[United States Statutes at Large, Volume 121, 110th Congress, 1st Session]
[From the U.S. Government Publishing Office, www.gpo.gov]

121 STAT. 784

Public Law 110-84
110th Congress

An Act


 
To provide for reconciliation pursuant to section 601 of the concurrent
resolution on the budget for fiscal year 2008. [NOTE: Sept. 27,
2007 -  [H.R. 2669]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress [NOTE: College Cost Reduction and
Access Act. 20 USC 1001 note.] assembled,
SECTION 1. SHORT TITLE; REFERENCES.

(a) Short Title.--This Act may be cited as the ``College Cost
Reduction and Access Act''.
(b) References.--Except as otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.).
(c) [NOTE: 20 USC 1070a note.] Effective Date.--Except as
otherwise expressly provided, the amendments made by this Act shall be
effective on October 1, 2007.

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

SEC. 101. TUITION SENSITIVITY.

(a) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) through (9) as
paragraphs (3) through (8), respectively.

(b) [NOTE: 20 USC 1070a note.] Effective Date.--The amendments
made by subsection (a) shall be effective with respect to determinations
of Federal Pell Grant amounts for award years beginning on or after July
1, 2007.

(c) Authorization and Appropriation of Funds.--There is authorized
to be appropriated, and there is appropriated, out of any money in the
Treasury not otherwise appropriated, for the Department of Education to
carry out the amendment made by subsection (a), $11,000,000 for fiscal
year 2008.
SEC. 102. MANDATORY PELL GRANT INCREASES.

(a) Extension of Authority.--Section 401(a) (20 U.S.C. 1070a(a)) is
amended by striking ``fiscal year 2004'' and inserting ``fiscal year
2017''.

[[Page 785]]
121 STAT. 785

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

[[Page 786]]
121 STAT. 786

SEC. 103. UPWARD BOUND.

Section 402C [NOTE: 20 USC 1070a-13.] is further amended by adding
at the end the following new subsection:

``(f) Additional Funds.--
``(1) Authorization and appropriation.--There are authorized
to be appropriated, and there are appropriated to the Secretary,
from funds not otherwise appropriated, $57,000,000 for each of
the fiscal years 2008 through 2011 to carry out paragraph (2),
except that any amounts that remain unexpended for such purpose
for each of such fiscal years may be available for technical
assistance and administration costs for the Upward Bound
program. The authority to award grants under this subsection
shall expire at the end of fiscal year 2011.
``(2) Use of funds.--The amounts made available by paragraph
(1) shall be available to provide assistance to all Upward Bound
projects that did not receive assistance in fiscal year 2007 and
that have a grant score above 70. Such assistance shall be made
available in the form of 4-year grants.''.
SEC. 104. TEACH GRANTS.

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

``Subpart 9--TEACH Grants

``SEC. [NOTE: 20 USC 1070g.] 420L. DEFINITIONS.

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

[[Page 787]]
121 STAT. 787

``SEC. [NOTE: 20 USC 1070g-1.] 420M. PROGRAM ESTABLISHED.

``(a) Program Authority.--
``(1) Payments required.--The Secretary shall pay to each
eligible institution such sums as may be necessary to pay to
each teacher candidate who files an application and agreement in
accordance with section 420N, and who qualifies under paragraph
(2) of section 420N(a), a TEACH Grant in the amount of $4,000
for each academic year during which that teacher candidate is in
attendance at the institution.
``(2) References.--Grants made under paragraph (1) shall be
known as `Teacher Education Assistance for College and Higher
Education Grants' or `TEACH Grants'.

``(b) Payment Methodology.--
``(1) Prepayment.--Not [NOTE: Federal Register,
publication.] less than 85 percent of any funds provided to an
eligible institution under subsection (a) shall be advanced to
the eligible institution prior to the start of each payment
period and shall be based upon an amount requested by the
institution as needed to pay teacher candidates until such time
as the Secretary determines and publishes in the Federal
Register with an opportunity for comment, an alternative payment
system that provides payments to institutions in an accurate and
timely manner, except that this sentence shall not be construed
to limit the authority of the Secretary to place an institution
on a reimbursement system of payment.
``(2) Direct payment.--Nothing in this section shall be
interpreted to prohibit the Secretary from paying directly to
teacher candidates, in advance of the beginning of the academic
term, an amount for which teacher candidates are eligible, in
cases where the eligible institution elects not to participate
in the disbursement system required by paragraph (1).
``(3) Distribution of grants to teacher candidates.--
Payments under this subpart shall be made, in accordance with
regulations promulgated by the Secretary for such purpose, in
such manner as will best accomplish the purposes of this
subpart. Any disbursement allowed to be made by crediting the
teacher candidate's account shall be limited to tuition and fees
and, in the case of institutionally-owned housing, room and
board. The teacher candidate may elect to have the institution
provide other such goods and services by crediting the teacher
candidate's account.

``(c) Reductions in Amount.--
``(1) Part-time students.--In any case where a teacher
candidate attends an eligible institution on less than a full-
time basis (including a teacher candidate who attends an
eligible institution on less than a half-time basis) during any
academic year, the amount of a grant under this subpart for
which that teacher candidate is eligible shall be reduced in
proportion to the degree to which that teacher candidate is not
attending on a full-time basis, in accordance with a schedule of
reductions established by the Secretary for the purposes of this
subpart, computed in accordance with this subpart.
Such [NOTE: Regulations. Federal Register,
publication.] schedule of reductions shall be established by
regulation and published in the Federal Register in accordance
with section 482 of this Act.
``(2) No exceeding cost.--The amount of a grant awarded
under this subpart, in combination with Federal assistance

[[Page 788]]
121 STAT. 788

and other student assistance, shall not exceed the cost of
attendance (as defined in section 472) at the eligible
institution at which that teacher candidate is in attendance.
If, with respect to any teacher candidate for any academic year,
it is determined that the amount of a TEACH Grant exceeds the
cost of attendance for that year, the amount of the TEACH Grant
shall be reduced until such grant does not exceed the cost of
attendance at the eligible institution.

``(d) Period of Eligibility for Grants.--
``(1) Undergraduate and post-baccalaureate students.--The
period during which an undergraduate or post-baccalaureate
student may receive grants under this subpart shall be the
period required for the completion of the first undergraduate
baccalaureate or post-baccalaureate course of study being
pursued by the teacher candidate at the eligible institution at
which the teacher candidate is in attendance, except that--
``(A) any period during which the teacher candidate
is enrolled in a noncredit or remedial course of study
as described in paragraph (3) shall not be counted for
the purpose of this paragraph; and
``(B) the total amount that a teacher candidate may
receive under this subpart for undergraduate or post-
baccalaureate study shall not exceed $16,000.
``(2) Graduate students.--The period during which a graduate
student may receive grants under this subpart shall be the
period required for the completion of a master's degree course
of study pursued by the teacher candidate at the eligible
institution at which the teacher candidate is in attendance,
except that the total amount that a teacher candidate may
receive under this subpart for graduate study shall not exceed
$8,000.
``(3) Remedial course; study abroad.--Nothing in this
section shall be construed to exclude from eligibility courses
of study which are noncredit or remedial in nature (including
courses in English language acquisition) which are determined by
the eligible institution to be necessary to help the teacher
candidate be prepared for the pursuit of a first undergraduate
baccalaureate or post-baccalaureate degree or certificate or, in
the case of courses in English language instruction, to be
necessary to enable the teacher candidate to utilize already
existing knowledge, training, or skills. Nothing in this section
shall be construed to exclude from eligibility programs of study
abroad that are approved for credit by the home institution at
which the teacher candidate is enrolled.
``SEC. [NOTE: 20 USC 1070g-2.] 420N. APPLICATIONS; ELIGIBILITY.

``(a) Applications; Demonstration of Eligibility.--
``(1) Filing required.--The Secretary shall periodically set
dates by which teacher candidates shall file applications for
grants under this subpart. Each teacher candidate desiring a
grant under this subpart for any year shall file an application
containing such information and assurances as the Secretary may
determine necessary to enable the Secretary to carry out the
functions and responsibilities of this subpart.

[[Page 789]]
121 STAT. 789

``(2) Demonstration of teach grant eligibility.--Each
application submitted under paragraph (1) shall contain such
information as is necessary to demonstrate that--
``(A) if the applicant is an enrolled student--
``(i) the student is an eligible student for
purposes of section 484;
``(ii) the student--
``(I) has a grade point average that
is determined, under standards
prescribed by the Secretary, to be
comparable to a 3.25 average on a zero
to 4.0 scale, except that, if the
student is in the first year of a
program of undergraduate education, such
grade point average shall be determined
on the basis of the student's cumulative
secondary school grade point average; or
``(II) displayed high academic
aptitude by receiving a score above the
75th percentile on at least one of the
batteries in an undergraduate, post-
baccalaureate, or graduate school
admissions test; and
``(iii) the student is completing coursework
and other requirements necessary to begin a career
in teaching, or plans to complete such coursework
and requirements prior to graduating; or
``(B) if the applicant is a current or prospective
teacher applying for a grant to obtain a graduate
degree--
``(i) the applicant is a teacher or a retiree
from another occupation with expertise in a field
in which there is a shortage of teachers, such as
mathematics, science, special education, English
language acquisition, or another high-need
subject; or
``(ii) the applicant is or was a teacher who
is using high-quality alternative certification
routes, such as Teach for America, to get
certified.

``(b) Agreements to Serve.--Each application under subsection (a)
shall contain or be accompanied by an agreement by the applicant that--
``(1) the applicant will--
``(A) serve as a full-time teacher for a total of
not less than 4 academic years within 8 years after
completing the course of study for which the applicant
received a TEACH Grant under this subpart;
``(B) teach in a school described in section
465(a)(2)(A);
``(C) teach in any of the following fields--
``(i) mathematics;
``(ii) science;
``(iii) a foreign language;
``(iv) bilingual education;
``(v) special education;
``(vi) as a reading specialist; or
``(vii) another field documented as high-need
by the Federal Government, State government, or
local educational agency, and approved by the
Secretary;
``(D) [NOTE: Certification.] submit evidence of
such employment in the form of a certification by the
chief administrative officer of the school upon
completion of each year of such service; and

[[Page 790]]
121 STAT. 790

``(E) comply with the requirements for being a
highly qualified teacher as defined in section 9101 of
the Elementary and Secondary Education Act of 1965; and
``(2) in the event that the applicant is determined to have
failed or refused to carry out such service obligation, the sum
of the amounts of any TEACH Grants received by such applicant
will be treated as a loan and collected from the applicant in
accordance with subsection (c) and the regulations thereunder.

``(c) Repayment for Failure to Complete Service.--In the event that
any recipient of a grant under this subpart fails or refuses to comply
with the service obligation in the agreement under subsection (b), the
sum of the amounts of any TEACH Grants received by such recipient shall,
upon a determination of such a failure or refusal in such service
obligation, be treated as a Federal Direct Unsubsidized Stafford Loan
under part D of title IV, and shall be subject to repayment, together
with interest thereon accruing from the date of the grant award, in
accordance with terms and conditions specified by the Secretary in
regulations under this subpart.
``SEC. [NOTE: 20 USC 1070g-3.] 420O. PROGRAM PERIOD AND FUNDING.

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

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

SEC. 201. INTEREST RATE REDUCTIONS.

(a) FFEL Interest Rates.--
(1) Section 427A(l) (20 U.S.C. 1077a(l)) is amended by
adding at the end the following new paragraph:
``(4) Reduced rates for undergraduate subsidized loans.--
Notwithstanding subsection (h) and paragraph (1) of this
subsection, with respect to any loan to an undergraduate student
made, insured, or guaranteed under this part (other than a loan
made pursuant to section 428B, 428C, or 428H) for which the
first disbursement is made on or after July 1, 2006, and before
July 1, 2012, the applicable rate of interest shall be as
follows:
``(A) For a loan for which the first disbursement is
made on or after July 1, 2006, and before July 1, 2008,
6.8 percent on the unpaid principal balance of the loan.
``(B) For a loan for which the first disbursement is
made on or after July 1, 2008, and before July 1, 2009,
6.0 percent on the unpaid principal balance of the loan.
``(C) For a loan for which the first disbursement is
made on or after July 1, 2009, and before July 1, 2010,
5.6 percent on the unpaid principal balance of the loan.
``(D) For a loan for which the first disbursement is
made on or after July 1, 2010, and before July 1, 2011,
4.5 percent on the unpaid principal balance of the loan.

[[Page 791]]
121 STAT. 791

``(E) For a loan for which the first disbursement is
made on or after July 1, 2011, and before July 1, 2012,
3.4 percent on the unpaid principal balance of the
loan.''.
(2) Special allowance cross reference.--Section
438(b)(2)(I)(ii)(II) (20 U.S.C. 1087-1(b)(2)(I)(ii)(II)) is
amended by striking ``section 427A(l)(1)'' and inserting
``section 427A(l)(1) or (l)(4)''.

(b) Direct Loan Interest Rates.--Section 455(b)(7) (20 U.S.C.
1087e(b)(7)) is amended by adding at the end the following new
subparagraph:
``(D) Reduced rates for undergraduate fdsl.--
Notwithstanding the preceding paragraphs of this
subsection and subparagraph (A) of this paragraph, for
Federal Direct Stafford Loans made to undergraduate
students for which the first disbursement is made on or
after July 1, 2006, and before July 1, 2012, the
applicable rate of interest shall be as follows:
``(i) For a loan for which the first
disbursement is made on or after July 1, 2006, and
before July 1, 2008, 6.8 percent on the unpaid
principal balance of the loan.
``(ii) For a loan for which the first
disbursement is made on or after July 1, 2008, and
before July 1, 2009, 6.0 percent on the unpaid
principal balance of the loan.
``(iii) For a loan for which the first
disbursement is made on or after July 1, 2009, and
before July 1, 2010, 5.6 percent on the unpaid
principal balance of the loan.
``(iv) For a loan for which the first
disbursement is made on or after July 1, 2010, and
before July 1, 2011, 4.5 percent on the unpaid
principal balance of the loan.
``(v) For a loan for which the first
disbursement is made on or after July 1, 2011, and
before July 1, 2012, 3.4 percent on the unpaid
principal balance of the loan.''.
SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED
FORCES.

(a) Federal Family Education Loans.--Section 428(b)(1)(M)(iii) (20
U.S.C. 1078(b)(1)(M)(iii)) is amended--
(1) in the matter preceding subclause (I), by striking ``not
in excess of 3 years'';
(2) in subclause (II), by striking ``; or'' and inserting a
comma; and
(3) by adding at the end the following:
``and for the 180-day period following the
demobilization date for the service described in
subclause (I) or (II); or''.

(b) Direct Loans.--Section 455(f)(2)(C) (20 U.S.C. 1087e(f)(2)(C))
is amended--
(1) in the matter preceding clause (i), by striking ``not in
excess of 3 years'';
(2) in clause (ii), by striking ``; or'' and inserting a
comma; and
(3) by adding at the end the following:

[[Page 792]]
121 STAT. 792

``and for the 180-day period following the
demobilization date for the service described in clause
(i) or (ii); or''.

(c) Perkins Loans.--Section 464(c)(2)(A)(iii) (20 U.S.C.
1087dd(c)(2)(A)(iii)) is amended--
(1) in the matter preceding subclause (I), by striking ``not
in excess of 3 years'';
(2) in subclause (II), by striking the semicolon and
inserting a comma; and
(3) by adding at the end the following:

``and for the 180-day period following the demobilization date for the
service described in subclause (I) or (II);''.
(d) Applicability.--Section 8007(f) of the Higher Education
Reconciliation Act of 2005 (20 U.S.C. 1078 note) is amended by striking
``loans for which'' and all that follows through the period at the end
and inserting ``all loans under title IV of the Higher Education Act of
1965.''.
SEC. 203. INCOME-BASED REPAYMENT.

(a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.) is
amended by adding at the end the following:
``SEC. [NOTE: 20 USC 1098e.] 493C. INCOME-BASED REPAYMENT.

``(a) Definitions.--In this section:
``(1) Excepted plus loan.--The term `excepted PLUS loan'
means a loan under section 428B, or a Federal Direct PLUS Loan,
that is made, insured, or guaranteed on behalf of a dependent
student.
``(2) Excepted consolidation loan.--The term `excepted
consolidation loan' means a consolidation loan under section
428C, or a Federal Direct Consolidation Loan, if the proceeds of
such loan were used to the discharge the liability on an
excepted PLUS loan.
``(3) Partial financial hardship.--The term `partial
financial hardship', when used with respect to a borrower, means
that for such borrower--
``(A) the annual amount due on the total amount of
loans made, insured, or guaranteed under part B or D
(other than an excepted PLUS loan or excepted
consolidation loan) to a borrower as calculated under
the standard repayment plan under section
428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year
repayment period; exceeds
``(B) 15 percent of the result obtained by
calculating, on at least an annual basis, the amount by
which--
``(i) the borrower's, and the borrower's
spouse's (if applicable), adjusted gross income;
exceeds
``(ii) 150 percent of the poverty line
applicable to the borrower's family size as
determined under section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)).

``(b) Income-Based Repayment Program Authorized.--Notwithstanding
any other provision of this Act, the Secretary shall carry out a program
under which--
``(1) a borrower of any loan made, insured, or guaranteed
under part B or D (other than an excepted PLUS loan or excepted
consolidation loan) who has a partial financial hardship
(whether or not the borrower's loan has been submitted to a
guaranty agency for default aversion or is already in default)
may elect, during any period the borrower has the

[[Page 793]]
121 STAT. 793

partial financial hardship, to have the borrower's aggregate
monthly payment for all such loans not exceed the result
described in subsection (a)(3)(B) divided by 12;
``(2) the holder of such a loan shall apply the borrower's
monthly payment under this subsection first toward interest due
on the loan, next toward any fees due on the loan, and then
toward the principal of the loan;
``(3) any interest due and not paid under paragraph (2)--
``(A) shall, on subsidized loans, be paid by the
Secretary for a period of not more than 3 years after
the date of the borrower's election under paragraph (1),
except that such period shall not include any period
during which the borrower is in deferment due to an
economic hardship described in section 435(o); and
``(B) be capitalized--
``(i) in the case of a subsidized loan,
subject to subparagraph (A), at the time the
borrower--
``(I) ends the election to make
income-based repayment under this
subsection; or
``(II) begins making payments of not
less than the amount specified in
paragraph (6)(A); or
``(ii) in the case of an unsubsidized loan, at
the time the borrower--
``(I) ends the election to make
income-based repayment under this
subsection; or
``(II) begins making payments of not
less than the amount specified in
paragraph (6)(A);
``(4) any principal due and not paid under paragraph (2)
shall be deferred;
``(5) the amount of time the borrower makes monthly payments
under paragraph (1) may exceed 10 years;
``(6) if the borrower no longer has a partial financial
hardship or no longer wishes to continue the election under this
subsection, then--
``(A) the maximum monthly payment required to be
paid for all loans made to the borrower under part B or
D (other than an excepted PLUS loan or excepted
consolidation loan) shall not exceed the monthly amount
calculated under section 428(b)(9)(A)(i) or
455(d)(1)(A), based on a 10-year repayment period, when
the borrower first made the election described in this
subsection; and
``(B) the amount of time the borrower is permitted
to repay such loans may exceed 10 years;
``(7) the Secretary shall repay or cancel any outstanding
balance of principal and interest due on all loans made under
part B or D (other than a loan under section 428B or a Federal
Direct PLUS Loan) to a borrower who--
``(A) at any time, elected to participate in income-
based repayment under paragraph (1); and
``(B) for a period of time prescribed by the
Secretary, not to exceed 25 years, meets 1 or more of
the following requirements--
``(i) has made reduced monthly payments under
paragraph (1) or paragraph (6);
``(ii) has made monthly payments of not less
than the monthly amount calculated under section
428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-
year

[[Page 794]]
121 STAT. 794

repayment period, when the borrower first made the
election described in this subsection;
``(iii) has made payments of not less than the
payments required under a standard repayment plan
under section 428(b)(9)(A)(i) or 455(d)(1)(A) with
a repayment period of 10 years;
``(iv) has made payments under an income-
contingent repayment plan under section
455(d)(1)(D); or
``(v) has been in deferment due to an economic
hardship described in section 435(o);
``(8) a borrower who is repaying a loan made under part B or
D pursuant to income-based repayment may elect, at any time, to
terminate repayment pursuant to income-based repayment and repay
such loan under the standard repayment plan; and
``(9) the special allowance payment to a lender calculated
under section 438(b)(2)(I), when calculated for a loan in
repayment under this section, shall be calculated on the
principal balance of the loan and on any accrued interest unpaid
by the borrower in accordance with this section.

``(c) Eligibility Determinations.--
The [NOTE: Procedures.] Secretary shall establish procedures for
annually determining the borrower's eligibility for income-based
repayment, including verification of a borrower's annual income and the
annual amount due on the total amount of loans made, insured, or
guaranteed under part B or D (other than an excepted PLUS loan or
excepted consolidation loan), and such other procedures as are necessary
to effectively implement income-based repayment under this section. The
Secretary shall consider, but is not limited to, the procedures
established in accordance with section 455(e)(1) or in connection with
income sensitive repayment schedules under section 428(b)(9)(A)(iii) or
428C(b)(1)(E).''.

(b) Conforming Amendments.--
(1) Section 428C (20 U.S.C. 1078-3) is amended--
(A) in subsection (a)(3)(B)(i), by amending
subclause (V) to read as follows:
``(V) an individual may obtain a
subsequent consolidation loan under
section 455(g) only--
``(aa) for the purposes of
obtaining an income contingent
repayment plan, and only if the
loan has been submitted to the
guaranty agency for default
aversion; or
``(bb) for the purposes of
using the public service loan
forgiveness program under
section 455(m).'';
(B) in the first sentence of subsection (b)(5), by
inserting ``or chooses to obtain a consolidation loan
for the purposes of using the public service loan
forgiveness program offered under section 455(m),''
after ``from such a lender,''; and
(C) in the second sentence of such subsection, by
inserting before the period the following: ``, except
that if a borrower intends to be eligible to use the
public service loan forgiveness program under section
455(m), such loan shall be repaid using one of the
repayment options described in section 455(m)(1)(A)''.

[[Page 795]]
121 STAT. 795

(2) Section 428C (20 U.S.C. 1078-3) (as amended by paragraph
(1) of this subsection) is amended--
(A) in subsection (a)(3)(B)(i)(V)(aa)--
(i) by striking ``an income contingent
repayment plan,'' and inserting ``income
contingent repayment or income-based repayment,'';
and
(ii) by inserting ``or if the loan is already
in default'' before the semicolon;
(B) in the first sentence of subsection (b)(5), by
inserting ``or income-based repayment terms'' after
``income-sensitive repayment terms''; and
(C) in the second sentence of such subsection, by
inserting ``, pursuant to income-based repayment under
section 493C,'' after ``part D of this title''.
(3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D)) is
amended by inserting ``made on behalf of a dependent student''
after ``PLUS loan''.

(c) [NOTE: 20 USC 1078-3 note.] Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall be effective on July 1,
2009.
(2) Exception.--The amendments made by subsection (b)(1)
shall be effective on July 1, 2008.
SEC. 204. [NOTE: National Guard. Armed Forces.] DEFERRAL OF LOAN
REPAYMENT FOLLOWING ACTIVE DUTY.

Part G of title IV is further amended by adding after section 493C
(as added by section 203 of this Act) the following new section:
``SEC. [NOTE: 20 USC 1098f.] 493D. DEFERRAL OF LOAN REPAYMENT
FOLLOWING ACTIVE DUTY.

``(a) Deferral of Loan Repayment Following Active Duty.--In addition
to any deferral of repayment of a loan made under this title pursuant to
section 428(b)(1)(M)(iii), 455(f)(2)(C), or 464(c)(2)(A)(iii), a
borrower of a loan under this title who is a member of the National
Guard or other reserve component of the Armed Forces of the United
States, or a member of such Armed Forces in a retired status, is called
or ordered to active duty, and is enrolled, or was enrolled within six
months prior to the activation, in a program of instruction at an
eligible institution, shall be eligible for a deferment during the 13
months following the conclusion of such service, except that a deferment
under this subsection shall expire upon the borrower's return to
enrolled student status.
``(b) Active Duty.--Notwithstanding section 481(d), in this section,
the term `active duty' has the meaning given such term in section
101(d)(1) of title 10, United States Code, except that such term--
``(1) does not include active duty for training or
attendance at a service school; but
``(2) includes, in the case of members of the National
Guard, active State duty.''.
SEC. 205. MAXIMUM REPAYMENT PERIOD.

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

[[Page 796]]
121 STAT. 796

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

TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 301. GUARANTY AGENCY COLLECTION RETENTION.

Clause (ii) of section 428(c)(6)(A) (20 U.S.C. 1078(c)(6)(A)(ii)) is
amended to read as follows:
``(ii) [NOTE: Applicability.] an amount
equal to 24 percent of such payments for use in
accordance with section 422B, except that--
``(I) beginning October 1, 2003 and
ending September 30, 2007, this clause
shall be applied by substituting `23
percent' for `24 percent'; and
``(II) beginning October 1, 2007,
this clause shall be applied by
substituting `16 percent' for `24
percent'.''.
SEC. 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.

(a) Elimination of Status.--Part B of title IV (20 U.S.C. 1071 et
seq.) is amended by striking section 428I (20 U.S.C. 1078-9).
(b) Conforming Amendments.--Part B of title IV is further amended--
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E) through (H)
as subparagraphs (D) through (G), respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by
striking the matter following subparagraph (B).

(c) Effective Date.--The [NOTE: Applicability. 20 USC 1078
note.] amendments made by subsections (a) and (b) shall be effective on
October 1, 2007, except that section 428I of the Higher Education Act of
1965 (as in effect on the day before the date of enactment of this Act)
shall apply to eligible

[[Page 797]]
121 STAT. 797

lenders that received a designation under subsection (a) of such section
prior to October 1, 2007, for the remainder of the year for which the
designation was made.
SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.

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

(b) [NOTE: 20 USC 1078 note.] Effective Date.--The amendment made
by subsection (a) shall be effective on October 1, 2012, and shall apply
with respect to loans made on or after such date.
SEC. 304. DEFINITIONS.

Section 435 (20 U.S.C. 1085) is amended--
(1) in subsection (o)(1)--
(A) in subparagraph (A)(ii)--
(i) by striking ``100 percent of the poverty
line for a family of 2'' and inserting ``150
percent of the poverty line applicable to the
borrower's family size''; and
(ii) by inserting ``or'' after the semicolon;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B);
(2) in subsection (o)(2), by striking ``(1)(C)'' and
inserting ``(1)(B)''; and
(3) by adding at the end the following:

``(p) Eligible Not-for-Profit Holder.--
``(1) Definition.--Subject to the limitations in paragraph
(2) and the prohibition in paragraph (3), the term `eligible
not-for-profit holder' means an eligible lender under subsection
(d) (except for an eligible lender described in subsection
(d)(1)(E)) that requests a special allowance payment under
section 438(b)(2)(I)(vi)(II) or a payment under section 771 and
that is--
``(A) a State, or a political subdivision,
authority, agency, or other instrumentality thereof,
including such entities that are eligible to issue bonds
described in section 1.103-1 of title 26, Code of
Federal Regulations, or section 144(b) of the Internal
Revenue Code of 1986;
``(B) an entity described in section 150(d)(2) of
such Code that has not made the election described in
section 150(d)(3) of such Code;
``(C) an entity described in section 501(c)(3) of
such Code; or
``(D) a trustee acting as an eligible lender on
behalf of a State, political subdivision, authority,
agency, instrumentality, or other entity described in
subparagraph (A), (B), or (C).
``(2) Limitations.--

[[Page 798]]
121 STAT. 798

``(A) Existing on date of enactment.--
``(i) In general.--An eligible lender shall
not be an eligible not-for-profit holder under
this Act unless such lender--
``(I) was a State, political
subdivision, authority, agency,
instrumentality, or other entity
described in paragraph (1)(A), (B), or
(C) that was, on the date of the
enactment of the College Cost Reduction
and Access Act, acting as an eligible
lender under subsection (d) (other than
an eligible lender described in
subsection (d)(1)(E)); or
``(II) is a trustee acting as an
eligible lender under this Act on behalf
of such a State, political subdivision,
authority, agency, instrumentality, or
other entity described in subclause (I)
of this clause.
``(ii) Exception.--Notwithstanding clause (i),
a State may elect, in accordance with regulations
of the Secretary, to waive the requirements this
subparagraph for a new not-for-profit holder
determined by the State to be necessary to carry
out a public purpose of such State, except that a
State may not make such election with respect the
requirements of clause (i)(II).
``(B) No for-profit ownership or control.--No
political subdivision, authority, agency,
instrumentality, or other entity described in paragraph
(1)(A), (B), or (C) shall be an eligible not-for-profit
holder under this Act if such entity is owned or
controlled, in whole or in part, by a for-profit entity.
``(C) Sole ownership of loans and income.--No State,
political subdivision, authority, agency,
instrumentality, or other entity described in paragraph
(1)(A), (B), or (C) shall be an eligible not-for-profit
holder under this Act with respect to any loan, or
income from any loan, unless the State, political
subdivision, authority, agency, instrumentality, or
other entity described in paragraph (1)(A), (B), or (C)
is the sole owner of the beneficial interest in such
loan and the income from such loan.
``(D) Trustee compensation limitations.--A trustee
described in paragraph (1)(D) shall not receive
compensation as consideration for acting as an eligible
lender on behalf of an entity described in described in
paragraph (1)(A), (B), or (C) in excess of reasonable
and customary fees.
``(E) Rule of construction.--For purposes of
subparagraphs (B), (C), and (D) of this paragraph, a
State, political subdivision, authority, agency,
instrumentality, or other entity described in paragraph
(1)(A), (B), or (C) shall not--
``(i) be deemed to be owned or controlled, in
whole or in part, by a for-profit entity, or
``(ii) lose its status as the sole owner of a
beneficial interest in a loan and the income from
a loan by that political subdivision, authority,
agency, instrumentality, or other entity,
by granting a security interest in, or otherwise
pledging as collateral, such loan, or the income from
such loan,

[[Page 799]]
121 STAT. 799

to secure a debt obligation in the operation of an
arrangement described in paragraph (1)(D).
``(3) Prohibition.--In the case of a loan for which the
special allowance payment is calculated under section
438(b)(2)(I)(vi)(II) and that is sold by the eligible not-for-
profit holder holding the loan to an entity that is not an
eligible not-for-profit holder under this Act, the special
allowance payment for such loan shall, beginning on the date of
the sale, no longer be calculated under section
438(b)(2)(I)(vi)(II) and shall be calculated under section
438(b)(2)(I)(vi)(I) instead.
``(4) Regulations.--Not [NOTE: Deadline.] later than 1
year after the date of enactment of the College Cost Reduction
and Access Act, the Secretary shall promulgate regulations in
accordance with the provisions of this subsection.''.
SEC. 305. SPECIAL ALLOWANCES.

(a) Reduction of Lender Special Allowance Payments.--Section
438(b)(2)(I) (20 U.S.C. 1087-1(b)(2)(I)) is amended--
(1) in clause (i), by striking ``clauses (ii), (iii), and
(iv)'' and inserting ``the following clauses'';
(2) in clause (v)(III), by striking ``clauses (ii), (iii),
and (iv)'' and inserting ``clauses (ii), (iii), (iv), and
(vi)''; and
(3) by adding at the end the following:
``(vi) Reduction for loans disbursed on or
after october 1, 2007.--With respect to a loan on
which the applicable interest rate is determined
under section 427A(l) and for which the first
disbursement of principal is made on or after
October 1, 2007, the special allowance payment
computed pursuant to this subparagraph shall be
computed--
``(I) for loans held by an eligible
lender not described in subclause (II)--
``(aa) by substituting `1.79
percent' for `2.34 percent' each
place the term appears in this
subparagraph;
``(bb) by substituting `1.19
percent' for `1.74 percent' in
clause (ii);
``(cc) by substituting `1.79
percent' for `2.64 percent' in
clause (iii); and
``(dd) by substituting `2.09
percent' for `2.64 percent' in
clause (iv); and
``(II) for loans held by an eligible
not-for-profit holder--
``(aa) by substituting `1.94
percent' for `2.34 percent' each
place the term appears in this
subparagraph;
``(bb) by substituting `1.34
percent' for `1.74 percent' in
clause (ii);
``(cc) by substituting `1.94
percent' for `2.64 percent' in
clause (iii); and
``(dd) by substituting `2.24
percent' for `2.64 percent' in
clause (iv).''.

(b) Increased Loan Fees From Lenders.--Paragraph (2) of section
438(d) (20 U.S.C. 1087-1(d)(2)) is amended to read as follows:

[[Page 800]]
121 STAT. 800

``(2) Amount of loan fees.--The amount of the loan fee which
shall be deducted under paragraph (1), but which may not be
collected from the borrower, shall be equal to--
``(A) except as provided in subparagraph (B), 0.50
percent of the principal amount of the loan with respect
to any loan under this part for which the first
disbursement was made on or after October 1, 1993; and
``(B) 1.0 percent of the principal amount of the
loan with respect to any loan under this part for which
the first disbursement was made on or after October 1,
2007.''.
SEC. 306. ACCOUNT MAINTENANCE FEES.

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

TITLE IV--LOAN FORGIVENESS

SEC. 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

Section 455 (20 U.S.C. 1087e) is further amended by adding at the
end the following:
``(m) Repayment Plan for Public Service Employees.--
``(1) In general.--The Secretary shall cancel the balance of
interest and principal due, in accordance with paragraph (2), on
any eligible Federal Direct Loan not in default for a borrower
who--
``(A) has made 120 monthly payments on the eligible
Federal Direct Loan after October 1, 2007, pursuant to
any one or a combination of the following--
``(i) payments under an income-based repayment
plan under section 493C;
``(ii) payments under a standard repayment
plan under subsection (d)(1)(A), based on a 10-
year repayment period;
``(iii) monthly payments under a repayment
plan under subsection (d)(1) or (g) of not less
than the monthly amount calculated under
subsection (d)(1)(A), based on a 10-year repayment
period; or
``(iv) payments under an income contingent
repayment plan under subsection (d)(1)(D); and
``(B)(i) is employed in a public service job at the
time of such forgiveness; and
``(ii) has been employed in a public service job
during the period in which the borrower makes each of
the 120 payments described in subparagraph (A).
``(2) Loan cancellation amount.--After the conclusion of the
employment period described in paragraph (1), the Secretary
shall cancel the obligation to repay the balance of principal
and interest due as of the time of such cancellation, on the
eligible Federal Direct Loans made to the borrower under this
part.
``(3) Definitions.--In this subsection:
``(A) Eligible federal direct loan.--The term
`eligible Federal Direct Loan' means a Federal Direct
Stafford Loan, Federal Direct PLUS Loan, or Federal
Direct Unsubsidized Stafford Loan, or a Federal Direct
Consolidation Loan.

[[Page 801]]
121 STAT. 801

``(B) Public service job.--The term `public service
job' means--
``(i) a full-time job in emergency management,
government, military service, public safety, law
enforcement, public health, public education
(including early childhood education), social work
in a public child or family service agency, public
interest law services (including prosecution or
public defense or legal advocacy in low-income
communities at a nonprofit organization), public
child care, public service for individuals with
disabilities, public service for the elderly,
public library sciences, school-based library
sciences and other school-based services, or at an
organization that is described in section
501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such
Code; or
``(ii) teaching as a full-time faculty member
at a Tribal College or University as defined in
section 316(b) and other faculty teaching in high-
needs areas, as determined by the Secretary.''.

TITLE V--FEDERAL PERKINS LOANS

SEC. 501. DISTRIBUTION OF LATE COLLECTIONS.

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

TITLE VI--NEED ANALYSIS

SEC. 601. SUPPORT FOR WORKING STUDENTS.

(a) Dependent Students.--Subparagraph (D) of section 475(g)(2) (20
U.S.C. 1087oo(g)(2)(D)) is amended to read as follows:
``(D) an income protection allowance of the
following amount (or a successor amount prescribed by
the Secretary under section 478)--
``(i) for academic year 2009-2010, $3,750;
``(ii) for academic year 2010-2011, $4,500;
``(iii) for academic year 2011-2012, $5,250;
and
``(iv) for academic year 2012-2013, $6,000;''.

(b) Independent Students Without Dependents Other Than a Spouse.--
Clause (iv) of section 476(b)(1)(A) (20 U.S.C. 1087pp(b)(1)(A)) is
amended to read as follows:
``(iv) an income protection allowance of the
following amount (or a successor amount prescribed
by the Secretary under section 478)--
``(I) for single or separated
students, or married students where both
are enrolled pursuant to subsection
(a)(2)--
``(aa) for academic year
2009-2010, $7,000;
``(bb) for academic year
2010-2011, $7,780;
``(cc) for academic year
2011-2012, $8,550; and
``(dd) for academic year
2012-2013, $9,330; and

[[Page 802]]
121 STAT. 802

``(II) for married students where 1
is enrolled pursuant to subsection
(a)(2)--
``(aa) for academic year
2009-2010, $11,220;
``(bb) for academic year
2010-2011, $12,460;
``(cc) for academic year
2011-2012, $13,710; and
``(dd) for academic year
2012-2013, $14,960;''.

(c) Independent Students With Dependents Other Than a Spouse.--
Paragraph (4) of section 477(b) (20 U.S.C. 1087qq(b)) is amended to read
as follows:
``(4) Income protection allowance.--The income protection
allowance is determined by the tables described in subparagraphs
(A) through (D) (or a successor table prescribed by the
Secretary under section 478).
``(A) Academic year 2009-2010.--For academic year
2009-2010, the income protection allowance is determined
by the following table:

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


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

``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
For each
(including student)                  1          2          3           4           5      additional
subtract:
----------------------------------------------------------------------------------------------------------------
2                         $19,690    $16,330
3                          24,510     21,160    $17,800
4                          30,280     26,910     23,560     $20,190
5                          35,730     32,350     29,000      25,640     $22,290
6                          41,780     38,410     35,080      31,690      28,350      $3,350
For each
additional
add:                                           4,710      4,710      4,710       4,710       4,710
----------------------------------------------------------------------------------------------------------------



[[Page 803]]
121 STAT. 803

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

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


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

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


(d) Updated Tables and Amounts.--Section 478(b) (20 U.S.C.
1087rr(b)) is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) Revised tables.--
``(A) In general.--For [NOTE: Federal Register,
publication.] each academic year after academic year
2008-2009, the Secretary shall publish in the Federal
Register a revised table of income protection allowances
for the purpose of sections 475(c)(4) and 477(b)(4),
subject to subparagraphs (B) and (C).
``(B) Table for independent students.--
``(i) Academic years 2009-2010 through 2012-
2013.--For each of the academic years 2009-2010
through 2012-2013, the Secretary shall not develop
a revised table of income protection allowances
under section 477(b)(4) and the table specified
for such academic year under subparagraphs (A)
through (D) of such section shall apply.
``(ii) Other academic years.--For each
academic year after academic year 2012-2013, the
Secretary

[[Page 804]]
121 STAT. 804

shall develop the revised table of income
protection allowances by increasing each of the
dollar amounts contained in the table of income
protection allowances under section 477(b)(4)(D)
by a percentage equal to the estimated percentage
increase in the Consumer Price Index (as
determined by the Secretary) between December 2011
and the December next preceding the beginning of
such academic year, and rounding the result to the
nearest $10.
``(C) Table for parents.--For each academic year
after academic year 2008-2009, the Secretary shall
develop the revised table of income protection
allowances under section 475(c)(4) by increasing each of
the dollar amounts contained in the table by a
percentage equal to the estimated percentage increase in
the Consumer Price Index (as determined by the
Secretary) between December 1992 and the December next
preceding the beginning of such academic year, and
rounding the result to the nearest $10.''; and
(2) in paragraph (2), by striking ``shall be developed'' and
all that follows through the period at the end and inserting
``shall be developed for each academic year after academic year
2012-2013, by increasing each of the dollar amounts contained in
such section for academic year 2012-2013 by a percentage equal
to the estimated percentage increase in the Consumer Price Index
(as determined by the Secretary) between December 2011 and the
December next preceding the beginning of such academic year, and
rounding the result to the nearest $10.''.

(e) [NOTE: 20 USC 1087oo note.] Effective Date.--The amendments
made by this section shall be effective on July 1, 2009.
SEC. 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO IMPROVEMENTS.

(a) Simplified Needs Test.--Section 479 (20 U.S.C. 1087ss) is
amended--
(1) in subsection (b)--
(A) in paragraph (1)(A)(i)--
(i) in subclause (II), by striking ``or''
after the semicolon;
(ii) by redesignating subclause (III) as
subclause (IV);
(iii) by inserting after subclause (II) the
following:
``(III) 1 of whom is a dislocated
worker; or''; and
(iv) in subclause (IV) (as redesignated by
clause (ii)), by striking ``12-month'' and
inserting ``24-month''; and
(B) in paragraph (1)(B)(i)--
(i) in subclause (II), by striking ``or''
after the semicolon;
(ii) by redesignating subclause (III) as
subclause (IV);
(iii) by inserting after subclause (II) the
following:
``(III) 1 of whom is a dislocated
worker; or''; and
(iv) in subclause (IV) (as redesignated by
clause (ii)), by striking ``12-month'' and
inserting ``24-month'';

[[Page 805]]
121 STAT. 805

(2) in subsection (c)--
(A) in paragraph (1)--
(i) in subparagraph (A)--
(I) in clause (ii), by striking
``or'' after the semicolon;
(II) by redesignating clause (iii)
as clause (iv);
(III) by inserting after clause (ii)
the following:
``(iii) 1 of whom is a dislocated worker;
or''; and
(IV) in clause (iv) (as redesignated
by subclause (II)), by striking ``12-
month'' and inserting ``24-month''; and
(ii) in subparagraph (B), by striking
``$20,000'' and inserting ``$30,000''; and
(B) in paragraph (2)--
(i) in subparagraph (A)--
(I) in clause (ii), by striking
``or'' after the semicolon;
(II) by redesignating clause (iii)
as clause (iv);
(III) by inserting after clause (ii)
the following:
``(iii) 1 of whom is a dislocated worker;
or''; and
(IV) in clause (iv) (as redesignated
by subclause (II)), by striking ``12-
month'' and inserting ``24-month''; and
(ii) in subparagraph (B), by striking
``$20,000'' and inserting ``$30,000''; and
(C) in the flush matter following paragraph (2)(B),
by adding at the end the following: ``The Secretary
shall annually adjust the income level necessary to
qualify an applicant for the zero expected family
contribution. The income level shall be adjusted
according to increases in the Consumer Price Index, as
defined in section 478(f).''; and
(3) in subsection (d)--
(A) by redesignating paragraphs (1) through (6) as
subparagraphs (A) through (F), respectively and moving
the margins of such subparagraphs 2 ems to the right;
and
(B) by striking ``(d) Definition'' and all that
follows through ``the term'' and inserting the
following:

``(d) Definitions.--In this section:
``(1) Dislocated worker.--The term `dislocated worker' has
the meaning given the term in section 101 of the Workforce
Investment Act of 1998 (29 U.S.C. 2801).
``(2) Means-tested federal benefit program.--The term''.

(b) [NOTE: 20 USC 1087ss note.] Effective Date.--The amendments
made by this section shall be effective on July 1, 2009.
SEC. 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

(a) Amendments.--The third sentence of section 479A(a) (20 U.S.C.
1087tt(a)) is amended--
(1) by inserting ``or an independent student'' after
``family member'';
(2) by inserting ``a family member who is a dislocated
worker (as defined in section 101 of the Workforce Investment
Act of 1998),'' before ``the number of parents''; and

[[Page 806]]
121 STAT. 806

(3) by inserting ``a change in housing status that results
in an individual being homeless (as defined in section 103 of
the McKinney-Vento Homeless Assistance Act),'' after ``under
section 487,''.

(b) [NOTE: 20 USC 1087tt note.] Effective Date.--The amendments
made by this section shall take effect on July 1, 2009.
SEC. 604. DEFINITIONS.

(a) In General.--Section 480 (20 U.S.C. 1087vv) is amended--
(1) in subsection (a)(2)--
(A) by striking ``and no portion'' and inserting
``no portion''; and
(B) by inserting ``and no distribution from any
qualified education benefit described in subsection
(f)(3) that is not subject to Federal income tax,''
after ``1986,'';
(2) by striking subsection (b) and inserting the following:

``(b) Untaxed Income and Benefits.--
``(1) The term `untaxed income and benefits' means--
``(A) child support received;
``(B) workman's compensation;
``(C) veteran's benefits such as death pension,
dependency, and indemnity compensation, but excluding
veterans' education benefits as defined in subsection
(c);
``(D) interest on tax-free bonds;
``(E) housing, food, and other allowances (excluding
rent subsidies for low-income housing) for military,
clergy, and others (including cash payments and cash
value of benefits);
``(F) cash support or any money paid on the
student`s behalf, except, for dependent students, funds
provided by the student's parents;
``(G) untaxed portion of pensions;
``(H) payments to individual retirement accounts and
Keogh accounts excluded from income for Federal income
tax purposes; and
``(I) any other untaxed income and benefits, such as
Black Lung Benefits, Refugee Assistance, or railroad
retirement benefits, or benefits received through
participation in employment and training activities
under title I of the Workforce Investment Act of 1998
(29 U.S.C. 2801 et seq.).
``(2) The term `untaxed income and benefits' shall not
include the amount of additional child tax credit claimed for
Federal income tax purposes.'';
(3) in subsection (d)--
(A) by redesignating paragraphs (1), (2), (3)
through (6), and (7) as subparagraphs (A), (B), (D)
through (G), and (I), respectively, and indenting
appropriately;
(B) by striking ``The term'' and inserting the
following:
``(1) Definition.--The term'';
(C) by striking subparagraph (B) (as redesignated by
subparagraph (A)) and inserting the following:
``(B) is an orphan, in foster care, or a ward of the
court, at any time when the individual is 13 years of
age or older;
``(C) is an emancipated minor or is in legal
guardianship as determined by a court of competent
jurisdiction in the individual's State of legal
residence;'';

[[Page 807]]
121 STAT. 807

(D) in subparagraph (G) (as redesignated by
subparagraph (A)), by striking ``or'' after the
semicolon;
(E) by inserting after subparagraph (G) (as
redesignated by subparagraph (A)) the following:
``(H) has been verified during the school year in
which the application is submitted as either an
unaccompanied youth who is a homeless child or youth (as
such terms are defined in section 725 of the McKinney-
Vento Homeless Assistance Act), or as unaccompanied, at
risk of homelessness, and self-supporting, by--
``(i) a local educational agency homeless
liaison, designated pursuant to section
722(g)(1)(J)(ii) of the McKinney-Vento Homeless
Assistance Act;
``(ii) the director of a program funded under
the Runaway and Homeless Youth Act or a designee
of the director;
``(iii) the director of a program funded under
subtitle B of title IV of the McKinney-Vento
Homeless Assistance Act (relating to emergency
shelter grants) or a designee of the director; or
``(iv) a financial aid administrator; or'';
and
(F) by adding at the end the following:
``(2) Simplifying the dependency override process.--A
financial aid administrator may make a determination of
independence under paragraph (1)(I) based upon a documented
determination of independence that was previously made by
another financial aid administrator under such paragraph in the
same award year.'';
(4) in subsection (e)--
(A) in paragraph (3), by striking ``and'' after the
semicolon;
(B) in paragraph (4), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(5) special combat pay.'';
(5) in subsection (f), by striking paragraph (3) and
inserting the following:
``(3) A qualified education benefit shall be considered an
asset of--
``(A) the student if the student is an independent
student; or
``(B) the parent if the student is a dependent
student, regardless of whether the owner of the account
is the student or the parent.'';
(6) in subsection (j)--
(A) in paragraph (2), by inserting ``, or a
distribution that is not includable in gross income
under section 529 of such Code, under another prepaid
tuition plan offered by a State, or under a Coverdell
education savings account under section 530 of such
Code,'' after ``1986''; and
(B) by adding at the end the following:
``(4) Notwithstanding paragraph (1), special combat pay
shall not be treated as estimated financial assistance for
purposes of section 471(3).''; and
(7) by adding at the end the following:

[[Page 808]]
121 STAT. 808

``(n) Special Combat Pay.--The term `special combat pay' means pay
received by a member of the Armed Forces because of exposure to a
hazardous situation.''.
(b) [NOTE: 20 USC 1087vv note.] Effective Date.--The amendments
made by this section shall be effective on July 1, 2009.

TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM

SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM.

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

``PART I--COMPETITIVE LOAN AUCTION PILOT PROGRAM

``SEC. 499. [NOTE: 20 USC 1099d.] COMPETITIVE LOAN AUCTION PILOT
PROGRAM.

``(a) Definitions.--In this section:
``(1) Eligible federal plus loan.--The term `eligible
Federal PLUS Loan' means a loan described in section 428B made
to a parent of a dependent student who is a new borrower on or
after July 1, 2009.
``(2) Eligible lender.--The term `eligible lender' has the
meaning given the term in section 435.

``(b) Pilot Program.--The Secretary shall carry out a pilot program
under which the Secretary establishes a mechanism for an auction of
eligible Federal PLUS Loans in accordance with this subsection. The
pilot program shall meet the following requirements:
``(1) Planning and implementation.--During [NOTE: Effective
date. Termination date.] the period beginning on the date of
enactment of this section and ending on June 30, 2009, the
Secretary shall plan and implement the pilot program under this
subsection. During the planning and implementation, the
Secretary shall consult with other Federal agencies with
knowledge of, and experience with, auction programs, including
the Federal Communication Commission and the Department of the
Treasury.
``(2) Origination and disbursement; applicability of section
428b.--Beginning [NOTE: Effective date.] on July 1, 2009, the
Secretary shall arrange for the origination and disbursement of
all eligible Federal PLUS Loans in accordance with the
provisions of this subsection and the provisions of section 428B
that are not inconsistent with this subsection.
``(3) Loan origination mechanism.--The Secretary shall
establish a loan origination auction mechanism that meets the
following requirements:
``(A) Auction for each state.--The Secretary
administers an auction under this paragraph for each
State, under which eligible lenders compete to originate
eligible Federal PLUS Loans under this paragraph at all
institutions of higher education within such State.
``(B) Prequalification process.--The Secretary
establishes a prequalification process for eligible
lenders desiring to participate in an auction under this
paragraph that contains, at a minimum--

[[Page 809]]
121 STAT. 809

``(i) a set of borrower benefits and servicing
requirements each eligible lender shall meet in
order to participate in such an auction; and
``(ii) an assessment of each such eligible
lender's capacity, including capital capacity, to
participate effectively.
``(C) Timing and origination.--Each State auction
takes place every 2 years, and the eligible lenders with
the winning bids for the State are the only eligible
lenders permitted to originate eligible Federal PLUS
Loans made under this paragraph for the cohort of
students at the institutions of higher education within
the State until the students graduate from or leave the
institutions of higher education.
``(D) Bids.--Each eligible lender's bid consists of
the amount of the special allowance payment (after the
application of section 438(b)(2)(I)(v)) the eligible
lender proposes to accept from the Secretary with
respect to the eligible Federal PLUS Loans made under
this paragraph in lieu of the amount determined under
section 438(b)(2)(I).
``(E) Maximum bid.--The maximum bid allowable under
this paragraph shall not exceed the amount of the
special allowance payable on eligible Federal PLUS Loans
made under this paragraph computed under section
438(b)(2)(I) (other than clauses (ii), (iii), (iv), and
(vi) of such section), except that for purposes of the
computation under this subparagraph, section
438(b)(2)(I)(i)(III) shall be applied by substituting
`1.79 percent' for `2.34 percent'.
``(F) Winning bids.--The winning bids for each State
auction shall be the 2 bids containing the lowest and
the second lowest proposed special allowance payments,
subject to subparagraph (E).
``(G) Agreement with secretary.--Each eligible
lender having a winning bid under subparagraph (F)
enters into an agreement with the Secretary under which
the eligible lender--
``(i) agrees to originate eligible Federal
PLUS Loans under this paragraph to each borrower
who--
``(I) seeks an eligible Federal PLUS
Loan under this paragraph to enable a
dependent student to attend an
institution of higher education within
the State;
``(II) is eligible for an eligible
Federal PLUS Loan; and
``(III) elects to borrow from the
eligible lender; and
``(ii) agrees to accept a special allowance
payment (after the application of section
438(b)(2)(I)(v)) from the Secretary with respect
to the eligible Federal PLUS Loans originated
under clause (i) in the amount proposed in the
second lowest winning bid described in
subparagraph (F) for the applicable State auction.
``(H) Sealed bids; confidentiality.--All bids are
sealed and the Secretary keeps the bids confidential,
including following the announcement of the winning
bids.
``(I) Eligible lender of last resort.--

[[Page 810]]
121 STAT. 810

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

[[Page 811]]
121 STAT. 811

than the eligible lender described in
clause (i); and
``(II) [NOTE: Deadline.] not later
than 10 days after receiving such
notification from the borrower, the
eligible lender described in clause (i)
does not agree to match such terms and
conditions, or provide more favorable
terms and conditions to such borrower
than the offered terms and conditions
described in subclause (I).
``(iv) Consolidation of additional loans.--If
a borrower has a Federal Direct PLUS Loan or a
loan made on behalf of a dependent student under
section 428B and seeks to consolidate such loan
with an eligible Federal PLUS Loan made under this
paragraph, then the eligible lender that
originated the borrower's loan under this
paragraph may include in the consolidation under
this subparagraph a Federal Direct PLUS Loan or a
loan made on behalf of a dependent student under
section 428B, but only if--
``(I) [NOTE: Deadline.] in the
case of a Federal Direct PLUS Loan, the
eligible lender agrees, not later than
10 days after the borrower requests such
consolidation from the lender, to match
the consolidation terms and conditions
that would otherwise be available to the
borrower if the borrower consolidated
such loans in the loan program under
part D; or
``(II) [NOTE: Deadline.] in the
case of a loan made on behalf of a
dependent student under section 428B,
the eligible lender agrees, not later
than 10 days after the borrower requests
such consolidation from the lender, to
match the consolidation terms and
conditions offered by an eligible lender
other than the eligible lender that
originated the borrower's loans under
this paragraph.
``(v) Special allowance on consolidation loans
that include loans made under this paragraph.--The
applicable special allowance payment for loans
consolidated under this paragraph shall be equal
to the lesser of--
``(I) the weighted average of the
special allowance payment on such loans,
except that in calculating such weighted
average the Secretary shall exclude any
Federal Direct PLUS Loan included in the
consolidation; or
``(II) the result of--
``(aa) the average of the
bond equivalent rates of the
quotes of the 3-month commercial
paper (financial) rates in
effect for each of the days in
such quarter as reported by the
Federal Reserve in Publication
H-15 (or its successor) for such
3-month period; plus
``(bb) 1.59 percent.
``(vi) Interest payment rebate fee.--Any loan
under section 428C consolidated under this
paragraph shall not be subject to the interest
payment rebate fee under section 428C(f).''.

[[Page 812]]
121 STAT. 812

TITLE VIII--PARTNERSHIP GRANTS

SEC. 801. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

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

``PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM

``SEC. [NOTE: 20 USC 1141.] 771. COLLEGE ACCESS CHALLENGE GRANT
PROGRAM.

``(a) Authorization and Appropriation.--There are authorized to be
appropriated, and there are appropriated, to carry out this section
$66,000,000 for each of the fiscal years 2008 and 2009.
The [NOTE: Expiration date.] authority to award grants under this
section shall expire at the end of fiscal year 2009.

``(b) Program Authorized.--
``(1) Grants authorized.--From amounts appropriated under
subsection (a), the Secretary shall award grants, from
allotments under subsection (c), to States (and to philanthropic
organization, as appropriate under paragraph (3)) having
applications approved under subsection (d), to enable the State
(or philanthropic organization) to pay the Federal share of the
costs of carrying out the activities and services described in
subsection (f).
``(2) Federal share; non-federal share.--
``(A) Federal share.--The amount of the Federal
share under this section for a fiscal year shall be
equal to \2/3\ of the costs of the activities and
services described in subsection (f) that are carried
out under the grant.
``(B) Non-federal share.--The amount of the non-
Federal share under this section shall be equal to \1/3\
of the costs of the activities and services described in
subsection (f). The non-Federal share may be in cash or
in-kind, and may be provided from State resources,
contributions from private organizations, or both.
``(3) Reduction for failure to pay non-federal share.--If a
State fails to provide the full non-Federal share required under
this subsection, the Secretary shall reduce the amount of the
grant payment under this section proportionately, and may award
the proportionate reduction amount of the grant directly to a
philanthropic organization, as defined in subsection (i), to
carry out this section.
``(4) Temporary ineligibility for subsequent payments.--
``(A) In general.--The Secretary shall determine a
grantee to be temporarily ineligible to receive a grant
payment under this section for a fiscal year if--
``(i) the grantee fails to submit an annual
report pursuant to subsection (h) for the
preceding fiscal year; or
``(ii) the Secretary determines, based on
information in such annual report, that the
grantee is not effectively meeting the conditions
described under subsection (g) and the goals of
the application under subsection (d).

[[Page 813]]
121 STAT. 813

``(B) Reinstatement.--If the Secretary determines
that a grantee is ineligible under subparagraph (A), the
Secretary may enter into an agreement with the grantee
setting forth the terms and conditions under which the
grantee may regain eligibility to receive payments under
this section.

``(c) Determination of Allotment.--
``(1) Amount of allotment.--Subject to paragraph (2), in
making grant payments to grantees under this section, the
allotment to each grantee for a fiscal year shall be equal to
the sum of--
``(A) the amount that bears the same relation to 50
percent of the amount appropriated under subsection (a)
for such fiscal year as the number of residents in the
State aged 5 through 17 who are living below the poverty
line applicable to the resident's family size (as
determined under section 673(2) of the Community Service
Block Grant Act) bears to the total number of such
residents in all States; and
``(B) the amount that bears the same relation to 50
percent of the amount appropriated under subsection (a)
for such fiscal year as the number of residents in the
State aged 15 through 44 who are living below the
poverty line applicable to the individual's family size
(as determined under section 673(2) of the Community
Service Block Grant Act) bears to the total number of
such residents in all States.
``(2) Minimum amount.--The allotment for each State under
this section for a fiscal year shall not be an amount that is
less than 0.5 percent of the total amount appropriated under
subsection (a) for such fiscal year.

``(d) Submission and Contents of Application.--
``(1) In general.--For each fiscal year for which a grantee
desires a grant payment under subsection (b), the State agency
with jurisdiction over higher education, or another agency
designated by the Governor or chief executive of the State to
administer the program under this section, or a philanthropic
organization, in accordance with subsection (b)(3), shall submit
an application to the Secretary at such time, in such manner,
and containing the information described in paragraph (2).
``(2) Application.--An application submitted under paragraph
(1) shall include the following:
``(A) A description of the grantee's capacity to
administer the grant under this section and report
annually to the Secretary on the activities and services
described in subsection (f).
``(B) A description of the grantee's plan for using
the grant funds to meet the requirements of subsections
(f) and (g), including plans for how the grantee will
make special efforts to--
``(i) provide such benefits to students in the
State that are underrepresented in postsecondary
education; or
``(ii) in the case of a philanthropic
organization that operates in more than one State,
provide benefits to such students in each such
State for which the

[[Page 814]]
121 STAT. 814

philanthropic organization is receiving grant
funds under this section.
``(C) A description of how the grantee will provide
or coordinate the provision of the non-Federal share
from State resources or private contributions.
``(D) A description of--
``(i) the structure that the grantee has in
place to administer the activities and services
described in subsection (f); or
``(ii) the plan to develop such administrative
capacity.

``(e) Subgrants to Nonprofit Organizations.--A State receiving a
payment under this section may elect to make a subgrant to one or more
nonprofit organizations in the State, including an eligible not-for-
profit holder (as defined in section 435(p) of the Higher Education Act
of 1965, as amended by section 303 of this Act), or a partnership of
such organizations, to carry out activities or services described in
subsection (f), if the nonprofit organization or partnership--
``(1) was in existence on the day before the date of the
enactment of this Act; and
``(2) as of such day, was participating in activities and
services related to increasing access to higher education, such
as those activities and services described in subsection (f).

``(f) Allowable Uses.--
``(1) In general.--Subject to paragraph (3), a grantee may
use a grant payment under this section only for the following
activities and services, pursuant to the conditions under
subsection (g):
``(A) Information for students and families
regarding--
``(i) the benefits of a postsecondary
education;
``(ii) postsecondary education opportunities;
``(iii) planning for postsecondary education;
and
``(iv) career preparation.
``(B) Information on financing options for
postsecondary education and activities that promote
financial literacy and debt management among students
and families.
``(C) Outreach activities for students who may be at
risk of not enrolling in or completing postsecondary
education.
``(D) Assistance in completion of the Free
Application for Federal Student Aid or other common
financial reporting form under section 483(a) of the
Higher Education Act of 1965.
``(E) Need-based grant aid for students.
``(F) Professional development for guidance
counselors at middle schools and secondary schools, and
financial aid administrators and college admissions
counselors at institutions of higher education, to
improve such individuals' capacity to assist students
and parents with--
``(i) understanding--
``(I) entrance requirements for
admission to institutions of higher
education; and
``(II) State eligibility
requirements for Academic
Competitiveness Grants or National SMART
Grants under section 401A, and other
financial

[[Page 815]]
121 STAT. 815

assistance that is dependent upon a
student's coursework;
``(ii) applying to institutions of higher
education;
``(iii) applying for Federal student financial
assistance and other State, local, and private
student financial assistance and scholarships;
``(iv) activities that increase students'
ability to successfully complete the coursework
required for a postsecondary degree, including
activities such as tutoring or mentoring; and
``(v) activities to improve secondary school
students' preparedness for postsecondary entrance
examinations.
``(G) Student loan cancellation or repayment (as
applicable), or interest rate reductions, for borrowers
who are employed in a high-need geographical area or a
high-need profession in the State, as determined by the
State.
``(2) Prohibited uses.--Funds made available under this
section shall not be used to promote any lender's loans.
``(3) Use of funds for administrative purposes.--A grantee
may use not more than 6 percent of the total amount of the sum
of the Federal share provided under this section and the non-
Federal share required under this section for administrative
purposes relating to the grant under this section.

``(g) Special Conditions.--
``(1) Availability to students and families.--A grantee
receiving a grant payment under this section shall--
``(A) make the activities and services described in
subparagraphs (A) through (F) of subsection (f)(1) that
are funded under the payment available to all qualifying
students and families in the State;
``(B) allow students and families to participate in
the activities and services without regard to--
``(i) the postsecondary institution in which
the student enrolls;
``(ii) the type of student loan the student
receives;
``(iii) the servicer of such loan; or
``(iv) the student's academic performance;
``(C) not charge any student or parent a fee or
additional charge to participate in the activities or
services; and
``(D) in the case of an activity providing grant
aid, not require a student to meet any condition other
than eligibility for Federal financial assistance under
title IV of the Higher Education Act of 1965, except as
provided for in the loan cancellation or repayment or
interest rate reductions described in subsection
(f)(1)(G).
``(2) Priority.--A grantee receiving a grant payment under
this section shall, in carrying out any activity or service
described in subsection (f)(1) with the grant funds, prioritize
students and families who are living below the poverty line
applicable to the individual's family size (as determined under
section 673(2) of the Community Service Block Grant Act).
``(3) Disclosures.--
``(A) Organizational disclosures.--In the case of a
State that has chosen to make a payment to an eligible
not-for-profit holder in the State in accordance with
subsection (e), the holder shall clearly and prominently
indicate

[[Page 816]]
121 STAT. 816

the name of the holder and the nature of the holder's
work in connection with any of the activities carried
out, or any information or services provided, with such
funds.
``(B) Informational disclosures.--Any information
about financing options for higher education provided
through an activity or service funded under this section
shall--
``(i) include information to students and the
students' parents of the availability of Federal,
State, local, institutional, and other grants and
loans for postsecondary education; and
``(ii) present information on financial
assistance for postsecondary education that is not
provided under title IV of the Higher Education
Act of 1965 in a manner that is clearly distinct
from information on student financial assistance
under such title.
``(4) Coordination.--A grantee receiving a grant payment
under this section shall attempt to coordinate the activities
carried out with the grant payment with any existing activities
that are similar to such activities, and with any other entities
that support the existing activities in the State.

``(h) Report.--A grantee receiving a payment under this section
shall prepare and submit an annual report to the Secretary on the
activities and services carried out under this section, and on the
implementation of such activities and services. The report shall
include--
``(1) each activity or service that was provided to students
and families over the course of the year;
``(2) the cost of providing each activity or service;
``(3) the number, and percentage, if feasible and
applicable, of students who received each activity or service;
and
``(4) the total contributions from private organizations
included in the grantee's non-Federal share for the fiscal year.

``(i) Definitions.--In this section:
``(1) Philanthropic organization.--The term `philanthropic
organization' means a non-profit organization--
``(A) that does not receive funds under title IV of
the Higher Education Act of 1965 or under the Elementary
and Secondary Education Act of 1965;
``(B) that is not a local educational agency or an
institution of higher education;
``(C) that has a demonstrated record of dispersing
grant aid to underserved populations to ensure access
to, and participation in, higher education;
``(D) that is affiliated with an eligible consortia
(as defined in paragraph (2)) to carry out this section;
and
``(E) the primary purpose of which is to provide
financial aid and support services to students from
underrepresented populations to increase the number of
such students who enter and remain in college.
``(2) Eligible consortia.--The term `eligible consortia'
means a partnership of 2 or more entities that have agreed to
work together to carry out this section that--
``(A) includes--
``(i) a philanthropic organization, which
serves as the manager of the consortia;

[[Page 817]]
121 STAT. 817

``(ii) a State that demonstrates a commitment
to ensuring the creation of a Statewide system to
address the issues of early intervention and
financial support for eligible students to enter
and remain in college; and
``(iii) at the discretion of the philanthropic
organization described in clause (i), additional
partners, including other non-profit
organizations, government entities (including
local municipalities, school districts, cities,
and counties), institutions of higher education,
and other public or private programs that provide
mentoring or outreach programs; and
``(B) conducts activities to assist students with
entering and remaining in college, which may include--
``(i) providing need-based grants to students;
``(ii) providing early notification to low-
income students of their potential eligibility for
Federal financial aid (which may include assisting
students and families with filling out FAFSA
forms), as well as other financial aid and other
support available from the eligible consortia;
``(iii) encouraging increased student
participation in higher education through
mentoring or outreach programs; and
``(iv) conducting marketing and outreach
efforts that are designed to--
``(I) encourage full participation
of students in the activities of the
consortia that carry out this section;
and
``(II) provide the communities
impacted by the activities of the
consortia with a general knowledge about
the efforts of the consortia.
``(3) Grantee.--The term `grantee' means--
``(A) a State awarded a grant under this section; or
``(B) with respect to such a State that has failed
to meet the non-Federal share requirement of subsection
(b), a philanthropic organization awarded the
proportionate reduction amount of such a grant under
subsection (b)(3).''.
SEC. 802. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND
UNIVERSITIES AND MINORITY-SERVING
INSTITUTIONS.

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

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

``SEC. [NOTE: 20 USC 1099e.] 499A. INVESTMENT IN HISTORICALLY
BLACK COLLEGES AND UNIVERSITIES AND
OTHER MINORITY-SERVING INSTITUTIONS.

``(a) Eligible Institution.--An institution of higher education is
eligible to receive funds from the amounts made available under this
section if such institution is--

[[Page 818]]
121 STAT. 818

``(1) a part B institution (as defined in section 322 (20
U.S.C. 1061));
``(2) a Hispanic-serving institution (as defined in section
502 (20 U.S.C. 1101a));
``(3) a Tribal College or University (as defined in section
316 (20 U.S.C. 1059c));
``(4) an Alaska Native-serving institution or a Native
Hawaiian-serving institution (as defined in section 317(b) (20
U.S.C. 1059d(b)));
``(5) a Predominantly Black Institution (as defined in
subsection (c));
``(6) an Asian American and Native American Pacific
Islander-serving institution (as defined in subsection (c)); or
``(7) a Native American-serving nontribal institution (as
defined in subsection (c)).

``(b) New Investment of Funds.--
``(1) In general.--There shall be available to the Secretary
to carry out this section, from funds not otherwise
appropriated, $255,000,000 for each of the fiscal years 2008 and
2009. [NOTE: Expiration date.] The authority to award grants
under this section shall expire at the end of fiscal year 2009.
``(2) Allocation and allotment.--
``(A) In general.--Of the amounts made available
under paragraph (1) for each fiscal year--
``(i) $100,000,000 shall be available for
allocation under subparagraph (B);
``(ii) $100,000,000 shall be available for
allocation under subparagraph (C); and
``(iii) $55,000,000 shall be available for
allocation under subparagraph (D).
``(B) HSI stem and articulation programs.--The
amount made available for allocation under this
subparagraph by subparagraph (A)(i) for any fiscal year
shall be available for Hispanic-serving Institutions for
activities described in section 503, with a priority
given to applications that propose--
``(i) to increase the number of Hispanic and
other low income students attaining degrees in the
fields of science, technology, engineering, or
mathematics; and
``(ii) to develop model transfer and
articulation agreements between 2-year Hispanic-
serving institutions and 4-year institutions in
such fields.
``(C) Allocation and allotment hbcus and pbis.--From
the amount made available for allocation under this
subparagraph by subparagraph (A)(ii) for any fiscal
year--
``(i) 85 percent shall be available to
eligible institutions described in subsection
(a)(1) and shall be made available as grants under
section 323 and allotted among such institutions
under section 324, treating such amount, plus the
amount appropriated for such fiscal year in a
regular or supplemental appropriation Act to carry
out part B of title III, as the amount
appropriated to carry out part B of title III for
purposes of allotments under section 324, for use
by such institutions with a priority for--

[[Page 819]]
121 STAT. 819

``(I) activities described in
paragraphs (1), (2), (4), (5), and (10)
of section 323(a); and
``(II) other activities, consistent
with the institution's comprehensive
plan and designed to increase the
institution's capacity to prepare
students for careers in the physical or
natural sciences, mathematics, computer
science or information technology or
sciences, engineering, language
instruction in the less-commonly taught
languages or international affairs, or
nursing or allied health professions;
and
``(ii) 15 percent shall be available to
eligible institutions described in subsection
(a)(5) and shall be available for a competitive
grant program to award 25 grants of $600,000
annually for programs in any of the following
areas:
``(I) science, technology,
engineering, or mathematics (STEM);
``(II) health education;
``(III) internationalization or
globalization;
``(IV) teacher preparation; or
``(V) improving educational outcomes
of African American males.
``(D) Allocation and allotment to other minority-
serving institutions.--From the amount made available
for allocation under this subparagraph by subparagraph
(A)(iii) for any fiscal year--
``(i) $30,000,000 for such fiscal year shall
be available to eligible institutions described in
subsection (a)(3) and shall be made available as
grants under section 316, treating such
$30,000,000 as part of the amount appropriated for
such fiscal year in a regular or supplemental
appropriation Act to carry out such section, and
using such $30,000,000 for purposes described in
subsection (c) of such section;
``(ii) $15,000,000 for such fiscal year shall
be available to eligible institutions described in
subsection (a)(4) and shall be made available as
grants under section 317, treating such
$15,000,000 as part of the amount appropriated for
such fiscal year in a regular or supplemental
appropriation Act to carry out such section and
using such $15,000,000 for purposes described in
subsection (c) of such section;
``(iii) $5,000,000 for such fiscal year shall
be available to eligible institutions described in
subsection (a)(6) for activities described in
section 311(c); and
``(iv) $5,000,000 for such fiscal year shall
be available to eligible institutions described in
subsection (a)(7)--
``(I) to plan, develop, undertake,
and carry out activities to improve and
expand such institutions' capacity to
serve Native Americans, which may
include--
``(aa) the purchase, rental,
or lease of scientific or
laboratory equipment for
educational purposes, including
instructional and research
purposes;

[[Page 820]]
121 STAT. 820

``(bb) renovation and
improvement in classroom,
library, laboratory, and other
instructional facilities;
``(cc) support of faculty
exchanges, faculty development,
and faculty fellowships to
assist faculty in attaining
advanced degrees in the
faculty's field of instruction;
``(dd) curriculum
development and academic
instruction;
``(ee) the purchase of
library books, periodicals,
microfilm, and other educational
materials;
``(ff) funds and
administrative management, and
acquisition of equipment for use
in strengthening funds
management;
``(gg) the joint use of
facilities such as laboratories
and libraries; and
``(hh) academic tutoring and
counseling programs and student
support services; and
``(II) to which the Secretary, to
the extent possible and consistent with
a competitive process under which such
grants are awarded, allocates funds
under this clause to ensure maximum and
equitable distribution among all such
eligible institutions.

``(c) Definitions.--
``(1) Asian american.--The term `Asian American' has the
meaning given the term `Asian' in the Office of Management and
Budget's Standards for Maintaining, Collecting, and Presenting
Federal Data on Race and Ethnicity as published on October 30,
1997 (62 Fed. Reg. 58789).
``(2) Asian american and native american pacific islander-
serving institution.--The term `Asian American and Native
American Pacific Islander-serving institution' means an
institution of higher education that--
``(A) is an eligible institution under section
312(b); and
``(B) at the time of application, has an enrollment
of undergraduate students that is at least 10 percent
Asian American and Native American Pacific Islander
students.
``(3) Enrollment of needy students.--The term `enrollment of
needy students' means the enrollment at an institution of higher
education with respect to which not less than 50 percent of the
undergraduate students enrolled in an academic program leading
to a degree--
``(A) in the second fiscal year preceding the fiscal
year for which the determination is made, were Federal
Pell Grant recipients for such year;
``(B) come from families that receive benefits under
a means-tested Federal benefit program (as defined in
paragraph (5));
``(C) attended a public or nonprofit private
secondary school--
``(i) that is in the school district of a
local educational agency that was eligible for
assistance under part A of title I of the
Elementary and Secondary Education Act of 1965 for
any year during which the student attended such
secondary school; and

[[Page 821]]
121 STAT. 821

``(ii) which for the purpose of this paragraph
and for that year was determined by the Secretary
(pursuant to regulations and after consultation
with the State educational agency of the State in
which the school is located) to be a school in
which the enrollment of children counted under a
measure of poverty described in section 1113(a)(5)
of such Act exceeds 30 percent of the total
enrollment of such school; or
``(D) are first-generation college students (as that
term is defined in section 402A(g)), and a majority of
such first-generation college students are low-income
individuals.
``(4) Low-income individual.--The term `low-income
individual' has the meaning given such term in section 402A(g).
``(5) Means-tested federal benefit program.--The term
`means-tested Federal benefit program' means a program of the
Federal Government, other than a program under title IV, in
which eligibility for the programs' benefits or the amount of
such benefits are determined on the basis of income or resources
of the individual or family seeking the benefit.
``(6) Native american.--The term `Native American' means an
individual who is of a tribe, people, or culture that is
indigenous to the United States.
``(7) Native american pacific islander.--The term `Native
American Pacific Islander' means any descendant of the
aboriginal people of any island in the Pacific Ocean that is a
territory or possession of the United States.
``(8) Native american-serving nontribal institution.--The
term `Native American-serving nontribal institution' means an
institution of higher education that--
``(A) at the time of application--
``(i) has an enrollment of undergraduate
students that is not less than 10 percent Native
American students; and
``(ii) is not a Tribal College or University
(as defined in section 316); and
``(B) submits to the Secretary such enrollment data
as may be necessary to demonstrate that the institution
is described in subparagraph (A), along with such other
information and data as the Secretary may by regulation
require.
``(9) Predominantly black institution.--The term
`Predominantly Black institution' means an institution of higher
education that--
``(A) has an enrollment of needy students as defined
by paragraph (3);
``(B) has an average educational and general
expenditure which is low, per full-time equivalent
undergraduate student in comparison with the average
educational and general expenditure per full-time
equivalent undergraduate student of institutions of
higher education that offer similar instruction, except
that the Secretary may apply the waiver requirements
described in section 392(b) to this subparagraph in the
same manner as the Secretary applies the waiver
requirements to section 312(b)(1)(B);
``(C) has an enrollment of undergraduate students--
``(i) that is at least 40 percent Black
American students;

[[Page 822]]
121 STAT. 822

``(ii) that is at least 1,000 undergraduate
students;
``(iii) of which not less than 50 percent of
the undergraduate students enrolled at the
institution are low-income individuals or first-
generation college students (as that term is
defined in section 402A(g)); and
``(iv) of which not less than 50 percent of
the undergraduate students are enrolled in an
educational program leading to a bachelor's or
associate's degree that the institution is
licensed to award by the State in which the
institution is located;
``(D) is legally authorized to provide, and provides
within the State, an educational program for which the
institution of higher education awards a bachelor's
degree, or in the case of a junior or community college,
an associate's degree;
``(E) is accredited by a nationally recognized
accrediting agency or association determined by the
Secretary to be a reliable authority as to the quality
of training offered, or is, according to such an agency
or association, making reasonable progress toward
accreditation; and
``(F) is not receiving assistance under part B of
title III.''.

Approved September 27, 2007.

LEGISLATIVE HISTORY--H.R. 2669:
---------------------------------------------------------------------------

HOUSE REPORTS: Nos. 110-210 (Comm. on Education and Labor) and 110-317
(Comm. of Conference).
CONGRESSIONAL RECORD, Vol. 153 (2007):
July 11, considered and passed House.
July 17, 19, considered and passed Senate, amended.
Sept. 6, Senate considered conference report.
Sept. 7, Senate and House agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 43 (2007):
Sept. 27, Presidential remarks.