
    out this part, there are authorized to be appropriated $10,000,000 for
    fiscal year 1999 and such sums as may be necessary for each of the 4
    succeeding fiscal years.

    [[Page 112 STAT. 1819]]

    SEC. 827. STUDY OF <<NOTE: 20 USC 1152 note.>> INSTITUTIONAL PROCEDURES
                TO REPORT SEXUAL ASSAULTS.

        (a) In General.--The Attorney General, in consultation with the
    Secretary of Education, shall provide for a national study to examine
    procedures undertaken after an institution of higher education receives
    a report of sexual assault.
        (b) Report.--The study required by subsection (a) shall include an
    analysis of--
                (1) the existence and publication of the institution of
            higher education's and State's definition of sexual assault;
                (2) the existence and publication of the institution's
            policy for campus sexual assaults;
                (3) the individuals to whom reports of sexual assault are
            given most often and--
                        (A) how the individuals are trained to respond to
                    the reports; and
                        (B) the extent to which the individuals are trained;
                (4) the reporting options that are articulated to the victim
            or victims of the sexual assault regarding--
                        (A) on-campus reporting and procedure options; and
                        (B) off-campus reporting and procedure options;
                (5) the resources available for victims' safety, support,
            medical health, and confidentiality, including--
                        (A) how well the resources are articulated both
                    specifically to the victim of sexual assault and
                    generally to the campus at large; and
                        (B) the security of the resources in terms of
                    confidentiality or reputation;
                (6) policies and practices that may prevent or discourage
            the reporting of campus sexual assaults to local crime
            authorities, or that may otherwise obstruct justice or interfere
            with the prosecution of perpetrators of campus sexual assaults;
                (7) policies and practices found successful in aiding the
            report and any ensuing investigation or prosecution of a campus
            sexual assault;
                (8) the on-campus procedures for investigation and
            disciplining the perpetrator of a sexual assault, including--
                        (A) the format for collecting evidence; and
                        (B) the format of the investigation and disciplinary
                    proceeding, including the faculty responsible for
                    running the disciplinary procedure and the persons
                    allowed to attend the disciplinary procedure; and
                (9) types of punishment for offenders, including--
                        (A) whether the case is directed outside the
                    institution for further punishment; and
                        (B) how the institution punishes perpetrators.

        (c) Submission of Report.--The report required by subsection (b)
    shall be submitted to Congress not later than September 1, 2000.
        (d) Definition.--For purposes of this section, the term ``campus
    sexual assaults'' means sexual assaults occurring at institutions of
    higher education and sexual assaults committed against or by students or
    employees of such institutions.
        (e) Authorization of Appropriations.--There is authorized to be
    appropriated to carry out this section $1,000,000 for fiscal year 2000.

    [[Page 112 STAT. 1820]]

     PART F--IMPROVING UNITED STATES UNDERSTANDING OF SCIENCE, ENGINEERING,
                           AND TECHNOLOGY IN EAST ASIA

    SEC. 831. <<NOTE: 42 USC 1862 note.>> IMPROVING UNITED STATES
                UNDERSTANDING OF SCIENCE, ENGINEERING, AND TECHNOLOGY IN
                EAST ASIA.

        (a) Establishment.--The Director of the National Science Foundation
    is authorized, beginning in fiscal year 2000, to carry out an
    interdisciplinary program of education and research on East Asian
    science, engineering, and technology. The Director shall carry out the
    interdisciplinary program in consultation with the Secretary of
    Education.
        (b) Purposes.--The purposes of the program established under this
    section shall be to--
                (1) increase understanding of East Asian research, and
            innovation for the creative application of science and
            technology to the problems of society;
                (2) provide scientists, engineers, technology managers, and
            students with training in East Asian languages, and with an
            understanding of research, technology, and management of
            innovation, in East Asian countries;
                (3) provide program participants with opportunities to be
            directly involved in scientific and engineering research, and
            activities related to the management of scientific and
            technological innovation, in East Asia; and
                (4) create mechanisms for cooperation and partnerships among
            United States industry, universities, colleges, not-for-profit
            institutions, Federal laboratories (within the meaning of
            section 4(6) of the Stevenson-Wydler Technology Innovation Act
            of 1980 (15 U.S.C. 3703(6))), and government, to disseminate the
            results of the program assisted under this section for the
            benefit of United States research and innovation.

        (c) Participation by Federal Scientists, Engineers, and Managers.--
    Scientists, engineers, and managers of science and engineering programs
    in Federal agencies and the Federal laboratories shall be eligible to
    participate in the program assisted under this section on a reimbursable
    basis.
        (d) Requirement for Merit Review.--Awards made under the program
    established under this section shall only be made using a competitive,
    merit-based review process.
        (e) Authorization of Appropriations.--There is authorized to be
    appropriated to carry out this section $10,000,000 for fiscal year 2000.

                          PART G--OLYMPIC SCHOLARSHIPS

    SEC. 836. EXTENSION OF AUTHORIZATION.

        Section 1543(d) of the Higher Education Amendments of 1992 is
    amended by <<NOTE: 20 USC 1070 note.>> striking ``1993'' and inserting
    ``1999''.

                          PART H--UNDERGROUND RAILROAD

    SEC. 841. <<NOTE: Historic preservation. 20 USC 1153.>> UNDERGROUND
                RAILROAD EDUCATIONAL AND CULTURAL PROGRAM.

        (a) Program Established.--The Secretary of Education, in
    consultation and cooperation with the Secretary of the Interior,

    [[Page 112 STAT. 1821]]

    is authorized to make grants to 1 or more nonprofit educational
    organizations that are established to research, display, interpret, and
    collect artifacts relating to the history of the Underground Railroad.
        (b) Grant Agreement.--Each nonprofit educational organization
    awarded a grant under this section shall enter into an agreement with
    the Secretary of Education. Each such agreement shall require the
    organization--
                (1) to establish a facility to house, display, and interpret
            the artifacts related to the history of the Underground
            Railroad, and to make the interpretive efforts available to
            institutions of higher education that award a baccalaureate or
            graduate degree;
                (2) to demonstrate substantial private support for the
            facility through the implementation of a public-private
            partnership between a State or local public entity and a private
            entity for the support of the facility, which private entity
            shall provide matching funds for the support of the facility in
            an amount equal to 4 times the amount of the contribution of the
            State or local public entity, except that not more than 20
            percent of the matching funds may be provided by the Federal
            Government;
                (3) to create an endowment to fund any and all shortfalls in
            the costs of the on-going operations of the facility;
                (4) to establish a network of satellite centers throughout
            the United States to help disseminate information regarding the
            Underground Railroad throughout the United States, if such
            satellite centers raise 80 percent of the funds required to
            establish the satellite centers from non-Federal public and
            private sources;
                (5) to establish the capability to electronically link the
            facility with other local and regional facilities that have
            collections and programs which interpret the history of the
            Underground Railroad; and
                (6) <<NOTE: Reports.>> to submit, for each fiscal year for
            which the organization receives funding under this section, a
            report to the Secretary of Education that contains--
                        (A) a description of the programs and activities
                    supported by the funding;
                        (B) the audited financial statement of the
                    organization for the preceding fiscal year;
                        (C) a plan for the programs and activities to be
                    supported by the funding as the Secretary may require;
                    and
                        (D) an evaluation of the programs and activities
                    supported by the funding as the Secretary may require.

        (c) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section $6,000,000 for fiscal year 1999,
    $6,000,000 for fiscal year 2000, $6,000,000 for fiscal year 2001,
    $3,000,000 for fiscal year 2002, and $3,000,000 for fiscal year 2003.

    [[Page 112 STAT. 1822]]

                     PART I--SUMMER TRAVEL AND WORK PROGRAMS

    SEC. 846. <<NOTE: 22 USC 1474 note.>> AUTHORITY TO ADMINISTER SUMMER
                TRAVEL AND WORK PROGRAMS.

        The Director of the United States Information Agency is authorized
    to administer summer travel and work programs without regard to
    preplacement requirements.

        PART J <<NOTE: Web-Based Education Commission Act.>> --WEB-BASED
    EDUCATION COMMISSION

    SEC. 851. SHORT TITLE; DEFINITIONS.

        (a) In General.--This part may be cited as the ``Web-Based Education
    Commission Act''.
        (b) Definitions.--In this part:
                (1) Commission.--The term ``Commission'' means the Web-Based
            Education Commission established under section 852.
                (2) Information technology.--The term ``information
            technology'' has the meaning given that term in section 5002 of
            the Information Technology Management Reform Act of 1996 (110
            Stat. 679).
                (3) State.--The term ``State'' means each of the several
            States of the United States and the District of Columbia.

    SEC. 852. ESTABLISHMENT OF WEB-BASED EDUCATION COMMISSION.

        (a) Establishment.--There is established a commission to be known as
    the Web-Based Education Commission.
        (b) Membership.--
                (1) Composition.--The Commission shall be composed of 14
            members, of which--
                        (A) <<NOTE: President.>> three members shall be
                    appointed by the President, from among individuals
                    representing the Internet technology industry;
                        (B) three members shall be appointed by the
                    Secretary, from among individuals with expertise in
                    accreditation, establishing statewide curricula, and
                    establishing information technology networks pertaining
                    to education curricula;
                        (C) two members shall be appointed by the Majority
                    Leader of the Senate;
                        (D) two members shall be appointed by the Minority
                    Leader of the Senate;
                        (E) two members shall be appointed by the Speaker of
                    the House of Representatives; and
                        (F) two members shall be appointed by the Minority
                    Leader of the House of Representatives.
                (2) <<NOTE: Deadline.>> Date.--The appointments of the
            members of the Commission shall be made not later than 45 days
            after the date of enactment of this Act.

        (c) Period of Appointment; Vacancies.--Members shall be appointed
    for the life of the Commission. Any vacancy in the Commission shall not
    affect its powers, but shall be filled in the same manner as the
    original appointment.
        (d) <<NOTE: Deadline.>>  Initial Meeting.--Not later than 30 days
    after the date on which all members of the Commission have been
    appointed, the Commission shall hold the Commission's first meeting.

    [[Page 112 STAT. 1823]]

        (e) Meetings.--The Commission shall meet at the call of the
    Chairperson.
        (f ) Quorum.--A majority of the members of theCommission shall
    constitute a quorum, but a lesser number of members may hold hearings.
        (g) Chairperson and Vice Chairperson.--The Commission shall select a
    chairperson and vice chairperson from among the members of the
    Commission.

    SEC. 853. DUTIES OF THE COMMISSION.

        (a) Study.--
                (1) In general.--The Commission shall conduct a thorough
            study to assess the educational software available in retail
            markets for secondary and postsecondary students who choose to
            use such software.
                (2) Public hearings.--As part of the study conducted under
            this subsection, the Commission shall hold public hearings in
            each region of the United States concerning the assessment
            referred to in paragraph (1).
                (3) Existing information.--To the extent practicable, in
            carrying out the study under this subsection, the Commission
            shall identify and use existing information related to the
            assessment referred to in paragraph (1).

        (b) <<NOTE: Deadline.>>  Report.--Not later than 6 months after the
    first meeting of the Commission, the Commission shall submit a report to
    the President and Congress that shall contain a detailed statement of
    the findings and conclusions of the Commission resulting from the study,
    together with the Commission's recommendations--
                (1) for such legislation and administrative actions as the
            Commission considers to be appropriate; and
                (2) regarding the appropriate Federal role in determining
            quality educational software products.

        (c) Facilitation of Exchange of Information.--In carrying out the
    study under subsection (a), the Commission shall, to the extent
    practicable, facilitate the exchange of information concerning the
    issues that are the subject of the study among--
                (1) officials of the Federal Government, and State
            governments and political subdivisions of States; and
                (2) educators from Federal, State, and local institutions of
            higher education and secondary schools.

    SEC. 854. POWERS OF THE COMMISSION.

        (a) Hearings.--The Commission may hold such hearings, sit and act at
    such times and places, take such testimony, and receive such evidence as
    the Commission considers advisable to carry out the duties of the
    Commission.
        (b) Information From Federal Agencies.--The Commission may request
    from the head of any Federal agency or instrumentality such information
    as the Commission considers necessary to carry out the provisions of
    this part. Each such agency or instrumentality shall, to the extent
    permitted by law and subject to the exceptions set forth in section 552
    of title 5, United States Code (commonly referred to as the Freedom of
    Information Act), furnish such information to the Commission upon
    request.
        (c) Postal Services.--The Commission may use the United States mails
    in the same manner and under the same conditions as other departments
    and agencies of the Federal Government.

    [[Page 112 STAT. 1824]]

        (d) Gifts.--The Commission may accept, use, and dispose of gifts or
    donations of services or property.

    SEC. 855. COMMISSION PERSONNEL MATTERS.

        (a) Compensation of Members.--Except as provided in subsection (b),
    each member of the Commission who is not an officer or employee of the
    Federal Government shall serve without compensation. All members of the
    Commission who are officers or employees of the United States shall
    serve without compensation in addition to that received for their
    services as officers or employees of the United States.
        (b) Travel Expenses.--The members of the Commission shall be allowed
    travel expenses, including per diem in lieu of subsistence, at rates
    authorized for employees of agencies under subchapter I of chapter 57 of
    title 5, United States Code, while away from their homes or regular
    places of business in the performance of services for the Commission.
        (c) Staff.--
                (1) In general.--The Chairperson of the Commission may,
            without regard to the civil service laws and regulations,
            appoint and terminate an executive director and such other
            additional personnel as may be necessary to enable the
            Commission to perform the Commission's duties. The employment of
            an executive director shall be subject to confirmation by the
            Commission.
                (2) Compensation.--The Chairperson of the Commission may fix
            the compensation of the executive director and other personnel
            without regard to the provisions of chapter 51 and subchapter
            III of chapter 53 of title 5, United States Code, relating to
            classification of positions and General Schedule pay rates,
            except that the rate of pay for the executive director and other
            personnel may not exceed the rate payable for level V of the
            Executive Schedule under section 5316 of such title.

        (d) Detail of Government Employees.--Any Federal Government employee
    may be detailed to the Commission without reimbursement, and such detail
    shall be without interruption or loss of civil service status or
    privilege.
        (e) Procurement of Temporary and Intermittent Services.--The
    Chairperson of the Commission may procure temporary and intermittent
    services under section 3109(b) of title 5, United States Code, at rates
    for individuals that do not exceed the daily equivalent of the annual
    rate of basic pay prescribed for level V of the Executive Schedule under
    section 5316 of such title.

    SEC. 856. TERMINATION OF THE COMMISSION.

        The Commission shall terminate on the date that is 90 days after the
    date on which the Commission submits the Commission's report under
    section 853(b).

    SEC. 857. AUTHORIZATION OF APPROPRIATIONS.

        (a) In General.--There are authorized to be appropriated $450,000
    for fiscal year 1999 to the Commission to carry out this part.
        (b) Availability.--Any sums appropriated under the authorization
    contained in this section shall remain available, without fiscal year
    limitation, until expended.

    [[Page 112 STAT. 1825]]

                              PART K--MISCELLANEOUS

    SEC. 861. EDUCATION-WELFARE STUDY.

        (a) Study.--The Comptroller General of the United States shall
    conduct a study of the effectiveness of educational approaches
    (including vocational and post-secondary education approaches) and rapid
    employment approaches to helping welfare recipients and other low-income
    adults become employed and economically self-sufficient. Such study
    shall include--
                (1) a survey of the available scientific evidence and
            research data on the subject, including a comparison of the
            effects of programs emphasizing a vocational or postsecondary
            educational approach to programs emphasizing a rapid employment
            approach, along with research on the impacts of programs which
            emphasize a combination of such approaches;
                (2) an examination of the research regarding the impact of
            postsecondary education on the educational attainment of the
            children of recipients who have completed a postsecondary
            education program; and
                (3) information regarding short and long-term employment,
            wages, duration of employment, poverty rates, sustainable
            economic self-sufficiency, prospects for career advancement or
            wage increases, access to quality child care, placement in
            employment with benefits including health care, life insurance
            and retirement, and related program outcomes.

        (b) <<NOTE: Deadline.>> Report.--Not later than August 1, 1999, the
    Comptroller General of the United States shall prepare and submit to the
    Committees on Ways and Means and on Education and the Workforce of the
    House of Representatives and the Committees on Finance and on Labor and
    Human Resources of the Senate, a report that contains the finding of the
    study required by subsection (a).

    SEC. 862. RELEASE OF CONDITIONS, COVENANTS, AND REVERSIONARY INTERESTS,
                GUAM COMMUNITY COLLEGE CONVEYANCE, BARRIGADA, GUAM.

        (a) Release.--The Secretary of Education shall release all
    conditions and covenants that were imposed by the United States, and the
    reversionary interests that were retained by the United States, as part
    of the conveyance of a parcel of Federal surplus property located in
    Barrigada, Guam, consisting of approximately 314.28 acres and known as
    Naval Communications Area Master Station, WESTPAC, parcel IN, which was
    conveyed to the Guam Community College pursuant to--
                (1) the quitclaim deed dated June 8, 1990, conveying 61.45
            acres, between the Secretary, acting through the Administrator
            for Management Services, and the Guam Community College, acting
            through its Board of Trustees; and
                (2) the quitclaim deed dated June 8, 1990, conveying 252.83
            acres, between the Secretary, acting through the Administrator
            for Management Services, and the Guam Community College, acting
            through its Board of Trustees, and the Governor of Guam.

        (b) Consideration.--The Secretary shall execute the release of the
    conditions, covenants, and reversionary interests under subsection (a)
    without consideration.

    [[Page 112 STAT. 1826]]

        (c) Instrument of Release.--The Secretary shall execute and file in
    the appropriate office or offices a deed of release, amended deed, or
    other appropriate instrument effectuating the release of the conditions,
    covenants, and reversionary interests under subsection (a).

    SEC. 863. SENSE OF CONGRESS REGARDING GOOD CHARACTER.

        (a) Findings.--Congress finds that--
                (1) the future of our Nation and world will be determined by
            the young people of today;
                (2) record levels of youth crime, violence, teenage
            pregnancy, and substance abuse indicate a growing moral crisis
            in our society;
                (3) character development is the long-term process of
            helping young people to know, care about, and act upon such
            basic values as trustworthiness, respect for self and others,
            responsibility, fairness, compassion, and citizenship;
                (4) these values are universal, reaching across cultural and
            religious differences;
                (5) a recent poll found that 90 percent of Americans support
            the teaching of core moral and civic values;
                (6) parents will always be children's primary character
            educators;
                (7) good moral character is developed best in the context of
            the family;
                (8) parents, community leaders, and school officials are
            establishing successful partnerships across the Nation to
            implement character education programs;
                (9) character education programs also ask parents, faculty,
            and staff to serve as role models of core values, to provide
            opportunities for young people to apply these values, and to
            establish high academic standards that challenge students to set
            high goals, work to achieve the goals, and persevere in spite of
            difficulty;
                (10) the development of virtue and moral character, those
            habits of mind, heart, and spirit that help young people to
            know, desire, and do what is right, has historically been a
            primary mission of colleges and universities; and
                (11) the Congress encourages parents, faculty, and staff
            across the Nation to emphasize character development in the
            home, in the community, in our schools, and in our colleges and
            universities.

        (b) Sense of Congress.--It is the sense of Congress that Congress
    should support and encourage character building initiatives in schools
    across America and urge colleges and universities to affirm that the
    development of character is one of the primary goals of higher
    education.

    SEC. 864. EDUCATIONAL MERCHANDISE LICENSING CODES OF CONDUCT.

        It is the sense of Congress that all American colleges and
    universities should adopt rigorous educational merchandise licensing
    codes of conduct to assure that university and college licensed
    merchandise is not made by sweatshop and exploited adult or child labor
    either domestically or abroad, and that such codes should include at
    least the following:
                (1) Public reporting of the code and the companies adhering
            to the code.

    [[Page 112 STAT. 1827]]

                (2) Independent monitoring of the companies adhering to the
            code by entities not limited to major international accounting
            firms.
                (3) An explicit prohibition on the use of child labor.
                (4) An explicit requirement that companies pay workers at
            least the governing minimum wage and applicable overtime.
                (5) An explicit requirement that companies allow workers the
            right to organize without retribution.
                (6) An explicit requirement that companies maintain a safe
            and healthy workplace.

                       TITLE IX--AMENDMENTS TO OTHER LAWS

       PART A--EXTENSION AND REVISION OF INDIAN HIGHER EDUCATION PROGRAMS

    SEC. 901. TRIBALLY CONTROLLED COLLEGES AND UNIVERSITIES.

        (a) Reauthorization.--
                (1) Amount of grants.--Section 108(a)(2) of the Tribally
            Controlled Community College Assistance Act of 1978 (25 U.S.C.
            1808(a)(2)) is amended by striking ``$5,820'' and inserting
            ``$6,000''.
                (2) Authorization of appropriations.--
                        (A) Title i.--Section 110(a) of the Tribally
                    Controlled Community College Assistance Act of 1978 (25
                    U.S.C. 1810(a)) is amended--
                              (i) in paragraph (1), by striking ``1993'' and

                          inserting ``1999'';
                              (ii) in paragraph (2), by striking
                          ``$30,000,000 for fiscal year 1993'' and inserting
                          ``$40,000,000 for fiscal year 1999'';
                              (iii) in paragraph (3), by striking ``1993''
                          and
                          inserting ``1999''; and
                              (iv) in paragraph (4), by striking ``1993''
                          and
                          inserting ``1999''.
                        (B) Title iii.--Section 306(a) of the Tribally
                    Controlled Community College Assistance Act of 1978 (25
                    U.S.C. 1836(a)) is amended by striking ``1993'' and
                    inserting ``1999''.
                        (C) Title iv.--Section 403 of the Tribal Economic
                    Development and Technology Related Education Assistance
                    Act of 1990 (25 U.S.C. 1852) is amended by striking
                    ``1993'' and inserting ``1999''.

        (b) Extension to Colleges and Universities.--The Tribally Controlled
    Community College Assistance Act of 1978 (25 U.S.C. 1801 et seq.) is
    amended--
                (1) in the first section (25 U.S.C. 1801 note), by striking
            ``Community College'' and inserting ``College or University'';
                (2) in the heading for title I (25 U.S.C. 1802 et seq.), by
            striking ``COMMUNITY COLLEGES'' and inserting ``COLLEGES OR
            UNIVERSITIES'';
                (3) in the heading for title III (25 U.S.C. 1831 et seq.),
            by striking ``COMMUNITY COLLEGE'' and inserting ``COLLEGE OR
            UNIVERSITY'';

    [[Page 112 STAT. 1828]]

                (4) in the heading for section 107, by striking ``community
            colleges'' and inserting ``colleges or universities'';
                (5) in sections 2(a)(4), 2(a)(7), 2(b)(4), 102(b), 103, 105,
            106(b), 107(a), 107(b), 108(a), 108(b)(3)(A), 108(b)(3)(B),
            108(b)(4), 109(b)(2), 109(b)(3), 109(d), 113(a), 113(b),
            113(c)(1), 113(c)(2), 302(b), 303, 304, 305(a), and 305(b) (25
            U.S.C. 1801(a)(4), 1801(a)(7), 1801(b)(4), 1803(b), 1804, 1805,
            1806(b), 1807(a), 1807(b), 1808(a), 1808(b)(3)(A),
            1808(b)(3)(B), 1808(b)(4), 1809(b)(2), 1809(b)(3), 1809(d),
            1813(a), 1813(b), 1813(c)(1), 1813(c)(2), 1832(b), 1833, 1834,
            1835(a), and 1835(b)), by striking ``community college'' each
            place the term appears and inserting ``college or university'';
                (6) in sections 101, 102(a), 104(a)(1), 107(a), 108(c)(2),
            109(b)(1), 111(a)(2), 112(a), 112(a)(2), 112(c)(2)(B), 301,
            302(a), and 402(a) (25 U.S.C. 1802, 1803(a), 1804a(a)(1),
            1807(a), 1808(c)(2), 1809(b)(1), 1811(a)(2), 1812(a),
            1812(a)(2), 1812(c)(2)(B), 1831, 1832(a), and 1851(a)), by
            striking ``community colleges'' each place the term appears and
            inserting ``colleges or universities'';
                (7) in sections 108(a)(1), 108(a), 113(b)(2), 113(c)(2),
            302(a), 302(b), 302(b)(2)(B), 302(b)(4), 303, 304, 305(a), and
            305(b) (25 U.S.C. 1808(a)(1), 1808(a), 1813(b)(2), 1813(c)(2),
            1832(a), 1832(b), 1832(b)(2)(B), 1832(b)(4), 1833, 1834,
            1835(a), and 1835(b)), by striking ``such college'' each place
            the term appears and inserting ``such college or university'';
                (8) in sections 104(a)(2), 109(b)(1), and 111(a)(2) (25
            U.S.C. 1804a(a)(2), 1809(b)(1), and 1811(a)(2)), by striking
            ``such colleges'' and inserting ``such colleges or
            universities'';
                (9) in section 2(b)(5) (25 U.S.C. 1801(b)(5)), by striking
            ``community college's'' and inserting ``college or
            university's'';
                (10) in section 109(a) (25 U.S.C. 1809(a)), by inserting
            ``or university'' after ``tribally controlled college'';
                (11) in section 110(a)(4) (25 U.S.C. 1810(a)(4)), by
            striking ``Tribally Controlled Community Colleges'' and
            inserting ``tribally controlled colleges or universities'';
                (12) in sections 102(b), 109(d), 113(c)(2)(E), 302(b)(6),
            and 305(a) (25 U.S.C. 1803(b), 1809(d), 1813(c)(2)(E),
            1832(b)(6), and 1835(a)), by striking ``the college'' and
            inserting ``the college or university'';
                (13) in section 112(c)(1) (25 U.S.C. 1812(c)(1)), by
            striking ``colleges'' and inserting ``colleges or
            universities'';
                (14) in sections 302(b)(4) and 305(a) (25 U.S.C. 1832(b)(4)
            and 1835(a)), by striking ``that college'' and inserting ``that
            college or university''; and
                (15) in section 302(b)(4) (25 U.S.C. 1832(b)(4)), by
            striking ``other colleges'' and inserting ``other colleges or
            universities''.

        (c) <<NOTE: 25 USC 1801 note.>> Additional Conforming Amendments.--
                (1) Recommended legislation.--The Secretary of Education
            shall prepare and submit to Congress recommended legislation
            containing technical and conforming amendments to reflect the
            changes made by subsection (b).
                (2) <<NOTE: Deadline.>> Submission to congress.--Not later
            than 6 months after the effective date of this title, the
            Secretary of Education shall submit the recommended legislation
            referred to under paragraph (1).

        (d) <<NOTE: 25 USC 1801 note.>> References.--Any reference to a
    section or other provision of the Tribally Controlled Community College
    Assistance Act of

    [[Page 112 STAT. 1829]]

    1978 shall be deemed to be a reference to the Tribally Controlled
    College or University Assistance Act of 1978.

        (e) Clerical Amendment.--Section 109 of the Tribally Controlled
    Colleges or University Act of 1978 (as renamed by subsection (b)(1)) (25
    U.S.C. 1809) is amended by redesignating subsection (d) as subsection
    (c).

    SEC. 902. REAUTHORIZATION OF NAVAJO COMMUNITY COLLEGE ACT.

        Section 5(a)(1) of the Navajo Community College Act (25 U.S.C. 640c-
    1) is amended by striking ``1993'' and inserting ``1999''.

     PART B <<NOTE: Education of the Deaf Amendments of 1998.>> --EDUCATION
    OF THE DEAF

    SEC. 911. SHORT TITLE. <<NOTE: 20 USC 4301 note.>>

        This part may be cited as the ``Education of the Deaf Amendments of
    1998''.

    SEC. 912. ELEMENTARY AND SECONDARY EDUCATION PROGRAMS.

        Section 104(b) of the Education of the Deaf Act of 1986 (20 U.S.C.
    4304(b)) is amended--
                (1) in paragraph (1)--
                        (A) in subparagraph (A), by inserting ``and'' after
                    the semicolon;
                        (B) in subparagraph (B), by striking ``; and'' and
                    inserting a period; and
                        (C) by striking subparagraph (C);
                (2) in the matter preceding subparagraph (A) of paragraph
            (2)--
                        (A) by striking ``paragraph (1)'' and inserting
                    ``paragraph (1)(B)''; and
                        (B) by striking ``section 618(b)'' and inserting
                    ``section 618(a)(1)(A)'';
                (3) in paragraph (3), by striking ``intermediate educational
            unit'' and inserting ``educational service agency'';
                (4) in paragraph (4)--
                        (A) in subparagraph (A), by striking ``intermediate
                    educational unit'' and inserting ``educational service
                    agency''; and
                        (B) in subparagraph (B), by striking ``intermediate
                    educational units'' and inserting ``educational service
                    agencies''; and
                (5) by amending subparagraph (C) to read as follows:
                        ``(C) provide the child a free appropriate public
                    education in accordance with part B of the Individuals
                    with Disabilities Education Act and procedural
                    safeguards in accordance with the following provisions
                    of section 615 of such Act:
                              ``(i) Paragraphs (1), and (3) through (6) of
                          subsection (b).
                              ``(ii) Subsections (c) through (g).
                              ``(iii) Subsection (h), except for the matter
                          in paragraph (4) pertaining to transmission of
                          findings and decisions to a State advisory panel.
                              ``(iv) Paragraphs (1) and (2) of subsection
                          (i).
                              ``(v) Subsection ( j)--
                                        ``(I) except that such subsection
                                    shall not be applicable to a decision by
                                    the University to refuse to admit a
                                    child; or

    [[Page 112 STAT. 1830]]

                                        ``(II) to dismiss a child, except
                                    that, before dismissing any child, the
                                    University shall give at least 60 days
                                    written notice to the child's parents
                                    and to the local educational agency in
                                    which the child resides, unless the
                                    dismissal involves a suspension,
                                    expulsion, or other change in placement
                                    covered under section 615(k).
                              ``(vi) Subsections (k) through (m).''.

    SEC. 913. AGREEMENT WITH GALLAUDET UNIVERSITY. <<NOTE: District of
                Columbia.>>

        Section 105(a) of the Education of the Deaf Act of 1986 (20 U.S.C.
    4305(a)) is amended--
                (1) by striking ``within 1 year after enactment of the
            Education of the Deaf Act Amendments of 1992, a new'' and
            inserting ``and periodically update, an''; and
                (2) by amending the second sentence to read as follows:
            ``The Secretary or the University shall determine the necessity
            for the periodic update described in the preceding sentence.''.

    SEC. 914. AGREEMENT FOR THE NATIONAL TECHNICAL INSTITUTE FOR THE DEAF.

        Paragraph (2) of section 112(a) of the Education of the Deaf Act of
    1986 (20 U.S.C. 4332(a)) is amended to read as follows:
        ``(2) The Secretary and the institution of higher education with
    which the Secretary has an agreement under this section--
                ``(A) shall periodically assess the need for modification of
            the agreement; and
                ``(B) shall periodically update the agreement as determined
            necessary by the Secretary or the institution.''.

    SEC. 915. DEFINITIONS.

        Section 201 of the Education of the Deaf Act of 1986 (20 U.S.C.
    4351) is amended--
                (1) in paragraph (1)(C), by striking ``Palau (but only until
            the Compact of Free Association with Palau takes effect),''; and
                (2) in paragraph (5)--
                        (A) by inserting ``and'' after ``Virgin Islands,'';
                    and
                        (B) by striking ``, and Palau (but only until the
                    Compact of Free Association with Palau takes effect)''.

    SEC. 916. GIFTS.

        Subsection (b) of section 203 of the Education of the Deaf Act of
    1986 (20 U.S.C. 4353) is amended to read as follows:
        ``(b) Independent Financial and Compliance Audit.--
                ``(1) <<NOTE: Gallaudet University. District of
            Columbia.>> In general.--Gallaudet University shall have an
            annual independent financial and compliance audit made of the
            programs and activities of the University, including the
            national mission and school operations of the elementary and
            secondary education programs at Gallaudet. The institution of
            higher education with which the Secretary has an agreement under
            section 112 shall have an annual independent financial and
            compliance audit made of the programs and activities of such
            institution of higher education, including NTID, and containing
            specific schedules and analyses for all NTID funds, as
            determined by the Secretary.
                ``(2) Compliance.--As used in paragraph (1), compliance
            means compliance with sections 102(b), 105(b)(4), 112(b)(5),

    [[Page 112 STAT. 1831]]

            and 203(c), paragraphs (2) and (3) of section 207(b),
            subsections (b)(2), (b)(3), and (c) through (f ), of section
            207, and subsections (b) and (c) of section 210.
                ``(3) Submission of audits.--A copy of each audit described
            in paragraph (1) shall be provided to the Secretary within 15
            days of acceptance of the audit by the University or the
            institution authorized to establish and operate the NTID under
            section 112(a), as the case may be, but not later than January
            10 of each year.''.

    SEC. 917. REPORTS.

        Section 204(3) of the Education of the Deaf Act of 1986 (20 U.S.C.
    4354(3)) is amended--
                (1) in subparagraph (A), by striking ``The annual'' and
            inserting ``A summary of the annual''; and
                (2) in subparagraph (B), by striking ``the annual'' and
            inserting ``a summary of the annual''.

    SEC. 918. MONITORING, EVALUATION, AND REPORTING.

        Section 205(c) of the Education of the Deaf Act of 1986 (20 U.S.C.
    4355(c)) is amended by striking ``1993, 1994, 1995, 1996, and 1997'' and
    inserting ``1998 through 2003''.

    SEC. 919. FEDERAL ENDOWMENT PROGRAMS.

        Section 207 of the Education of the Deaf Act of 1986 (20 U.S.C.
    4357) is amended--
                (1) in subsection (b)--
                        (A) by amending paragraph (2) to read as follows:

        ``(2) Subject to the availability of appropriations, the Secretary
    shall make payments to each Federal endowment fund in amounts equal to
    sums contributed to the fund from non-Federal sources during the fiscal
    year in which the appropriations are made available (excluding transfers
    from other endowment funds of the institution involved).''; and
                        (B) by striking paragraph (3);
                (2) in subsection (c)(1), by inserting ``the Federal
            contribution of'' after ``shall invest'';
                (3) in subsection (d)--
                        (A) in paragraph (2)(C), by striking ``Beginning on
                    October 1, 1992, the'' and inserting ``The''; and
                        (B) in paragraph (3)(A), by striking ``prior'' and
                    inserting ``current''; and
                (4) in subsection (h)--
                        (A) in paragraph (1), by striking ``1993 through
                    1997'' and inserting ``1998 through 2003''; and
                        (B) in paragraph (2), by striking ``1993 through
                    1997'' and inserting ``1998 through 2003''.

    SEC. 920. SCHOLARSHIP PROGRAM.

        Section 208 of the Education of the Deaf Act of 1986 (20 U.S.C.
    4358) is repealed.

    SEC. 921. OVERSIGHT AND EFFECT OF AGREEMENTS.

        Section 209 of the Education of the Deaf Act of 1986 (20 U.S.C.
    4359) is amended--
                (1) in subsection (a), by striking ``Committee on Education
            and Labor'' and inserting ``Committee on Education and the
            Workforce''; and

    [[Page 112 STAT. 1832]]

                (2) by redesignating such section as section 208. <<NOTE: 20
            USC 4359.>>

    SEC. 922. INTERNATIONAL STUDENTS.

        (a) Amendment.--Section 210 of the Education of the Deaf Act of 1986
    (20 U.S.C. 4359a) is amended--
                (1) in subsection (a)--
                        (A) by striking ``10 percent'' and inserting ``15
                    percent''; and
                        (B) by inserting before the period the following:
                    ``, except that in any school year no United States
                    citizen who is qualified to be admitted to the
                    University or NTID and applies for admission to the
                    University or NTID shall be denied admission because of
                    the admission of an international student''; and
                (2) in subsection (b), by striking ``surcharge of 75 percent
            for the academic year 1993-1994 and 90 percent beginning with
            the academic year 1994-1995'' and inserting ``surcharge of 100
            percent for the academic year 1999-2000 and any succeeding
            academic year''.

        (b) Conforming Amendment.--Section 210 of such Act (20 U.S.C. 4359a)
    is amended by redesignating such section as section 209.

    SEC. 923. RESEARCH PRIORITIES.

        Title II of the Education of the Deaf Act of 1986 is amended by
    striking section 211 (20 U.S.C. 4360) and inserting the following:

    ``SEC. 210. RESEARCH PRIORITIES. <<NOTE: Gallaudet University. National
                Technical Institute for the Deaf. 20 USC 4359b.>>

        ``(a) Research Priorities.--Gallaudet University and the National
    Technical Institute for the Deaf shall each establish and disseminate
    priorities for their national mission with respect to deafness related
    research, development, and demonstration activities, that reflect public
    input, through a process that includes consumers, constituent groups,
    and the heads of other federally funded programs. The priorities for the
    University shall include activities conducted as part of the
    University's elementary and secondary education programs under section
    104.
        ``(b) <<NOTE: Deadline.>> Research Reports.--The University and NTID
    shall each prepare and submit an annual research report, to the
    Secretary, the Committee on Education and the Workforce of the House of
    Representatives, and the Committee on Labor and Human Resources of the
    Senate, not later than January 10 of each year, that shall include--
                ``(1) a summary of the public input received as part of the
            establishment and dissemination of priorities required by
            subsection (a), and the University's and NTID's response to the
            input; and
                ``(2) a summary description of the research undertaken by
            the University and NTID, the start and projected end dates for
            each research project, the projected cost and source or sources
            of funding for each project, and any products resulting from
            research completed in the prior fiscal year.''.

    SEC. 924. NATIONAL STUDY ON THE EDUCATION OF THE DEAF.

        The Education of the Deaf Act of 1986 (20 U.S.C. 4301 et seq.) is
    amended by adding after section 210 (as inserted by section 923) the
    following:

    [[Page 112 STAT. 1833]]

    ``SEC. 211. NATIONAL STUDY ON THE EDUCATION OF THE DEAF. <<NOTE: 20 USC
                4360.>>

        ``(a) Conduct of Study.--
                ``(1) In general.--The Secretary shall conduct a national
            study on the education of the deaf, to identify education-
            related barriers to successful postsecondary education
            experiences and employment for individuals who are deaf, and
            those education-related factors that contribute to successful
            postsecondary education experiences and employment for
            individuals who are deaf.
                ``(2) Definition.--In this section the term `deaf', when
            used with respect to an individual, means an individual with a
            hearing impairment, including an individual who is hard of
            hearing, an individual deafened later in life, and an individual
            who is profoundly deaf.

        ``(b) Public Input and Consultation.--
                ``(1) In general.--In conducting such study, the Secretary
            shall obtain input from the public. To obtain such input, the
            Secretary shall--
                        ``(A) <<NOTE: Federal Register,
                    publication.>> publish a notice with an opportunity for
                    comment in the Federal Register;
                        ``(B) consult with individuals and organizations
                    representing a wide range of perspectives on deafness-
                    related issues, including organizations representing
                    individuals who are deaf, parents of children who are
                    deaf, educators, and researchers; and
                        ``(C) take such other action as the Secretary deems
                    appropriate, which may include holding public meetings.
                ``(2) Structured opportunities.--The Secretary shall
            provide structured opportunities to receive and respond to the
            viewpoints of the individuals and organizations described in
            paragraph (1)(B).

        ``(c) <<NOTE: Deadline.>> Report.--The Secretary shall report to
    Congress not later than 18 months after the date of enactment of the
    Education of the Deaf Amendments of 1998 regarding the results of the
    study. The report shall contain--
                ``(1) recommendations, including recommendations for
            legislation, that the Secretary deems appropriate; and
                ``(2) a detailed summary of the input received under
            subsection (b) and the ways in which the report addresses such
            input.

        ``(d) Authorization of Appropriations.--There are authorized to be
    appropriated $1,000,000 for each of the fiscal years 1999 and 2000 to
    carry out the provisions of this section.''.

    SEC. 925. AUTHORIZATION OF APPROPRIATIONS.

        Title II of the Education of the Deaf Act of 1986 (20 U.S.C. 4351 et
    seq.) is amended by adding after section 211 (as inserted by section
    924) the following:

    ``SEC. 212. AUTHORIZATION OF APPROPRIATIONS. <<NOTE: 20 USC 4360a.>>

        ``(a) Gallaudet University.--There are authorized to be appropriated
    such sums as may be necessary for each of the fiscal years 1998 through
    2003 to carry out the provisions of title I and this title, relating
    to--
                ``(1) Gallaudet University;
                ``(2) Kendall Demonstration Elementary School; and
                ``(3) the Model Secondary School for the Deaf.

    [[Page 112 STAT. 1834]]

        ``(b) National Technical Institute for the Deaf.--There are
    authorized to be appropriated such sums as may be necessary for each of
    the fiscal years 1998 through 2003 to carry out the provisions of title
    I and this title relating to the National Technical Institute for the
    Deaf.''.

                    PART C--UNITED STATES INSTITUTE OF PEACE

    SEC. 931. AUTHORITIES OF THE UNITED STATES INSTITUTE OF PEACE.

        The United States Institute of Peace Act (22 U.S.C. 4601 et seq.) is
    amended--
                (1) in section 1705 (22 U.S.C. 4604)--
                        (A) in subsection (f ), by inserting ``personal
                    service and other'' after ``may enter into''; and
                        (B) in subsection (o), by inserting after
                    ``Services'' the following: ``and use all sources of
                    supply and services of the General Services
                    Administration'';
                (2) in section 1710(a)(1) (22 U.S.C. 4609(a)(1))--
                        (A) by striking ``1993'' and inserting ``1999''; and
                        (B) by striking ``6'' and inserting ``4''; and
                (3) in the second and third sentences of section 1712 (22
            U.S.C. 4611), by striking ``shall'' each place the term appears
            and inserting ``may''.

                  PART D--VOLUNTARY RETIREMENT INCENTIVE PLANS

    SEC. 941. VOLUNTARY RETIREMENT INCENTIVE PLANS.

        (a) In General.--Section 4 of the Age Discrimination in Employment
    Act of 1967 (29 U.S.C. 623) is amended by adding at the end the
    following:
        ``(m) Notwithstanding subsection (f )(2)(B), it shall not be a
    violation of subsection (a), (b), (c), or (e) solely because a plan of
    an institution of higher education (as defined in section 101 of the
    Higher Education Act of 1965) offers employees who are serving under a
    contract of unlimited tenure (or similar arrangement providing for
    unlimited tenure) supplemental benefits upon voluntary retirement that
    are reduced or eliminated on the basis of age, if--
                ``(1) such institution does not implement with respect to
            such employees any age-based reduction or cessation of benefits
            that are not such supplemental benefits, except as permitted by
            other provisions of this Act;
                ``(2) such supplemental benefits are in addition to any
            retirement or severance benefits which have been offered
            generally to employees serving under a contract of unlimited
            tenure (or similar arrangement providing for unlimited tenure),
            independent of any early retirement or exit-incentive plan,
            within the preceding 365 days; and
                ``(3) any employee who attains the minimum age and satisfies
            all non-age-based conditions for receiving a benefit under the
            plan has an opportunity lasting not less than 180 days to elect
            to retire and to receive the maximum benefit that could then be
            elected by a younger but otherwise similarly

    [[Page 112 STAT. 1835]]

            situated employee, and the plan does not require retirement to
            occur sooner than 180 days after such election.''.

        (b) Plans Permitted.--Section 4(i)(6) of the Age Discrimination in
    Employment Act of 1967 (29 U.S.C. 623(i)(6)) is amended by adding after
    the word ``accruals'' the following: ``or it is a plan permitted by
    subsection (m).''
        (c) <<NOTE: 29 USC 623 note.>> Construction.--Nothing in the
    amendment made by subsection (a) shall affect the application of section
    4 of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 623)
    with respect to--
                (1) any plan described in subsection (m) of section 4 of
            such Act (as added by subsection (a)), for any period prior to
            enactment of such Act;
                (2) any plan not described in subsection (m) of section 4 of
            such Act (as added by subsection (a)); or
                (3) any employer other than an institution of higher
            education (as defined in section 101 of the Higher Education Act
            of 1965).

        (d) Effective Date.-- <<NOTE: 29 USC 623 note.>>
                (1) In general.--This section shall take effect on the date
            of enactment of this Act.
                (2) Effect on causes of action existing before date of
            enactment.--The amendment made by subsection (a) shall not apply
            with respect to any cause of action arising under the Age
            Discrimination in Employment Act of 1967 prior to the date of
            enactment of this Act.

               PART E--GENERAL EDUCATION PROVISIONS ACT AMENDMENT

    SEC. 951. AMENDMENT TO FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT OF 1974

        Section 444(b) of the General Education Provisions Act (20 U.S.C.
    1232g(b)), also known as the Family Educational Rights and Privacy Act
    of 1974, is amended--
                (1) in paragraph (1), by amending subparagraph (C) to read
            as follows:
                ``(C)(i) authorized representatives of (I) the Comptroller
            General of the United States, (II) the Secretary, or (III) State
            educational authorities, under the conditions set forth in
            paragraph (3), or (ii) authorized representatives of the
            Attorney General for law enforcement purposes under the same
            conditions as apply to the Secretary under paragraph (3);''; and
                (2) in paragraph (6)--
                        (A) by inserting ``(A)'' after ``(6)'';
                        (B) in subparagraph (A), as designated by
                    subparagraph (A) of this paragraph--
                              (i) by striking ``the results'' and inserting
                          ``or a nonforcible sex offense, the final
                          results''; and
                              (ii) by striking ``such crime'' each place the
                          term appears and inserting ``such crime or
                          offense''; and
                        (C) adding at the end thereof the following:

        ``(B) Nothing in this section shall be construed to prohibit an
    institution of postsecondary education from disclosing the final results
    of any disciplinary proceeding conducted by such institution against a
    student who is an alleged perpetrator of any crime of violence (as that
    term is defined in section 16 of title 18, United

    [[Page 112 STAT. 1836]]

    States Code), or a nonforcible sex offense, if the institution
    determines as a result of that disciplinary proceeding that the student
    committed a violation of the institution's rules or policies with
    respect to such crime or offense.
        ``(C) For the purpose of this paragraph, the final results of any
    disciplinary proceeding--
                ``(i) shall include only the name of the student, the
            violation committed, and any sanction imposed by the institution
            on that student; and
                ``(ii) may include the name of any other student, such as a
            victim or witness, only with the written consent of that other
            student.''.

    SEC. 952. ALCOHOL OR DRUG POSSESSION DISCLOSURE.

        Section 444 of the General Education Provisions Act (20 U.S.C.
    1232g) is amended by adding at the end the following:
        ``(i) Drug and Alcohol Violation Disclosures.--
                ``(1) In general.--Nothing in this Act or the Higher
            Education Act of 1965 shall be construed to prohibit an
            institution of higher education from disclosing, to a parent or
            legal guardian of a student, information regarding any violation
            of any Federal, State, or local law, or of any rule or policy of
            the institution, governing the use or possession of alcohol or a
            controlled substance, regardless of whether that information is
            contained in the student's education records, if--
                        ``(A) the student is under the age of 21; and
                        ``(B) the institution determines that the student
                    has committed a disciplinary violation with respect to
                    such use or possession.
                ``(2) State law regarding disclosure.--Nothing in paragraph
            (1) shall be construed to supersede any provision of State law
            that prohibits an institution of higher education from making
            the disclosure described in subsection (a).''.

        PART F--LIAISON FOR PROPRIETARY INSTITUTIONS OF HIGHER EDUCATION

    SEC. 961. LIAISON FOR PROPRIETARY INSTITUTIONS OF HIGHER EDUCATION.

        Title II of the Department of Education Organization Act (20 U.S.C.
    3411 et seq.) is amended by adding at the end the following:

    ``SEC. 219. <<NOTE: 20 USC 3426.>> LIAISON FOR PROPRIETARY INSTITUTIONS
                OF HIGHER EDUCATION.

        ``(a) Establishment.--There shall be in the Department a Liaison for
    Proprietary Institutions of Higher Education, who shall be an officer of
    the Department appointed by the Secretary.
        ``(b) <<NOTE: Deadline.>> Appointment.--The Secretary shall appoint,
    not later than 6 months after the date of enactment of the Higher
    Education Amendments of 1998 a Liaison for Proprietary Institutions of
    Higher Education who shall be a person who--
                ``(1) has attained a certificate or degree from a
            proprietary institution of higher education; or
                ``(2) has been employed in a proprietary institution setting
            for not less than 5 years.

    [[Page 112 STAT. 1837]]

        ``(c) Duties.--The Liaison for Proprietary Institutions of Higher
    Education shall--
                ``(1) serve as the principal advisor to the Secretary on
            matters affecting proprietary institutions of higher education;
                ``(2) provide guidance to programs within the Department
            that involve functions affecting proprietary institutions of
            higher education; and
                ``(3) work with the Federal Interagency Committee on
            Education to improve the coordination of--
                        ``(A) the outreach programs in the numerous Federal
                    departments and agencies that administer education and
                    job training programs;
                        ``(B) collaborative business and education
                    partnerships; and
                        ``(C) education programs located in, and involving,
                    rural areas.''.

                      PART G--AMENDMENTS TO OTHER STATUTES

    SEC. 971. NONDISCHAREABILITY OF CERTAIN CLAIMS FOR EDUCATIONAL BENEFITS
                PROVIDED TO OBTAIN HIGHER EDUCATION.

        (a) Amendment.--Section 523(a)(8) of title 11, United States Code,
    is amended by striking ``unless--'' and all that follows through ``(B)
    excepting such debt'' and inserting ``unless excepting such debt''.
        (b) <<NOTE: Applicability. 11 USC 523 note.>> Effective Date.--The
    amendment made by subsection (a) shall apply only with respect to cases
    commenced under title 11, United States Code, after the date of
    enactment of this Act.

    SEC. 972. GNMA GUARANTEE FEE.

        (a) In General.--Section 306(g)(3)(A) of the National Housing Act
    (12 U.S.C. 1721(g)(3)(A)) is amended by striking ``No fee or charge''
    and all that follows through ``States)'' and inserting ``The Association
    shall assess and collect a fee in an amount equal to nine basis
    points''.
        (b) <<NOTE: 12 USC 1721 note.>> Effective Date.--The amendment made
    by this section shall take effect on October 1, 2004.

                                 PART H--REPEALS

    SEC. 981. REPEALS.

        Section 4122 of the Elementary and Secondary Education Act of 1965
    (20 U.S.C. 7132) is repealed.

        Approved October 7, 1998.

    LEGISLATIVE HISTORY--H.R. 6 (S. 1882):
    ---------------------------------------------------------------------------

    HOUSE REPORTS: Nos. 105-481 (Comm. on Education and the Workforce) and
    105-750 (Comm. of Conference).
    SENATE REPORTS: No. 105-181 accompanying S. 1882 (Comm. on Labor and
    Human Resources).
    CONGRESSIONAL RECORD, Vol. 144 (1998):
                Apr. 29, May 5, 6, considered and passed House.
                July 9, considered and passed Senate, amended, in lieu of S.
                    1882.
                Sept. 28, House agreed to conference report.
                Sept. 29, Senate agreed to conference report.
    WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
                Oct. 7, Presidential remarks and statement.

                                      <all>