[DOCID: f:hr317.110]
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110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-317
======================================================================
COLLEGE COST REDUCTION AND ACCESS ACT
_______
September 6, 2007.--Ordered to be printed
_______
Mr. George Miller of California, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany H.R. 2669]
The committee of conference on the disagreeing votes of the
two Houses on the amendment of the Senate to the bill (H.R.
2669), to provide for reconciliation pursuant to section 601 of
the concurrent resolution on the budget for fiscal year 2008,
having met, after full and free conference, have agreed to
recommend and do recommend to their respective Houses as
follows:
That the House recede from its disagreement to the
amendment of the Senate and agree to the same with an amendment
as follows:
In lieu of the matter proposed to be inserted by the
Senate amendment, insert the following:
SECTION 1. SHORT TITLE; REFERENCES.
(a) Short Title.--This Act may be cited as the ``College
Cost Reduction and Access Act''.
(b) References.--Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a
section or other provision of the Higher Education Act of 1965
(20 U.S.C. 1001 et seq.).
(c) Effective Date.--Except as otherwise expressly
provided, the amendments made by this Act shall be effective on
October 1, 2007.
TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER
EDUCATION
SEC. 101. TUITION SENSITIVITY.
(a) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is
amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraphs (4) through (9) as
paragraphs (3) through (8), respectively.
(b) Effective Date.--The amendments made by subsection (a)
shall be effective with respect to determinations of Federal
Pell Grant amounts for award years beginning on or after July
1, 2007.
(c) Authorization and Appropriation of Funds.--There is
authorized to be appropriated, and there is appropriated, out
of any money in the Treasury not otherwise appropriated, for
the Department of Education to carry out the amendment made by
subsection (a), $11,000,000 for fiscal year 2008.
SEC. 102. MANDATORY PELL GRANT INCREASES.
(a) Extension of Authority.--Section 401(a) (20 U.S.C.
1070a(a)) is amended by striking ``fiscal year 2004'' and
inserting ``fiscal year 2017''.
(b) Funding for Increases.--Section 401(b) (20 U.S.C.
1070a(b)) is amended by adding at the end the following new
paragraph:
``(9) Additional funds.--
``(A) In general.--There are authorized to
be appropriated, and there are appropriated, to
carry out subparagraph (B) of this paragraph
(in addition to any other amounts appropriated
to carry out this section and out of any money
in the Treasury not otherwise appropriated) the
following amounts:
``(i) $2,030,000,000 for fiscal
year 2008;
``(ii) $2,090,000,000 for fiscal
year 2009;
``(iii) $3,030,000,000 for fiscal
year 2010;
``(iv) $3,090,000,000 for fiscal
year 2011;
``(v) $5,050,000,000 for fiscal
year 2012;
``(vi) $105,000,000 for fiscal year
2013;
``(vii) $4,305,000,000 for fiscal
year 2014;
``(viii) $4,400,000,000 for fiscal
year 2015;
``(ix) $4,600,000,000 for fiscal
year 2016; and
``(x) $4,900,000,000 for fiscal
year 2017.
``(B) Increase in federal pell grants.--The
amounts made available pursuant to subparagraph
(A) of this paragraph shall be used to increase
the amount of the maximum Federal Pell Grant
for which a student shall be eligible during an
award year, as specified in the last enacted
appropriation Act applicable to that award
year, by--
``(i) $490 for each of the award
years 2008-2009 and 2009-2010;
``(ii) $690 for each of the award
years 2010-2011 and 2011-2012; and
``(iii) $1,090 for award year 2012-
2013.
``(C) Eligibility.--The Secretary shall
only award an increased amount of a Federal
Pell Grant under this section for any award
year pursuant to the provisions of this
paragraph to students who qualify for a Federal
Pell Grant award under the maximum grant award
enacted in the annual appropriation Act for
such award year without regard to the
provisions of this paragraph.
``(D) Formula otherwise unaffected.--Except
as provided in subparagraphs (B) and (C),
nothing in this paragraph shall be construed to
alter the requirements of this section, or
authorize the imposition of additional
requirements, for the determination and
allocation of Federal Pell Grants under this
section.
``(E) Ratable increases and decreases.--The
amounts specified in subparagraph (B) shall be
ratably increased or decreased to the extent
that funds available under subparagraph (A)
exceed or are less than (respectively) the
amount required to provide the amounts
specified in subparagraph (B).
``(F) Use of fiscal year funds for award
years.--The amounts made available by
subparagraph (A) for any fiscal year shall be
available and remain available for use under
subparagraph (B) for the award year that begins
in such fiscal year.''.
SEC. 103. UPWARD BOUND.
Section 402C is further amended by adding at the end the
following new subsection:
``(f) Additional Funds.--
``(1) Authorization and appropriation.--There are
authorized to be appropriated, and there are
appropriated to the Secretary, from funds not otherwise
appropriated, $57,000,000 for each of the fiscal years
2008 through 2011 to carry out paragraph (2), except
that any amounts that remain unexpended for such
purpose for each of such fiscal years may be available
for technical assistance and administration costs for
the Upward Bound program. The authority to award grants
under this subsection shall expire at the end of fiscal
year 2011.
``(2) Use of funds.--The amounts made available by
paragraph (1) shall be available to provide assistance
to all Upward Bound projects that did not receive
assistance in fiscal year 2007 and that have a grant
score above 70. Such assistance shall be made available
in the form of 4-year grants.''.
SEC. 104. TEACH GRANTS.
Part A of title IV (20 U.S.C. 1070 et seq.) is amended by
adding at the end the following new subpart:
``Subpart 9--TEACH Grants
``SEC. 420L. DEFINITIONS.
``For the purposes of this subpart:
``(1) Eligible institution.--The term `eligible
institution' means an institution of higher education,
as defined in section 102, that the Secretary
determines--
``(A) provides high quality teacher
preparation and professional development
services, including extensive clinical
experience as a part of pre-service
preparation;
``(B) is financially sound;
``(C) provides pedagogical course work, or
assistance in the provision of such coursework,
including the monitoring of student
performance, and formal instruction related to
the theory and practices of teaching; and
``(D) provides supervision and support
services to teachers, or assistance in the
provision of such services, including mentoring
focused on developing effective teaching skills
and strategies.
``(2) Post-baccalaureate.--The term `post-
baccalaureate' means a program of instruction for
individuals who have completed a baccalaureate degree,
that does not lead to a graduate degree, and that
consists of courses required by a State in order for a
teacher candidate to receive a professional
certification or licensing credential that is required
for employment as a teacher in an elementary school or
secondary school in that State, except that such term
shall not include any program of instruction offered by
an eligible institution that offers a baccalaureate
degree in education.
``(3) Teacher candidate.--The term `teacher
candidate' means a student or teacher described in
subparagraph (A) or (B) of section 420N(a)(2).
``SEC. 420M. PROGRAM ESTABLISHED.
``(a) Program Authority.--
``(1) Payments required.--The Secretary shall pay
to each eligible institution such sums as may be
necessary to pay to each teacher candidate who files an
application and agreement in accordance with section
420N, and who qualifies under paragraph (2) of section
420N(a), a TEACH Grant in the amount of $4,000 for each
academic year during which that teacher candidate is in
attendance at the institution.
``(2) References.--Grants made under paragraph (1)
shall be known as `Teacher Education Assistance for
College and Higher Education Grants' or `TEACH Grants'.
``(b) Payment Methodology.--
``(1) Prepayment.--Not less than 85 percent of any
funds provided to an eligible institution under
subsection (a) shall be advanced to the eligible
institution prior to the start of each payment period
and shall be based upon an amount requested by the
institution as needed to pay teacher candidates until
such time as the Secretary determines and publishes in
the Federal Register with an opportunity for comment,
an alternative payment system that provides payments to
institutions in an accurate and timely manner, except
that this sentence shall not be construed to limit the
authority of the Secretary to place an institution on a
reimbursement system of payment.
``(2) Direct payment.--Nothing in this section
shall be interpreted to prohibit the Secretary from
paying directly to teacher candidates, in advance of
the beginning of the academic term, an amount for which
teacher candidates are eligible, in cases where the
eligible institution elects not to participate in the
disbursement system required by paragraph (1).
``(3) Distribution of grants to teacher
candidates.--Payments under this subpart shall be made,
in accordance with regulations promulgated by the
Secretary for such purpose, in such manner as will best
accomplish the purposes of this subpart. Any
disbursement allowed to be made by crediting the
teacher candidate's account shall be limited to tuition
and fees and, in the case of institutionally-owned
housing, room and board. The teacher candidate may
elect to have the institution provide other such goods
and services by crediting the teacher candidate's
account.
``(c) Reductions in Amount.--
``(1) Part-time students.--In any case where a
teacher candidate attends an eligible institution on
less than a full-time basis (including a teacher
candidate who attends an eligible institution on less
than a half-time basis) during any academic year, the
amount of a grant under this subpart for which that
teacher candidate is eligible shall be reduced in
proportion to the degree to which that teacher
candidate is not attending on a full-time basis, in
accordance with a schedule of reductions established by
the Secretary for the purposes of this subpart,
computed in accordance with this subpart. Such schedule
of reductions shall be established by regulation and
published in the Federal Register in accordance with
section 482 of this Act.
``(2) No exceeding cost.--The amount of a grant
awarded under this subpart, in combination with Federal
assistance and other student assistance, shall not
exceed the cost of attendance (as defined in section
472) at the eligible institution at which that teacher
candidate is in attendance. If, with respect to any
teacher candidate for any academic year, it is
determined that the amount of a TEACH Grant exceeds the
cost of attendance for that year, the amount of the
TEACH Grant shall be reduced until such grant does not
exceed the cost of attendance at the eligible
institution.
``(d) Period of Eligibility for Grants.--
``(1) Undergraduate and post-baccalaureate
students.--The period during which an undergraduate or
post-baccalaureate student may receive grants under
this subpart shall be the period required for the
completion of the first undergraduate baccalaureate or
post-baccalaureate course of study being pursued by the
teacher candidate at the eligible institution at which
the teacher candidate is in attendance, except that--
``(A) any period during which the teacher
candidate is enrolled in a noncredit or
remedial course of study as described in
paragraph (3) shall not be counted for the
purpose of this paragraph; and
``(B) the total amount that a teacher
candidate may receive under this subpart for
undergraduate or post-baccalaureate study shall
not exceed $16,000.
``(2) Graduate students.--The period during which a
graduate student may receive grants under this subpart
shall be the period required for the completion of a
master's degree course of study pursued by the teacher
candidate at the eligible institution at which the
teacher candidate is in attendance, except that the
total amount that a teacher candidate may receive under
this subpart for graduate study shall not exceed
$8,000.
``(3) Remedial course; study abroad.--Nothing in
this section shall be construed to exclude from
eligibility courses of study which are noncredit or
remedial in nature (including courses in English
language acquisition) which are determined by the
eligible institution to be necessary to help the
teacher candidate be prepared for the pursuit of a
first undergraduate baccalaureate or post-baccalaureate
degree or certificate or, in the case of courses in
English language instruction, to be necessary to enable
the teacher candidate to utilize already existing
knowledge, training, or skills. Nothing in this section
shall be construed to exclude from eligibility programs
of study abroad that are approved for credit by the
home institution at which the teacher candidate is
enrolled.
``SEC. 420N. APPLICATIONS; ELIGIBILITY.
``(a) Applications; Demonstration of Eligibility.--
``(1) Filing required.--The Secretary shall
periodically set dates by which teacher candidates
shall file applications for grants under this subpart.
Each teacher candidate desiring a grant under this
subpart for any year shall file an application
containing such information and assurances as the
Secretary may determine necessary to enable the
Secretary to carry out the functions and
responsibilities of this subpart.
``(2) Demonstration of teach grant eligibility.--
Each application submitted under paragraph (1) shall
contain such information as is necessary to demonstrate
that--
``(A) if the applicant is an enrolled
student--
``(i) the student is an eligible
student for purposes of section 484;
``(ii) the student--
``(I) has a grade point
average that is determined,
under standards prescribed by
the Secretary, to be comparable
to a 3.25 average on a zero to
4.0 scale, except that, if the
student is in the first year of
a program of undergraduate
education, such grade point
average shall be determined on
the basis of the student's
cumulative secondary school
grade point average; or
``(II) displayed high
academic aptitude by receiving
a score above the 75th
percentile on at least one of
the batteries in an
undergraduate, post-
baccalaureate, or graduate
school admissions test; and
``(iii) the student is completing
coursework and other requirements
necessary to begin a career in
teaching, or plans to complete such
coursework and requirements prior to
graduating; or
``(B) if the applicant is a current or
prospective teacher applying for a grant to
obtain a graduate degree--
``(i) the applicant is a teacher or
a retiree from another occupation with
expertise in a field in which there is
a shortage of teachers, such as
mathematics, science, special
education, English language
acquisition, or another high-need
subject; or
``(ii) the applicant is or was a
teacher who is using high-quality
alternative certification routes, such
as Teach for America, to get certified.
``(b) Agreements To Serve.--Each application under
subsection (a) shall contain or be accompanied by an agreement
by the applicant that--
``(1) the applicant will--
``(A) serve as a full-time teacher for a
total of not less than 4 academic years within
8 years after completing the course of study
for which the applicant received a TEACH Grant
under this subpart;
``(B) teach in a school described in
section 465(a)(2)(A);
``(C) teach in any of the following fields:
``(i) mathematics;
``(ii) science;
``(iii) a foreign language;
``(iv) bilingual education;
``(v) special education;
``(vi) as a reading specialist; or
``(vii) another field documented as
high-need by the Federal Government,
State government, or local educational
agency, and approved by the Secretary;
``(D) submit evidence of such employment in
the form of a certification by the chief
administrative officer of the school upon
completion of each year of such service; and
``(E) comply with the requirements for
being a highly qualified teacher as defined in
section 9101 of the Elementary and Secondary
Education Act of 1965; and
``(2) in the event that the applicant is determined
to have failed or refused to carry out such service
obligation, the sum of the amounts of any TEACH Grants
received by such applicant will be treated as a loan
and collected from the applicant in accordance with
subsection (c) and the regulations thereunder.
``(c) Repayment for Failure To Complete Service.--In the
event that any recipient of a grant under this subpart fails or
refuses to comply with the service obligation in the agreement
under subsection (b), the sum of the amounts of any TEACH
Grants received by such recipient shall, upon a determination
of such a failure or refusal in such service obligation, be
treated as a Federal Direct Unsubsidized Stafford Loan under
part D of title IV, and shall be subject to repayment, together
with interest thereon accruing from the date of the grant
award, in accordance with terms and conditions specified by the
Secretary in regulations under this subpart.
``SEC. 420O. PROGRAM PERIOD AND FUNDING.
``Beginning on July 1, 2008, there shall be available to
the Secretary to carry out this subpart, from funds not
otherwise appropriated, such sums as may be necessary to
provide TEACH Grants in accordance with this subpart to each
eligible applicant.''.
TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS
SEC. 201. INTEREST RATE REDUCTIONS.
(a) FFEL Interest Rates.--
(1) Section 427A(l) (20 U.S.C. 1077a(l)) is amended
by adding at the end the following new paragraph:
``(4) Reduced rates for undergraduate subsidized
loans.--Notwithstanding subsection (h) and paragraph
(1) of this subsection, with respect to any loan to an
undergraduate student made, insured, or guaranteed
under this part (other than a loan made pursuant to
section 428B, 428C, or 428H) for which the first
disbursement is made on or after July 1, 2006, and
before July 1, 2012, the applicable rate of interest
shall be as follows:
``(A) For a loan for which the first
disbursement is made on or after July 1, 2006,
and before July 1, 2008, 6.8 percent on the
unpaid principal balance of the loan.
``(B) For a loan for which the first
disbursement is made on or after July 1, 2008,
and before July 1, 2009, 6.0 percent on the
unpaid principal balance of the loan.
``(C) For a loan for which the first
disbursement is made on or after July 1, 2009,
and before July 1, 2010, 5.6 percent on the
unpaid principal balance of the loan.
``(D) For a loan for which the first
disbursement is made on or after July 1, 2010,
and before July 1, 2011, 4.5 percent on the
unpaid principal balance of the loan.
``(E) For a loan for which the first
disbursement is made on or after July 1, 2011,
and before July 1, 2012, 3.4 percent on the
unpaid principal balance of the loan.''.
(2) Special allowance cross reference.--Section
438(b)(2)(I)(ii)(II) (20 U.S.C. 1087-
1(b)(2)(I)(ii)(II)) is amended by striking ``section
427A(l)(1)'' and inserting ``section 427A(l)(1) or
(l)(4)''.
(b) Direct Loan Interest Rates.--Section 455(b)(7) (20
U.S.C. 1087e(b)(7)) is amended by adding at the end the
following new subparagraph:
``(D) Reduced rates for undergraduate
fdsl.--Notwithstanding the preceding paragraphs
of this subsection and subparagraph (A) of this
paragraph, for Federal Direct Stafford Loans
made to undergraduate students for which the
first disbursement is made on or after July 1,
2006, and before July 1, 2012, the applicable
rate of interest shall be as follows:
``(i) For a loan for which the
first disbursement is made on or after
July 1, 2006, and before July 1, 2008,
6.8 percent on the unpaid principal
balance of the loan.
``(ii) For a loan for which the
first disbursement is made on or after
July 1, 2008, and before July 1, 2009,
6.0 percent on the unpaid principal
balance of the loan.
``(iii) For a loan for which the
first disbursement is made on or after
July 1, 2009, and before July 1, 2010,
5.6 percent on the unpaid principal
balance of the loan.
``(iv) For a loan for which the
first disbursement is made on or after
July 1, 2010, and before July 1, 2011,
4.5 percent on the unpaid principal
balance of the loan.
``(v) For a loan for which the
first disbursement is made on or after
July 1, 2011, and before July 1, 2012,
3.4 percent on the unpaid principal
balance of the loan.''.
SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED
FORCES.
(a) Federal Family Education Loans.--Section
428(b)(1)(M)(iii) (20 U.S.C. 1078(b)(1)(M)(iii)) is amended--
(1) in the matter preceding subclause (I), by
striking ``not in excess of 3 years'';
(2) in subclause (II), by striking ``; or'' and
inserting a comma; and
(3) by adding at the end the following:
``and for the 180-day period following
the demobilization date for the service
described in subclause (I) or (II);
or''.
(b) Direct Loans.--Section 455(f)(2)(C) (20 U.S.C.
1087e(f)(2)(C)) is amended--
(1) in the matter preceding clause (i), by striking
``not in excess of 3 years'';
(2) in clause (ii), by striking ``; or'' and
inserting a comma; and
(3) by adding at the end the following:
``and for the 180-day period following the
demobilization date for the service described
in clause (i) or (ii); or''.
(c) Perkins Loans.--Section 464(c)(2)(A)(iii) (20 U.S.C.
1087dd(c)(2)(A)(iii)) is amended--
(1) in the matter preceding subclause (I), by
striking ``not in excess of 3 years'';
(2) in subclause (II), by striking the semicolon
and inserting a comma; and
(3) by adding at the end the following:
``and for the 180-day period following the demobilization date
for the service described in subclause (I) or (II);''.
(d) Applicability.--Section 8007(f) of the Higher Education
Reconciliation Act of 2005 (20 U.S.C. 1078 note) is amended by
striking ``loans for which'' and all that follows through the
period at the end and inserting ``all loans under title IV of
the Higher Education Act of 1965.''.
SEC. 203. INCOME-BASED REPAYMENT.
(a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.)
is amended by adding at the end the following:
``SEC. 493C. INCOME-BASED REPAYMENT.
``(a) Definitions.--In this section:
``(1) Excepted plus loan.--The term `excepted PLUS
loan' means a loan under section 428B, or a Federal
Direct PLUS Loan, that is made, insured, or guaranteed
on behalf of a dependent student.
``(2) Excepted consolidation loan.--The term
`excepted consolidation loan' means a consolidation
loan under section 428C, or a Federal Direct
Consolidation Loan, if the proceeds of such loan were
used to discharge the liability on an excepted PLUS
loan.
``(3) Partial financial hardship.--The term
`partial financial hardship', when used with respect to
a borrower, means that for such borrower--
``(A) the annual amount due on the total
amount of loans made, insured, or guaranteed
under part B or D (other than an excepted PLUS
loan or excepted consolidation loan) to a
borrower as calculated under the standard
repayment plan under section 428(b)(9)(A)(i) or
455(d)(1)(A), based on a 10-year repayment
period; exceeds
``(B) 15 percent of the result obtained by
calculating, on at least an annual basis, the
amount by which--
``(i) the borrower's, and the
borrower's spouse's (if applicable),
adjusted gross income; exceeds
``(ii) 150 percent of the poverty
line applicable to the borrower's
family size as determined under section
673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2)).
``(b) Income-Based Repayment Program Authorized.--
Notwithstanding any other provision of this Act, the Secretary
shall carry out a program under which--
``(1) a borrower of any loan made, insured, or
guaranteed under part B or D (other than an excepted
PLUS loan or excepted consolidation loan) who has a
partial financial hardship (whether or not the
borrower's loan has been submitted to a guaranty agency
for default aversion or is already in default) may
elect, during any period the borrower has the partial
financial hardship, to have the borrower's aggregate
monthly payment for all such loans not exceed the
result described in subsection (a)(3)(B) divided by 12;
``(2) the holder of such a loan shall apply the
borrower's monthly payment under this subsection first
toward interest due on the loan, next toward any fees
due on the loan, and then toward the principal of the
loan;
``(3) any interest due and not paid under paragraph
(2)--
``(A) shall, on subsidized loans, be paid
by the Secretary for a period of not more than
3 years after the date of the borrower's
election under paragraph (1), except that such
period shall not include any period during
which the borrower is in deferment due to an
economic hardship described in section 435(o);
and
``(B) be capitalized--
``(i) in the case of a subsidized
loan, subject to subparagraph (A), at
the time the borrower--
``(I) ends the election to
make income-based repayment
under this subsection; or
``(II) begins making
payments of not less than the
amount specified in paragraph
(6)(A); or
``(ii) in the case of an
unsubsidized loan, at the time the
borrower--
``(I) ends the election to
make income-based repayment
under this subsection; or
``(II) begins making
payments of not less than the
amount specified in paragraph
(6)(A);
``(4) any principal due and not paid under
paragraph (2) shall be deferred;
``(5) the amount of time the borrower makes monthly
payments under paragraph (1) may exceed 10 years;
``(6) if the borrower no longer has a partial
financial hardship or no longer wishes to continue the
election under this subsection, then--
``(A) the maximum monthly payment required
to be paid for all loans made to the borrower
under part B or D (other than an excepted PLUS
loan or excepted consolidation loan) shall not
exceed the monthly amount calculated under
section 428(b)(9)(A)(i) or 455(d)(1)(A), based
on a 10-year repayment period, when the
borrower first made the election described in
this subsection; and
``(B) the amount of time the borrower is
permitted to repay such loans may exceed 10
years;
``(7) the Secretary shall repay or cancel any
outstanding balance of principal and interest due on
all loans made under part B or D (other than a loan
under section 428B or a Federal Direct PLUS Loan) to a
borrower who--
``(A) at any time, elected to participate
in income-based repayment under paragraph (1);
and
``(B) for a period of time prescribed by
the Secretary, not to exceed 25 years, meets 1
or more of the following requirements:
``(i) has made reduced monthly
payments under paragraph (1) or
paragraph (6);
``(ii) has made monthly payments of
not less than the monthly amount
calculated under section
428(b)(9)(A)(i) or 455(d)(1)(A), based
on a 10-year repayment period, when the
borrower first made the election
described in this subsection;
``(iii) has made payments of not
less than the payments required under a
standard repayment plan under section
428(b)(9)(A)(i) or 455(d)(1)(A) with a
repayment period of 10 years;
``(iv) has made payments under an
income-contingent repayment plan under
section 455(d)(1)(D);
``(v) has been in deferment due to
an economic hardship described in
section 435(o);
``(8) a borrower who is repaying a loan made under
part B or D pursuant to income-based repayment may
elect, at any time, to terminate repayment pursuant to
income-based repayment and repay such loan under the
standard repayment plan; and
``(9) the special allowance payment to a lender
calculated under section 438(b)(2)(I), when calculated
for a loan in repayment under this section, shall be
calculated on the principal balance of the loan and on
any accrued interest unpaid by the borrower in
accordance with this section.
``(c) Eligibility Determinations.--The Secretary shall
establish procedures for annually determining the borrower's
eligibility for income-based repayment, including verification
of a borrower's annual income and the annual amount due on the
total amount of loans made, insured, or guaranteed under part B
or D (other than an excepted PLUS loan or excepted
consolidation loan), and such other procedures as are necessary
to effectively implement income-based repayment under this
section. The Secretary shall consider, but is not limited to,
the procedures established in accordance with section 455(e)(1)
or in connection with income sensitive repayment schedules
under section 428(b)(9)(A)(iii) or 428C(b)(1)(E).''.
(b) Conforming Amendments.--
(1) Section 428C (20 U.S.C. 1078-3) is amended--
(A) in subsection (a)(3)(B)(i), by amending
subclause (V) to read as follows:
``(V) an individual may
obtain a subsequent
consolidation loan under
section 455(g) only--
``(aa) for the
purposes of obtaining
an income contingent
repayment plan, and
only if the loan has
been submitted to the
guaranty agency for
default aversion; or
``(bb) for the
purposes of using the
public service loan
forgiveness program
under section
455(m).'';
(B) in the first sentence of subsection
(b)(5), by inserting ``or chooses to obtain a
consolidation loan for the purposes of using
the public service loan forgiveness program
offered under section 455(m),'' after ``from
such a lender,''; and
(C) in the second sentence of such
subsection, by inserting before the period the
following: ``, except that if a borrower
intends to be eligible to use the public
service loan forgiveness program under section
455(m), such loan shall be repaid using one of
the repayment options described in section
455(m)(1)(A)''.
(2) Section 428C (20 U.S.C. 1078-3) (as amended by
paragraph (1) of this subsection) is amended--
(A) in subsection (a)(3)(B)(i)(V)(aa)--
(i) by striking ``an income
contingent repayment plan,'' and
inserting ``income contingent repayment
or income-based repayment,''; and
(ii) by inserting ``or if the loan
is already in default'' before the
semicolon;
(B) in the first sentence of subsection
(b)(5), by inserting ``or income-based
repayment terms'' after ``income-sensitive
repayment terms''; and
(C) in the second sentence of such
subsection, by inserting ``, pursuant to
income-based repayment under section 493C,''
after ``part D of this title''.
(3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D))
is amended by inserting ``made on behalf of a dependent
student'' after ``PLUS loan''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall be
effective on July 1, 2009.
(2) Exception.--The amendments made by subsection
(b)(1) shall be effective on July 1, 2008.
SEC. 204. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
Part G of title IV is further amended by adding after
section 493C (as added by section 203 of this Act) the
following new section:
``SEC. 493D. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.
``(a) Deferral of Loan Repayment Following Active Duty.--In
addition to any deferral of repayment of a loan made under this
title pursuant to section 428(b)(1)(M)(iii), 455(f)(2)(C), or
464(c)(2)(A)(iii), a borrower of a loan under this title who is
a member of the National Guard or other reserve component of
the Armed Forces of the United States, or a member of such
Armed Forces in a retired status, is called or ordered to
active duty, and is enrolled, or was enrolled within six months
prior to the activation, in a program of instruction at an
eligible institution, shall be eligible for a deferment during
the 13 months following the conclusion of such service, except
that a deferment under this subsection shall expire upon the
borrower's return to enrolled student status.
``(b) Active Duty.--Notwithstanding section 481(d), in this
section, the term `active duty' has the meaning given such term
in section 101(d)(1) of title 10, United States Code, except
that such term--
``(1) does not include active duty for training or
attendance at a service school; but
``(2) includes, in the case of members of the
National Guard, active State duty.''.
SEC. 205. MAXIMUM REPAYMENT PERIOD.
Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at
the end the following:
``(7) Maximum repayment period.--In calculating the
extended period of time for which an income contingent
repayment plan under this subsection may be in effect
for a borrower, the Secretary shall include all time
periods during which a borrower of loans under part B,
part D, or part E--
``(A) is not in default on any loan that is
included in the income contingent repayment
plan; and
``(B)(i) is in deferment due to an economic
hardship described in section 435(o);
``(ii) makes monthly payments under
paragraph (1) or (6) of section 493C(b);
``(iii) makes monthly payments of not less
than the monthly amount calculated under
section 428(b)(9)(A)(i) or subsection
(d)(1)(A), based on a 10-year repayment period,
when the borrower first made the election
described in section 493C(b)(1);
``(iv) makes payments of not less than the
payments required under a standard repayment
plan under section 428(b)(9)(A)(i) or
subsection (d)(1)(A) with a repayment period of
10 years; or
``(v) makes payments under an income
contingent repayment plan under subsection
(d)(1)(D).''.
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM
SEC. 301. GUARANTY AGENCY COLLECTION RETENTION.
Clause (ii) of section 428(c)(6)(A) (20 U.S.C.
1078(c)(6)(A)(ii)) is amended to read as follows:
``(ii) an amount equal to 24
percent of such payments for use in
accordance with section 422B, except
that--
``(I) beginning October 1,
2003 and ending September 30,
2007, this clause shall be
applied by substituting `23
percent' for `24 percent'; and
``(II) beginning October 1,
2007, this clause shall be
applied by substituting `16
percent' for `24 percent'.''.
SEC. 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.
(a) Elimination of Status.--Part B of title IV (20 U.S.C.
1071 et seq.) is amended by striking section 428I (20 U.S.C.
1078-9).
(b) Conforming Amendments.--Part B of title IV is further
amended--
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E)
through (H) as subparagraphs (D) through (G),
respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)),
by striking the matter following subparagraph (B).
(c) Effective Date.--The amendments made by subsections (a)
and (b) shall be effective on October 1, 2007, except that
section 428I of the Higher Education Act of 1965 (as in effect
on the day before the date of enactment of this Act) shall
apply to eligible lenders that received a designation under
subsection (a) of such section prior to October 1, 2007, for
the remainder of the year for which the designation was made.
SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.
(a) Amendment.--Subparagraph (G) of section 428(b)(1) (20
U.S.C. 1078(b)(1)(G)) is amended to read as follows:
``(G) insures 95 percent of the unpaid
principal of loans insured under the program,
except that--
``(i) such program shall insure 100
percent of the unpaid principal of
loans made with funds advanced pursuant
to section 428(j) or 439(q); and
``(ii) notwithstanding the
preceding provisions of this
subparagraph, such program shall insure
100 percent of the unpaid principal
amount of exempt claims as defined in
subsection (c)(1)(G);''.
(b) Effective Date.--The amendment made by subsection (a)
shall be effective on October 1, 2012, and shall apply with
respect to loans made on or after such date.
SEC. 304. DEFINITIONS.
Section 435 (20 U.S.C. 1085) is amended--
(1) in subsection (o)(1)--
(A) in subparagraph (A)(ii)--
(i) by striking ``100 percent of
the poverty line for a family of 2''
and inserting ``150 percent of the
poverty line applicable to the
borrower's family size''; and
(ii) by inserting ``or'' after the
semicolon;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B);
(2) in subsection (o)(2), by striking ``(1)(C)''
and inserting ``(1)(B)''; and
(3) by adding at the end the following:
``(p) Eligible Not-for-Profit Holder.--
``(1) Definition.--Subject to the limitations in
paragraph (2) and the prohibition in paragraph (3), the
term `eligible not-for-profit holder' means an eligible
lender under subsection (d) (except for an eligible
lender described in subsection (d)(1)(E)) that requests
a special allowance payment under section
438(b)(2)(I)(vi)(II) or a payment under section 771 and
that is--
``(A) a State, or a political subdivision,
authority, agency, or other instrumentality
thereof, including such entities that are
eligible to issue bonds described in section
1.103-1 of title 26, Code of Federal
Regulations, or section 144(b) of the Internal
Revenue Code of 1986;
``(B) an entity described in section
150(d)(2) of such Code that has not made the
election described in section 150(d)(3) of such
Code;
``(C) an entity described in section
501(c)(3) of such Code; or
``(D) a trustee acting as an eligible
lender on behalf of a State, political
subdivision, authority, agency,
instrumentality, or other entity described in
subparagraph (A), (B), or (C).
``(2) Limitations.--
``(A) Existing on date of enactment.--
``(i) In general.--An eligible
lender shall not be an eligible not-
for-profit holder under this Act unless
such lender--
``(I) was a State,
political subdivision,
authority, agency,
instrumentality, or other
entity described in paragraph
(1)(A), (B), or (C) that was,
on the date of the enactment of
the College Cost Reduction and
Access Act, acting as an
eligible lender under
subsection (d) (other than an
eligible lender described in
subsection (d)(1)(E)); or
``(II) is a trustee acting
as an eligible lender under
this Act on behalf of such a
State, political subdivision,
authority, agency,
instrumentality, or other
entity described in subclause
(I) of this clause.
``(ii) Exception.--Notwithstanding
clause (i), a State may elect, in
accordance with regulations of the
Secretary, to waive the requirements of
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 to 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 paragraph (1)(A), (B), or
(C) in excess of reasonable and customary fees.
``(E) Rule of construction.--For purposes
of subparagraphs (B), (C), and (D) of this
paragraph, a State, political subdivision,
authority, agency, instrumentality, or other
entity described in paragraph (1)(A), (B), or
(C) shall not--
``(i) be deemed to be owned or
controlled, in whole or in part, by a
for-profit entity, or
``(ii) lose its status as the sole
owner of a beneficial interest in a
loan and the income from a loan by that
political subdivision, authority,
agency, instrumentality, or other
entity,
by granting a security interest in, or
otherwise pledging as collateral, such loan, or
the income from such loan, to secure a debt
obligation in the operation of an arrangement
described in paragraph (1)(D).
``(3) Prohibition.--In the case of a loan for which
the special allowance payment is calculated under
section 438(b)(2)(I)(vi)(II) and that is sold by the
eligible not-for-profit holder holding the loan to an
entity that is not an eligible not-for-profit holder
under this Act, the special allowance payment for such
loan shall, beginning on the date of the sale, no
longer be calculated under section 438(b)(2)(I)(vi)(II)
and shall be calculated under section
438(b)(2)(I)(vi)(I) instead.
``(4) Regulations.--Not later than 1 year after the
date of enactment of the College Cost Reduction and
Access Act, the Secretary shall promulgate regulations
in accordance with the provisions of this
subsection.''.
SEC. 305. SPECIAL ALLOWANCES.
(a) Reduction of Lender Special Allowance Payments.--
Section 438(b)(2)(I) (20 U.S.C. 1087-1(b)(2)(I)) is amended--
(1) in clause (i), by striking ``clauses (ii),
(iii), and (iv)'' and inserting ``the following
clauses'';
(2) in clause (v)(III), by striking ``clauses (ii),
(iii), and (iv)'' and inserting ``clauses (ii), (iii),
(iv), and (vi)''; and
(3) by adding at the end the following:
``(vi) Reduction for loans
disbursed on or after october 1,
2007.--With respect to a loan on which
the applicable interest rate is
determined under section 427A(l) and
for which the first disbursement of
principal is made on or after October
1, 2007, the special allowance payment
computed pursuant to this subparagraph
shall be computed--
``(I) for loans held by an
eligible lender not described
in subclause (II)--
``(aa) by
substituting `1.79
percent' for `2.34
percent' each place the
term appears in this
subparagraph;
``(bb) by
substituting `1.19
percent' for `1.74
percent' in clause
(ii);
``(cc) by
substituting `1.79
percent' for `2.64
percent' in clause
(iii); and
``(dd) by
substituting `2.09
percent' for `2.64
percent' in clause
(iv); and
``(II) for loans held by an
eligible not-for-profit
holder--
``(aa) by
substituting `1.94
percent' for `2.34
percent' each place the
term appears in this
subparagraph;
``(bb) by
substituting `1.34
percent' for `1.74
percent' in clause
(ii);
``(cc) by
substituting `1.94
percent' for `2.64
percent' in clause
(iii); and
``(dd) by
substituting `2.24
percent' for `2.64
percent' in clause
(iv).''.
(b) Increased Loan Fees From Lenders.--Paragraph (2) of
section 438(d) (20 U.S.C. 1087-1(d)(2)) is amended to read as
follows:
``(2) Amount of loan fees.--The amount of the loan
fee which shall be deducted under paragraph (1), but
which may not be collected from the borrower, shall be
equal to--
``(A) except as provided in subparagraph
(B), 0.50 percent of the principal amount of
the loan with respect to any loan under this
part for which the first disbursement was made
on or after October 1, 1993; and
``(B) 1.0 percent of the principal amount
of the loan with respect to any loan under this
part for which the first disbursement was made
on or after October 1, 2007.''.
SEC. 306. ACCOUNT MAINTENANCE FEES.
Section 458(b) (20 U.S.C. 1087h(b)) is amended by striking
``0.10 percent'' and inserting ``0.06 percent''.
TITLE IV--LOAN FORGIVENESS
SEC. 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.
Section 455 (20 U.S.C. 1087e) is further amended by adding
at the end the following:
``(m) Repayment Plan for Public Service Employees.--
``(1) In general.--The Secretary shall cancel the
balance of interest and principal due, in accordance
with paragraph (2), on any eligible Federal Direct Loan
not in default for a borrower who--
``(A) has made 120 monthly payments on the
eligible Federal Direct Loan after October 1,
2007, pursuant to any one or a combination of
the following:
``(i) payments under an income-
based repayment plan under section
493C;
``(ii) payments under a standard
repayment plan under subsection
(d)(1)(A), based on a 10-year repayment
period;
``(iii) monthly payments under a
repayment plan under subsection (d)(1)
or (g) of not less than the monthly
amount calculated under subsection
(d)(1)(A), based on a 10-year repayment
period;
``(iv) payments under an income
contingent repayment plan under
subsection (d)(1)(D); and
``(B)(i) is employed in a public service
job at the time of such forgiveness; and
``(ii) has been employed in a public
service job during the period in which the
borrower makes each of the 120 payments
described in subparagraph (A).
``(2) Loan cancellation amount.--After the
conclusion of the employment period described in
paragraph (1), the Secretary shall cancel the
obligation to repay the balance of principal and
interest due as of the time of such cancellation, on
the eligible Federal Direct Loans made to the borrower
under this part.
``(3) Definitions.--In this subsection:
``(A) Eligible federal direct loan.--The
term `eligible Federal Direct Loan' means a
Federal Direct Stafford Loan, Federal Direct
PLUS Loan, or Federal Direct Unsubsidized
Stafford Loan, or a Federal Direct
Consolidation Loan.
``(B) Public service job.--The term `public
service job' means--
``(i) a full-time job in emergency
management, government, military
service, public safety, law
enforcement, public health, public
education (including early childhood
education), social work in a public
child or family service agency, public
interest law services (including
prosecution or public defense or legal
advocacy in low-income communities at a
nonprofit organization), public child
care, public service for individuals
with disabilities, public service for
the elderly, public library sciences,
school-based library sciences and other
school-based services, or at an
organization that is described in
section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from
taxation under section 501(a) of such
Code; or
``(ii) teaching as a full-time
faculty member at a Tribal College or
University as defined in section 316(b)
and other faculty teaching in high-
needs areas, as determined by the
Secretary.''.
TITLE V--FEDERAL PERKINS LOANS
SEC. 501. DISTRIBUTION OF LATE COLLECTIONS.
Section 466(b) (20 U.S.C. 1087ff(b)) is amended by striking
``March 31, 2012'' and inserting ``October 1, 2012''.
TITLE VI--NEED ANALYSIS
SEC. 601. SUPPORT FOR WORKING STUDENTS.
(a) Dependent Students.--Subparagraph (D) of section
475(g)(2) (20 U.S.C. 1087oo(g)(2)(D)) is amended to read as
follows:
``(D) an income protection allowance of the
following amount (or a successor amount
prescribed by the Secretary under section 478):
``(i) for academic year 2009-2010,
$3,750;
``(ii) for academic year 2010-2011,
$4,500;
``(iii) for academic year 2011-
2012, $5,250; and
``(iv) for academic year 2012-2013,
$6,000;''.
(b) Independent Students Without Dependents Other Than a
Spouse.--Clause (iv) of section 476(b)(1)(A) (20 U.S.C.
1087pp(b)(1)(A)) is amended to read as follows:
``(iv) an income protection
allowance of the following amount (or a
successor amount prescribed by the
Secretary under section 478):
``(I) for single or
separated students, or married
students where both are
enrolled pursuant to subsection
(a)(2)--
``(aa) for academic
year 2009-2010, $7,000;
``(bb) for academic
year 2010-2011, $7,780;
``(cc) for academic
year 2011-2012, $8,550;
and
``(dd) for academic
year 2012-2013, $9,330;
and
``(II) for married students
where 1 is enrolled pursuant to
subsection (a)(2)--
``(aa) for academic
year 2009-2010,
$11,220;
``(bb) for academic
year 2010-2011,
$12,460;
``(cc) for academic
year 2011-2012,
$13,710; and
``(dd) for academic
year 2012-2013,
$14,960;''.
(c) Independent Students With Dependents Other Than a
Spouse.--Paragraph (4) of section 477(b) (20 U.S.C. 1087qq(b))
is amended to read as follows:
``(4) Income protection allowance.--The income
protection allowance is determined by the tables
described in subparagraphs (A) through (D) (or a
successor table prescribed by the Secretary under
section 478).
``(A) Academic year 2009-2010.--For
academic year 2009-2010, the income protection
allowance is determined by the following table:
``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
Family Size Number in College
----------------------------------------------------------------------------------------------------------------
For each
(including student) 1 2 3 4 5 additional
subtract:
----------------------------------------------------------------------------------------------------------------
2 $17,720 $14,690
3 22,060 19,050 $16,020
4 27,250 24,220 21,210 $18,170
5 32,150 29,120 26,100 23,070 $20,060
6 37,600 34,570 31,570 28,520 25,520 $3,020
For each
additional
add: 4,240 4,240 4,240 4,240 4,240
----------------------------------------------------------------------------------------------------------------
``(B) Academic year 2010-2011.--For
academic year 2010-2011, the income protection
allowance is determined by the following table:
``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
Family Size Number in College
----------------------------------------------------------------------------------------------------------------
For each
(including student) 1 2 3 4 5 additional
subtract:
----------------------------------------------------------------------------------------------------------------
2 $19,690 $16,330
3 24,510 21,160 $17,800
4 30,280 26,910 23,560 $20,190
5 35,730 32,350 29,000 25,640 $22,290
6 41,780 38,410 35,080 31,690 28,350 $3,350
For each
additional
add: 4,710 4,710 4,710 4,710 4,710
----------------------------------------------------------------------------------------------------------------
``(C) Academic year 2011-2012.--For
academic year 2011-2012, the income protection
allowance is determined by the following table:
``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
Family Size Number in College
----------------------------------------------------------------------------------------------------------------
For each
(including student) 1 2 3 4 5 additional
subtract:
----------------------------------------------------------------------------------------------------------------
2 $21,660 $17,960
3 26,960 23,280 $19,580
4 33,300 29,600 25,920 $22,210
5 39,300 35,590 31,900 28,200 $24,520
6 45,950 42,250 38,580 34,860 31,190 $3,690
For each
additional
add: 5,180 5,180 5,180 5,180 5,180
----------------------------------------------------------------------------------------------------------------
``(D) Academic year 2012-2013.--For
academic year 2012-2013, the income protection
allowance is determined by the following table:
``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
Family Size Number in College
----------------------------------------------------------------------------------------------------------------
For each
(including student) 1 2 3 4 5 additional
subtract:
----------------------------------------------------------------------------------------------------------------
2 $23,630 $19,590
3 29,420 25,400 $21,360
4 36,330 32,300 28,280 $24,230
5 42,870 38,820 34,800 30,770 $26,750
6 50,130 46,100 42,090 38,030 34,020 $4,020
For each
additional
add: 5,660 5,660 5,660 5,660 5,660 ''.
----------------------------------------------------------------------------------------------------------------
(d) Updated Tables and Amounts.--Section 478(b) (20 U.S.C.
1087rr(b)) is amended--
(1) by striking paragraph (1) and inserting the
following:
``(1) Revised tables.--
``(A) In general.--For each academic year
after academic year 2008-2009, the Secretary
shall publish in the Federal Register a revised
table of income protection allowances for the
purpose of sections 475(c)(4) and 477(b)(4),
subject to subparagraphs (B) and (C).
``(B) Table for independent students.--
``(i) Academic years 2009-2010
through 2012-2013.--For each of the
academic years 2009-2010 through 2012-
2013, the Secretary shall not develop a
revised table of income protection
allowances under section 477(b)(4) and
the table specified for such academic
year under subparagraphs (A) through
(D) of such section shall apply.
``(ii) Other academic years.--For
each academic year after academic year
2012-2013, the Secretary shall develop
the revised table of income protection
allowances by increasing each of the
dollar amounts contained in the table
of income protection allowances under
section 477(b)(4)(D) by a percentage
equal to the estimated percentage
increase in the Consumer Price Index
(as determined by the Secretary)
between December 2011 and the December
next preceding the beginning of such
academic year, and rounding the result
to the nearest $10.
``(C) Table for parents.--For each academic
year after academic year 2008-2009, the
Secretary shall develop the revised table of
income protection allowances under section
475(c)(4) by increasing each of the dollar
amounts contained in the table by a percentage
equal to the estimated percentage increase in
the Consumer Price Index (as determined by the
Secretary) between December 1992 and the
December next preceding the beginning of such
academic year, and rounding the result to the
nearest $10.''; and
(2) in paragraph (2), by striking ``shall be
developed'' and all that follows through the period at
the end and inserting ``shall be developed for each
academic year after academic year 2012-2013, by
increasing each of the dollar amounts contained in such
section for academic year 2012-2013 by a percentage
equal to the estimated percentage increase in the
Consumer Price Index (as determined by the Secretary)
between December 2011 and the December next preceding
the beginning of such academic year, and rounding the
result to the nearest $10.''.
(e) Effective Date.--The amendments made by this section
shall be effective on July 1, 2009.
SEC. 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO IMPROVEMENTS.
(a) Simplified Needs Test.--Section 479 (20 U.S.C. 1087ss)
is amended--
(1) in subsection (b)--
(A) in paragraph (1)(A)(i)--
(i) in subclause (II), by striking
``or'' after the semicolon;
(ii) by redesignating subclause
(III) as subclause (IV);
(iii) by inserting after subclause
(II) the following:
``(III) 1 of whom is a
dislocated worker; or''; and
(iv) in subclause (IV) (as
redesignated by clause (ii)), by
striking ``12-month'' and inserting
``24-month''; and
(B) in paragraph (1)(B)(i)--
(i) in subclause (II), by striking
``or'' after the semicolon;
(ii) by redesignating subclause
(III) as subclause (IV);
(iii) by inserting after subclause
(II) the following:
``(III) 1 of whom is a
dislocated worker; or''; and
(iv) in subclause (IV) (as
redesignated by clause (ii)), by
striking ``12-month'' and inserting
``24-month'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in subparagraph (A)--
(I) in clause (ii), by
striking ``or'' after the
semicolon;
(II) by redesignating
clause (iii) as clause (iv);
(III) by inserting after
clause (ii) the following:
``(iii) 1 of whom is a dislocated
worker; or''; and
(IV) in clause (iv) (as
redesignated by subclause
(II)), by striking ``12-month''
and inserting ``24-month''; and
(ii) in subparagraph (B), by
striking ``$20,000'' and inserting
``$30,000''; and
(B) in paragraph (2)--
(i) in subparagraph (A)--
(I) in clause (ii), by
striking ``or'' after the
semicolon;
(II) by redesignating
clause (iii) as clause (iv);
(III) by inserting after
clause (ii) the following:
``(iii) 1 of whom is a dislocated
worker; or''; and
(IV) in clause (iv) (as
redesignated by subclause
(II)), by striking ``12-month''
and inserting ``24-month''; and
(ii) in subparagraph (B), by
striking ``$20,000'' and inserting
``$30,000''; and
(C) in the flush matter following paragraph
(2)(B), by adding at the end the following:
``The Secretary shall annually adjust the
income level necessary to qualify an applicant
for the zero expected family contribution. The
income level shall be adjusted according to
increases in the Consumer Price Index, as
defined in section 478(f).''; and
(3) in subsection (d)--
(A) by redesignating paragraphs (1) through
(6) as subparagraphs (A) through (F),
respectively and moving the margins of such
subparagraphs 2 ems to the right;
(B) by striking ``(d) Definition'' and all
that follows through ``the term'' and inserting
the following:
``(d) Definitions.--In this section:
``(1) Dislocated worker.--The term `dislocated
worker' has the meaning given the term in section 101
of the Workforce Investment Act of 1998 (29 U.S.C.
2801).
``(2) Means-tested federal benefit program.--The
term''.
(b) Effective Date.--The amendments made by this section
shall be effective on July 1, 2009.
SEC. 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.
(a) Amendments.--The third sentence of section 479A(a) (20
U.S.C. 1087tt(a)) is amended--
(1) by inserting ``or an independent student''
after ``family member'';
(2) by inserting ``a family member who is a
dislocated worker (as defined in section 101 of the
Workforce Investment Act of 1998),'' before ``the
number of parents''; and
(3) by inserting ``a change in housing status that
results in an individual being homeless (as defined in
section 103 of the McKinney-Vento Homeless Assistance
Act),'' after ``under section 487,''.
(b) Effective Date.--The amendments made by this section
shall take effect on July 1, 2009.
SEC. 604. DEFINITIONS.
(a) In General.--Section 480 (20 U.S.C. 1087vv) is
amended--
(1) in subsection (a)(2)--
(A) by striking ``and no portion'' and
inserting ``no portion''; and
(B) by inserting ``and no distribution from
any qualified education benefit described in
subsection (f)(3) that is not subject to
Federal income tax,'' after ``1986,'';
(2) by striking subsection (b) and inserting the
following:
``(b) Untaxed Income and Benefits.--
``(1) The term `untaxed income and benefits'
means--
``(A) child support received;
``(B) workman's compensation;
``(C) veteran's benefits such as death
pension, dependency, and indemnity
compensation, but excluding veterans' education
benefits as defined in subsection (c);
``(D) interest on tax-free bonds;
``(E) housing, food, and other allowances
(excluding rent subsidies for low-income
housing) for military, clergy, and others
(including cash payments and cash value of
benefits);
``(F) cash support or any money paid on the
student`s behalf, except, for dependent
students, funds provided by the student's
parents;
``(G) untaxed portion of pensions;
``(H) payments to individual retirement
accounts and Keogh accounts excluded from
income for Federal income tax purposes; and
``(I) any other untaxed income and
benefits, such as Black Lung Benefits, Refugee
Assistance, or railroad retirement benefits, or
benefits received through participation in
employment and training activities under title
I of the Workforce Investment Act of 1998 (29
U.S.C. 2801 et seq.).
``(2) The term `untaxed income and benefits' shall
not include the amount of additional child tax credit
claimed for Federal income tax purposes.'';
(3) in subsection (d)--
(A) by redesignating paragraphs (1), (2),
(3) through (6), and (7) as subparagraphs (A),
(B), (D) through (G), and (I), respectively,
and indenting appropriately;
(B) by striking ``The term'' and inserting
the following:
``(1) Definition.--The term'';
(C) by striking subparagraph (B) (as
redesignated by subparagraph (A)) and inserting
the following:
``(B) is an orphan, in foster care, or a
ward of the court, at any time when the
individual is 13 years of age or older;
``(C) is an emancipated minor or is in
legal guardianship as determined by a court of
competent jurisdiction in the individual's
State of legal residence;'';
(D) in subparagraph (G) (as redesignated by
subparagraph (A)), by striking ``or'' after the
semicolon;
(E) by inserting after subparagraph (G) (as
redesignated by subparagraph (A)) the
following:
``(H) has been verified during the school
year in which the application is submitted as
either an unaccompanied youth who is a homeless
child or youth (as such terms are defined in
section 725 of the McKinney-Vento Homeless
Assistance Act), or as unaccompanied, at risk
of homelessness, and self-supporting, by--
``(i) a local educational agency
homeless liaison, designated pursuant
to section 722(g)(1)(J)(ii) of the
McKinney-Vento Homeless Assistance Act;
``(ii) the director of a program
funded under the Runaway and Homeless
Youth Act or a designee of the
director;
``(iii) the director of a program
funded under subtitle B of title IV of
the McKinney-Vento Homeless Assistance
Act (relating to emergency shelter
grants) or a designee of the director;
or
``(iv) a financial aid
administrator; or''; and
(F) by adding at the end the following:
``(2) Simplifying the dependency override
process.--A financial aid administrator may make a
determination of independence under paragraph (1)(I)
based upon a documented determination of independence
that was previously made by another financial aid
administrator under such paragraph in the same award
year.'';
(4) in subsection (e)--
(A) in paragraph (3), by striking ``and''
after the semicolon;
(B) in paragraph (4), by striking the
period at the end and inserting ``; and''; and
(C) by adding at the end the following:
``(5) special combat pay.'';
(5) in subsection (f), by striking paragraph (3)
and inserting the following:
``(3) A qualified education benefit shall be
considered an asset of--
``(A) the student if the student is an
independent student; or
``(B) the parent if the student is a
dependent student, regardless of whether the
owner of the account is the student or the
parent.'';
(6) in subsection (j)--
(A) in paragraph (2), by inserting ``, or a
distribution that is not includable in gross
income under section 529 of such Code, under
another prepaid tuition plan offered by a
State, or under a Coverdell education savings
account under section 530 of such Code,'' after
``1986''; and
(B) by adding at the end the following:
``(4) Notwithstanding paragraph (1), special combat
pay shall not be treated as estimated financial
assistance for purposes of section 471(3).''; and
(7) by adding at the end the following:
``(n) Special Combat Pay.--The term `special combat pay'
means pay received by a member of the Armed Forces because of
exposure to a hazardous situation.''.
(b) Effective Date.--The amendments made by this section
shall be effective on July 1, 2009.
TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM
SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM.
Title IV (20 U.S.C. 1070 et seq.) is further amended by
adding at the end the following:
``PART I--COMPETITIVE LOAN AUCTION PILOT PROGRAM
``SEC. 499. COMPETITIVE LOAN AUCTION PILOT PROGRAM.
``(a) Definitions.--In this section:
``(1) Eligible federal plus loan.--The term
`eligible Federal PLUS Loan' means a loan described in
section 428B made to a parent of a dependent student
who is a new borrower on or after July 1, 2009.
``(2) Eligible lender.--The term `eligible lender'
has the meaning given the term in section 435.
``(b) Pilot Program.--The Secretary shall carry out a pilot
program under which the Secretary establishes a mechanism for
an auction of eligible Federal PLUS Loans in accordance with
this subsection. The pilot program shall meet the following
requirements:
``(1) Planning and implementation.--During the
period beginning on the date of enactment of this
section and ending on June 30, 2009, the Secretary
shall plan and implement the pilot program under this
subsection. During the planning and implementation, the
Secretary shall consult with other Federal agencies
with knowledge of, and experience with, auction
programs, including the Federal Communication
Commission and the Department of the Treasury.
``(2) Origination and disbursement; applicability
of section 428b.--Beginning on July 1, 2009, the
Secretary shall arrange for the origination and
disbursement of all eligible Federal PLUS Loans in
accordance with the provisions of this subsection and
the provisions of section 428B that are not
inconsistent with this subsection.
``(3) Loan origination mechanism.--The Secretary
shall establish a loan origination auction mechanism
that meets the following requirements:
``(A) Auction for each state.--The
Secretary administers an auction under this
paragraph for each State, under which eligible
lenders compete to originate eligible Federal
PLUS Loans under this paragraph at all
institutions of higher education within such
State.
``(B) Prequalification process.--The
Secretary establishes a prequalification
process for eligible lenders desiring to
participate in an auction under this paragraph
that contains, at a minimum--
``(i) a set of borrower benefits
and servicing requirements each
eligible lender shall meet in order to
participate in such an auction; and
``(ii) an assessment of each such
eligible lender's capacity, including
capital capacity, to participate
effectively.
``(C) Timing and origination.--Each State
auction takes place every 2 years, and the
eligible lenders with the winning bids for the
State are the only eligible lenders permitted
to originate eligible Federal PLUS Loans made
under this paragraph for the cohort of students
at the institutions of higher education within
the State until the students graduate from or
leave the institutions of higher education.
``(D) Bids.--Each eligible lender's bid
consists of the amount of the special allowance
payment (after the application of section
438(b)(2)(I)(v)) the eligible lender proposes
to accept from the Secretary with respect to
the eligible Federal PLUS Loans made under this
paragraph in lieu of the amount determined
under section 438(b)(2)(I).
``(E) Maximum bid.--The maximum bid
allowable under this paragraph shall not exceed
the amount of the special allowance payable on
eligible Federal PLUS Loans made under this
paragraph computed under section 438(b)(2)(I)
(other than clauses (ii), (iii), (iv), and (vi)
of such section), except that for purposes of
the computation under this subparagraph,
section 438(b)(2)(I)(i)(III) shall be applied
by substituting `1.79 percent' for `2.34
percent'.
``(F) Winning bids.--The winning bids for
each State auction shall be the 2 bids
containing the lowest and the second lowest
proposed special allowance payments, subject to
subparagraph (E).
``(G) Agreement with secretary.--Each
eligible lender having a winning bid under
subparagraph (F) enters into an agreement with
the Secretary under which the eligible lender--
``(i) agrees to originate eligible
Federal PLUS Loans under this paragraph
to each borrower who--
``(I) seeks an eligible
Federal PLUS Loan under this
paragraph to enable a dependent
student to attend an
institution of higher education
within the State;
``(II) is eligible for an
eligible Federal PLUS Loan; and
``(III) elects to borrow
from the eligible lender; and
``(ii) agrees to accept a special
allowance payment (after the
application of section 438(b)(2)(I)(v))
from the Secretary with respect to the
eligible Federal PLUS Loans originated
under clause (i) in the amount proposed
in the second lowest winning bid
described in subparagraph (F) for the
applicable State auction.
``(H) Sealed bids; confidentiality.--All
bids are sealed and the Secretary keeps the
bids confidential, including following the
announcement of the winning bids.
``(I) Eligible lender of last resort.--
``(i) In general.--In the event
that there is no winning bid under
subparagraph (F), the students at the
institutions of higher education within
the State that was the subject of the
auction shall be served by an eligible
lender of last resort, as determined by
the Secretary.
``(ii) Determination of eligible
lender of last resort.--Prior to the
start of any auction under this
paragraph, eligible lenders that desire
to serve as an eligible lender of last
resort shall submit an application to
the Secretary at such time and in such
manner as the Secretary may determine.
Such application shall include an
assurance that the eligible lender will
meet the prequalification requirements
described in subparagraph (B).
``(iii) Geographic location.--The
Secretary shall identify an eligible
lender of last resort for each State.
``(iv) Notification timing.--The
Secretary shall not identify any
eligible lender of last resort until
after the announcement of all the
winning bids for a State auction for
any year.
``(v) Maximum special allowance.--
The Secretary is authorized to set a
special allowance payment that shall be
payable to a lender of last resort for
a State under this subparagraph, which
special allowance payment shall be kept
confidential, including following the
announcement of winning bids. The
Secretary shall set such special
allowance payment so that it incurs the
lowest possible cost to the Federal
Government, taking into consideration
the lowest bid that was submitted in an
auction for such State and the lowest
bid submitted in a similar State, as
determined by the Secretary.
``(J) Guarantee against losses.--The
Secretary guarantees the eligible Federal PLUS
Loans made under this paragraph against losses
resulting from the default of a parent borrower
in an amount equal to 99 percent of the unpaid
principal and interest due on the loan.
``(K) Loan fees.--The Secretary shall not
collect a loan fee under section 438(d) with
respect to an eligible Federal Plus Loan
originated under this paragraph.
``(L) Consolidation.--
``(i) In general.--An eligible
lender who is permitted to originate
eligible Federal PLUS Loans for a
borrower under this paragraph shall
have the option to consolidate such
loans into 1 loan.
``(ii) Notification.--In the event
a borrower with eligible Federal PLUS
Loans made under this paragraph wishes
to consolidate the loans, the borrower
shall notify the eligible lender who
originated the loans under this
paragraph.
``(iii) Limitation on eligible
lender option to consolidate.--The
option described in clause (i) shall
not apply if--
``(I) the borrower includes
in the notification in clause
(ii) verification of
consolidation terms and
conditions offered by an
eligible lender other than the
eligible lender described in
clause (i); and
``(II) not later than 10
days after receiving such
notification from the borrower,
the eligible lender described
in clause (i) does not agree to
match such terms and
conditions, or provide more
favorable terms and conditions
to such borrower than the
offered terms and conditions
described in subclause (I).
``(iv) Consolidation of additional
loans.--If a borrower has a Federal
Direct PLUS Loan or a loan made on
behalf of a dependent student under
section 428B and seeks to consolidate
such loan with an eligible Federal PLUS
Loan made under this paragraph, then
the eligible lender that originated the
borrower's loan under this paragraph
may include in the consolidation under
this subparagraph a Federal Direct PLUS
Loan or a loan made on behalf of a
dependent student under section 428B,
but only if--
``(I) in the case of a
Federal Direct PLUS Loan, the
eligible lender agrees, not
later than 10 days after the
borrower requests such
consolidation from the lender,
to match the consolidation
terms and conditions that would
otherwise be available to the
borrower if the borrower
consolidated such loans in the
loan program under part D; or
``(II) in the case of a
loan made on behalf of a
dependent student under section
428B, the eligible lender
agrees, not later than 10 days
after the borrower requests
such consolidation from the
lender, to match the
consolidation terms and
conditions offered by an
eligible lender other than the
eligible lender that originated
the borrower's loans under this
paragraph.
``(v) Special allowance on
consolidation loans that include loans
made under this paragraph.--The
applicable special allowance payment
for loans consolidated under this
paragraph shall be equal to the lesser
of--
``(I) the weighted average
of the special allowance
payment on such loans, except
that in calculating such
weighted average the Secretary
shall exclude any Federal
Direct PLUS Loan included in
the consolidation; or
``(II) the result of--
``(aa) the average
of the bond equivalent
rates of the quotes of
the 3-month commercial
paper (financial) rates
in effect for each of
the days in such
quarter as reported by
the Federal Reserve in
Publication H-15 (or
its successor) for such
3-month period; plus
``(bb) 1.59
percent.
``(vi) Interest payment rebate
fee.--Any loan under section 428C
consolidated under this paragraph shall
not be subject to the interest payment
rebate fee under section 428C(f).''.
TITLE VIII--PARTNERSHIP GRANTS
SEC. 801. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.
Title VII (20 U.S.C. 1133 et seq.) is amended by adding at
the end the following new part:
``PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM
``SEC. 771. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.
``(a) Authorization and Appropriation.--There are
authorized to be appropriated, and there are appropriated, to
carry out this section $66,000,000 for each of the fiscal years
2008 and 2009. The authority to award grants under this section
shall expire at the end of fiscal year 2009.
``(b) Program Authorized.--
``(1) Grants authorized.--From amounts appropriated
under subsection (a), the Secretary shall award grants,
from allotments under subsection (c), to States (and to
philanthropic organizations, as appropriate under
paragraph (3)) having applications approved under
subsection (d), to enable the State (or philanthropic
organization) to pay the Federal share of the costs of
carrying out the activities and services described in
subsection (f).
``(2) Federal share; non-federal share.--
``(A) Federal share.--The amount of the
Federal share under this section for a fiscal
year shall be equal to \2/3\ of the costs of
the activities and services described in
subsection (f) that are carried out under the
grant.
``(B) Non-federal share.--The amount of the
non-Federal share under this section shall be
equal to \1/3\ of the costs of the activities
and services described in subsection (f). The
non-Federal share may be in cash or in-kind,
and may be provided from State resources,
contributions from private organizations, or
both.
``(3) Reduction for failure to pay non-federal
share.--If a State fails to provide the full non-
Federal share required under this subsection, the
Secretary shall reduce the amount of the grant payment
under this section proportionately, and may award the
proportionate reduction amount of the grant directly to
a philanthropic organization, as defined in subsection
(i), to carry out this section.
``(4) Temporary ineligibility for subsequent
payments.--
``(A) In general.--The Secretary shall
determine a grantee to be temporarily
ineligible to receive a grant payment under
this section for a fiscal year if--
``(i) the grantee fails to submit
an annual report pursuant to subsection
(h) for the preceding fiscal year; or
``(ii) the Secretary determines,
based on information in such annual
report, that the grantee is not
effectively meeting the conditions
described under subsection (g) and the
goals of the application under
subsection (d).
``(B) Reinstatement.--If the Secretary
determines that a grantee is ineligible under
subparagraph (A), the Secretary may enter into
an agreement with the grantee setting forth the
terms and conditions under which the grantee
may regain eligibility to receive payments
under this section.
``(c) Determination of Allotment.--
``(1) Amount of allotment.--Subject to paragraph
(2), in making grant payments to grantees under this
section, the allotment to each grantee for a fiscal
year shall be equal to the sum of--
``(A) the amount that bears the same
relation to 50 percent of the amount
appropriated under subsection (a) for such
fiscal year as the number of residents in the
State aged 5 through 17 who are living below
the poverty line applicable to the resident's
family size (as determined under section 673(2)
of the Community Service Block Grant Act) bears
to the total number of such residents in all
States; and
``(B) the amount that bears the same
relation to 50 percent of the amount
appropriated under subsection (a) for such
fiscal year as the number of residents in the
State aged 15 through 44 who are living below
the poverty line applicable to the individual's
family size (as determined under section 673(2)
of the Community Service Block Grant Act) bears
to the total number of such residents in all
States.
``(2) Minimum amount.--The allotment for each State
under this section for a fiscal year shall not be an
amount that is less than 0.5 percent of the total
amount appropriated under subsection (a) for such
fiscal year.
``(d) Submission and Contents of Application.--
``(1) In general.--For each fiscal year for which a
grantee desires a grant payment under subsection (b),
the State agency with jurisdiction over higher
education, or another agency designated by the Governor
or chief executive of the State to administer the
program under this section, or a philanthropic
organization, in accordance with subsection (b)(3),
shall submit an application to the Secretary at such
time, in such manner, and containing the information
described in paragraph (2).
``(2) Application.--An application submitted under
paragraph (1) shall include the following:
``(A) A description of the grantee's
capacity to administer the grant under this
section and report annually to the Secretary on
the activities and services described in
subsection (f).
``(B) A description of the grantee's plan
for using the grant funds to meet the
requirements of subsections (f) and (g),
including plans for how the grantee will make
special efforts to--
``(i) provide such benefits to
students in the State that are
underrepresented in postsecondary
education; or
``(ii) in the case of a
philanthropic organization that
operates in more than one State,
provide benefits to such students in
each such State for which the
philanthropic organization is receiving
grant funds under this section.
``(C) A description of how the grantee will
provide or coordinate the provision of the non-
Federal share from State resources or private
contributions.
``(D) A description of--
``(i) the structure that the
grantee has in place to administer the
activities and services described in
subsection (f); or
``(ii) the plan to develop such
administrative capacity.
``(e) Subgrants to Nonprofit Organizations.--A State
receiving a payment under this section may elect to make a
subgrant to one or more nonprofit organizations in the State,
including an eligible not-for-profit holder (as defined in
section 435(p) of the Higher Education Act of 1965, as amended
by section 303 of this Act), or a partnership of such
organizations, to carry out activities or services described in
subsection (f), if the nonprofit organization or partnership--
``(1) was in existence on the day before the date
of the enactment of this Act; and
``(2) as of such day, was participating in
activities and services related to increasing access to
higher education, such as those activities and services
described in subsection (f).
``(f) Allowable Uses.--
``(1) In general.--Subject to paragraph (3), a
grantee may use a grant payment under this section only
for the following activities and services, pursuant to
the conditions under subsection (g):
``(A) Information for students and families
regarding--
``(i) the benefits of a
postsecondary education;
``(ii) postsecondary education
opportunities;
``(iii) planning for postsecondary
education; and
``(iv) career preparation.
``(B) Information on financing options for
postsecondary education and activities that
promote financial literacy and debt management
among students and families.
``(C) Outreach activities for students who
may be at risk of not enrolling in or
completing postsecondary education.
``(D) Assistance in completion of the Free
Application for Federal Student Aid or other
common financial reporting form under section
483(a) of the Higher Education Act of 1965.
``(E) Need-based grant aid for students.
``(F) Professional development for guidance
counselors at middle schools and secondary
schools, and financial aid administrators and
college admissions counselors at institutions
of higher education, to improve such
individuals' capacity to assist students and
parents with--
``(i) understanding--
``(I) entrance requirements
for admission to institutions
of higher education; and
``(II) State eligibility
requirements for Academic
Competitiveness Grants or
National SMART Grants under
section 401A, and other
financial assistance that is
dependent upon a student's
coursework;
``(ii) applying to institutions of
higher education;
``(iii) applying for Federal
student financial assistance and other
State, local, and private student
financial assistance and scholarships;
``(iv) activities that increase
students' ability to successfully
complete the coursework required for a
postsecondary degree, including
activities such as tutoring or
mentoring; and
``(v) activities to improve
secondary school students' preparedness
for postsecondary entrance
examinations.
``(G) Student loan cancellation or
repayment (as applicable), or interest rate
reductions, for borrowers who are employed in a
high-need geographical area or a high-need
profession in the State, as determined by the
State.
``(2) Prohibited uses.--Funds made available under
this section shall not be used to promote any lender's
loans.
``(3) Use of funds for administrative purposes.--A
grantee may use not more than 6 percent of the total
amount of the sum of the Federal share provided under
this section and the non-Federal share required under
this section for administrative purposes relating to
the grant under this section.
``(g) Special Conditions.--
``(1) Availability to students and families.--A
grantee receiving a grant payment under this section
shall--
``(A) make the activities and services
described in subparagraphs (A) through (F) of
subsection (f)(1) that are funded under the
payment available to all qualifying students
and families in the State;
``(B) allow students and families to
participate in the activities and services
without regard to--
``(i) the postsecondary institution
in which the student enrolls;
``(ii) the type of student loan the
student receives;
``(iii) the servicer of such loan;
or
``(iv) the student's academic
performance;
``(C) not charge any student or parent a
fee or additional charge to participate in the
activities or services; and
``(D) in the case of an activity providing
grant aid, not require a student to meet any
condition other than eligibility for Federal
financial assistance under title IV of the
Higher Education Act of 1965, except as
provided for in the loan cancellation or
repayment or interest rate reductions described
in subsection (f)(1)(G).
``(2) Priority.--A grantee receiving a grant
payment under this section shall, in carrying out any
activity or service described in subsection (f)(1) with
the grant funds, prioritize students and families who
are living below the poverty line applicable to the
individual's family size (as determined under section
673(2) of the Community Service Block Grant Act).
``(3) Disclosures.--
``(A) Organizational disclosures.--In the
case of a State that has chosen to make a
payment to an eligible not-for-profit holder in
the State in accordance with subsection (e),
the holder shall clearly and prominently
indicate the name of the holder and the nature
of the holder's work in connection with any of
the activities carried out, or any information
or services provided, with such funds.
``(B) Informational disclosures.--Any
information about financing options for higher
education provided through an activity or
service funded under this section shall--
``(i) include information to
students and the students' parents of
the availability of Federal, State,
local, institutional, and other grants
and loans for postsecondary education;
and
``(ii) present information on
financial assistance for postsecondary
education that is not provided under
title IV of the Higher Education Act of
1965 in a manner that is clearly
distinct from information on student
financial assistance under such title.
``(4) Coordination.--A grantee receiving a grant
payment under this section shall attempt to coordinate
the activities carried out with the grant payment with
any existing activities that are similar to such
activities, and with any other entities that support
the existing activities in the State.
``(h) Report.--A grantee receiving a payment under this
section shall prepare and submit an annual report to the
Secretary on the activities and services carried out under this
section, and on the implementation of such activities and
services. The report shall include--
``(1) each activity or service that was provided to
students and families over the course of the year;
``(2) the cost of providing each activity or
service;
``(3) the number, and percentage, if feasible and
applicable, of students who received each activity or
service; and
``(4) the total contributions from private
organizations included in the grantee's non-Federal
share for the fiscal year.
``(i) Definitions.--In this section:
``(1) Philanthropic organization.--The term
`philanthropic organization' means a non-profit
organization--
``(A) that does not receive funds under
title IV of the Higher Education Act of 1965 or
under the Elementary and Secondary Education
Act of 1965;
``(B) that is not a local educational
agency or an institution of higher education;
``(C) that has a demonstrated record of
dispersing grant aid to underserved populations
to ensure access to, and participation in,
higher education;
``(D) that is affiliated with eligible
consortia (as defined in paragraph (2)) to
carry out this section; and
``(E) the primary purpose of which is to
provide financial aid and support services to
students from underrepresented populations to
increase the number of such students who enter
and remain in college.
``(2) Eligible consortia.--The term `eligible
consortia' means a partnership of 2 or more entities
that have agreed to work together to carry out this
section that--
``(A) includes--
``(i) a philanthropic organization,
which serves as the manager of the
consortia;
``(ii) a State that demonstrates a
commitment to ensuring the creation of
a Statewide system to address the
issues of early intervention and
financial support for eligible students
to enter and remain in college; and
``(iii) at the discretion of the
philanthropic organization described in
clause (i), additional partners,
including other non-profit
organizations, government entities
(including local municipalities, school
districts, cities, and counties),
institutions of higher education, and
other public or private programs that
provide mentoring or outreach programs;
and
``(B) conducts activities to assist
students with entering and remaining in
college, which may include--
``(i) providing need-based grants
to students;
``(ii) providing early notification
to low-income students of their
potential eligibility for Federal
financial aid (which may include
assisting students and families with
filling out FAFSA forms), as well as
other financial aid and other support
available from the eligible consortia;
``(iii) encouraging increased
student participation in higher
education through mentoring or outreach
programs; and
``(iv) conducting marketing and
outreach efforts that are designed to--
``(I) encourage full
participation of students in
the activities of the consortia
that carry out this section;
and
``(II) provide the
communities impacted by the
activities of the consortia
with a general knowledge about
the efforts of the consortia.
``(3) Grantee.--The term `grantee' means--
``(A) a State awarded a grant under this
section; or
``(B) with respect to such a State that has
failed to meet the non-Federal share
requirement of subsection (b), a philanthropic
organization awarded the proportionate
reduction amount of such a grant under
subsection (b)(3).''.
SEC. 802. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND MINORITY-SERVING INSTITUTIONS.
Title IV (20 U.S.C. 1070 et seq.) is further amended by
adding after part I (as added by section 701 of this Act) the
following new part:
``PART J--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND OTHER MINORITY-SERVING INSTITUTIONS
``SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND OTHER MINORITY-SERVING INSTITUTIONS.
``(a) Eligible Institution.--An institution of higher
education is eligible to receive funds from the amounts made
available under this section if such institution is--
``(1) a part B institution (as defined in section
322 (20 U.S.C. 1061));
``(2) a Hispanic-serving institution (as defined in
section 502 (20 U.S.C. 1101a));
``(3) a Tribal College or University (as defined in
section 316 (20 U.S.C. 1059c));
``(4) an Alaska Native-serving institution or a
Native Hawaiian-serving institution (as defined in
section 317(b) (20 U.S.C. 1059d(b)));
``(5) a Predominantly Black Institution (as defined
in subsection (c));
``(6) an Asian American and Native American Pacific
Islander-serving institution (as defined in subsection
(c)); or
``(7) a Native American-serving nontribal
institution (as defined in subsection (c)).
``(b) New Investment of Funds.--
``(1) In general.--There shall be available to the
Secretary to carry out this section, from funds not
otherwise appropriated, $255,000,000 for each of the
fiscal years 2008 and 2009. The authority to award
grants under this section shall expire at the end of
fiscal year 2009.
``(2) Allocation and allotment.--
``(A) In general.--Of the amounts made
available under paragraph (1) for each fiscal
year--
``(i) $100,000,000 shall be
available for allocation under
subparagraph (B);
``(ii) $100,000,000 shall be
available for allocation under
subparagraph (C); and
``(iii) $55,000,000 shall be
available for allocation under
subparagraph (D).
``(B) HSI stem and articulation programs.--
The amount made available for allocation under
this subparagraph by subparagraph (A)(i) for
any fiscal year shall be available for
Hispanic-serving Institutions for activities
described in section 503, with a priority given
to applications that propose--
``(i) to increase the number of
Hispanic and other low income students
attaining degrees in the fields of
science, technology, engineering, or
mathematics; and
``(ii) to develop model transfer
and articulation agreements between 2-
year Hispanic-serving institutions and
4-year institutions in such fields.
``(C) Allocation and allotment hbcus and
pbis.--From the amount made available for
allocation under this subparagraph by
subparagraph (A)(ii) for any fiscal year--
``(i) 85 percent shall be available
to eligible institutions described in
subsection (a)(1) and shall be made
available as grants under section 323
and allotted among such institutions
under section 324, treating such
amount, plus the amount appropriated
for such fiscal year in a regular or
supplemental appropriation Act to carry
out part B of title III, as the amount
appropriated to carry out part B of
title III for purposes of allotments
under section 324, for use by such
institutions with a priority for--
``(I) activities described
in paragraphs (1), (2), (4),
(5), and (10) of section
323(a); and
``(II) other activities,
consistent with the
institution's comprehensive
plan and designed to increase
the institution's capacity to
prepare students for careers in
the physical or natural
sciences, mathematics, computer
science or information
technology or sciences,
engineering, language
instruction in the less-
commonly taught languages or
international affairs, or
nursing or allied health
professions; and
``(ii) 15 percent shall be
available to eligible institutions
described in subsection (a)(5) and
shall be available for a competitive
grant program to award 25 grants of
$600,000 annually for programs in any
of the following areas:
``(I) science, technology,
engineering, or mathematics
(STEM);
``(II) health education;
``(III)
internationalization or
globalization;
``(IV) teacher preparation;
or
``(V) improving educational
outcomes of African American
males.
``(D) Allocation and allotment to other
minority-serving institutions.--From the amount
made available for allocation under this
subparagraph by subparagraph (A)(iii) for any
fiscal year--
``(i) $30,000,000 for such fiscal
year shall be available to eligible
institutions described in subsection
(a)(3) and shall be made available as
grants under section 316, treating such
$30,000,000 as part of the amount
appropriated for such fiscal year in a
regular or supplemental appropriation
Act to carry out such section, and
using such $30,000,000 for purposes
described in subsection (c) of such
section;
``(ii) $15,000,000 for such fiscal
year shall be available to eligible
institutions described in subsection
(a)(4) and shall be made available as
grants under section 317, treating such
$15,000,000 as part of the amount
appropriated for such fiscal year in a
regular or supplemental appropriation
Act to carry out such section and using
such $15,000,000 for purposes described
in subsection (c) of such section;
``(iii) $5,000,000 for such fiscal
year shall be available to eligible
institutions described in subsection
(a)(6) for activities described in
section 311(c); and
``(iv) $5,000,000 for such fiscal
year shall be available to eligible
institutions described in subsection
(a)(7)--
``(I) to plan, develop,
undertake, and carry out
activities to improve and
expand such institutions'
capacity to serve Native
Americans, which may include--
``(aa) the
purchase, rental, or
lease of scientific or
laboratory equipment
for educational
purposes, including
instructional and
research purposes;
``(bb) renovation
and improvement in
classroom, library,
laboratory, and other
instructional
facilities;
``(cc) support of
faculty exchanges,
faculty development,
and faculty fellowships
to assist faculty in
attaining advanced
degrees in the
faculty's field of
instruction;
``(dd) curriculum
development and
academic instruction;
``(ee) the purchase
of library books,
periodicals, microfilm,
and other educational
materials;
``(ff) funds and
administrative
management, and
acquisition of
equipment for use in
strengthening funds
management;
``(gg) the joint
use of facilities such
as laboratories and
libraries; and
``(hh) academic
tutoring and counseling
programs and student
support services; and
``(II) to which the
Secretary, to the extent
possible and consistent with a
competitive process under which
such grants are awarded,
allocates funds under this
clause to ensure maximum and
equitable distribution among
all such eligible institutions.
``(c) Definitions.--
``(1) Asian american.--The term `Asian American'
has the meaning given the term `Asian' in the Office of
Management and Budget's Standards for Maintaining,
Collecting, and Presenting Federal Data on Race and
Ethnicity as published on October 30, 1997 (62 Fed.
Reg. 58789).
``(2) Asian american and native american pacific
islander-serving institution.--The term `Asian American
and Native American Pacific Islander-serving
institution' means an institution of higher education
that--
``(A) is an eligible institution under
section 312(b); and
``(B) at the time of application, has an
enrollment of undergraduate students that is at
least 10 percent Asian American and Native
American Pacific Islander students.
``(3) Enrollment of needy students.--The term
`enrollment of needy students' means the enrollment at
an institution of higher education with respect to
which not less than 50 percent of the undergraduate
students enrolled in an academic program leading to a
degree--
``(A) in the second fiscal year preceding
the fiscal year for which the determination is
made, were Federal Pell Grant recipients for
such year;
``(B) come from families that receive
benefits under a means-tested Federal benefit
program (as defined in paragraph (5));
``(C) attended a public or nonprofit
private secondary school--
``(i) that is in the school
district of a local educational agency
that was eligible for assistance under
part A of title I of the Elementary and
Secondary Education Act of 1965 for any
year during which the student attended
such secondary school; and
``(ii) which for the purpose of
this paragraph and for that year was
determined by the Secretary (pursuant
to regulations and after consultation
with the State educational agency of
the State in which the school is
located) to be a school in which the
enrollment of children counted under a
measure of poverty described in section
1113(a)(5) of such Act exceeds 30
percent of the total enrollment of such
school; or
``(D) are first-generation college students
(as that term is defined in section 402A(g)),
and a majority of such first-generation college
students are low-income individuals.
``(4) Low-income individual.--The term `low-income
individual' has the meaning given such term in section
402A(g).
``(5) Means-tested federal benefit program.--The
term `means-tested Federal benefit program' means a
program of the Federal Government, other than a program
under title IV, in which eligibility for the programs'
benefits or the amount of such benefits are determined
on the basis of income or resources of the individual
or family seeking the benefit.
``(6) Native american.--The term `Native American'
means an individual who is of a tribe, people, or
culture that is indigenous to the United States.
``(7) Native american pacific islander.--The term
`Native American Pacific Islander' means any descendant
of the aboriginal people of any island in the Pacific
Ocean that is a territory or possession of the United
States.
``(8) Native american-serving nontribal
institution.--The term `Native American-serving
nontribal institution' means an institution of higher
education that--
``(A) at the time of application--
``(i) has an enrollment of
undergraduate students that is not less
than 10 percent Native American
students; and
``(ii) is not a Tribal College or
University (as defined in section 316);
and
``(B) submits to the Secretary such
enrollment data as may be necessary to
demonstrate that the institution is described
in subparagraph (A), along with such other
information and data as the Secretary may by
regulation require.
``(9) Predominantly black institution.--The term
`Predominantly Black institution' means an institution
of higher education that--
``(A) has an enrollment of needy students
as defined by paragraph (3);
``(B) has an average educational and
general expenditure which is low, per full-time
equivalent undergraduate student in comparison
with the average educational and general
expenditure per full-time equivalent
undergraduate student of institutions of higher
education that offer similar instruction,
except that the Secretary may apply the waiver
requirements described in section 392(b) to
this subparagraph in the same manner as the
Secretary applies the waiver requirements to
section 312(b)(1)(B);
``(C) has an enrollment of undergraduate
students--
``(i) that is at least 40 percent
Black American students;
``(ii) that is at least 1,000
undergraduate students;
``(iii) of which not less than 50
percent of the undergraduate students
enrolled at the institution are low-
income individuals or first-generation
college students (as that term is
defined in section 402A(g)); and
``(iv) of which not less than 50
percent of the undergraduate students
are enrolled in an educational program
leading to a bachelor's or associate's
degree that the institution is licensed
to award by the State in which the
institution is located;
``(D) is legally authorized to provide, and
provides within the State, an educational
program for which the institution of higher
education awards a bachelor's degree, or in the
case of a junior or community college, an
associate's degree;
``(E) is accredited by a nationally
recognized accrediting agency or association
determined by the Secretary to be a reliable
authority as to the quality of training
offered, or is, according to such an agency or
association, making reasonable progress toward
accreditation; and
``(F) is not receiving assistance under
part B of title III.''.
And the Senate agree to the same.
George Miller,
Robert E. Andrews,
Bobby Scott,
Ruben Hinojosa,
John F. Tierney,
David Wu,
Susan A. Davis,
Danny K. Davis,
Timothy Bishop,
Mazie K. Hirono,
Jason Altmire,
John Yarmuth,
Joe Courtney,
Managers on the Part of the House.
Ted Kennedy,
Chris Dodd,
Tom Harkin,
Barbara A. Mikulski,
Jeff Bingaman,
Patty Murray,
Jack Reed,
Hillary Rodham Clinton,
Barack Obama,
Bernard Sanders,
Sherrod Brown,
Michael B. Enzi,
Lamar Alexander,
Orrin G. Hatch,
Managers on the Part of the Senate.
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at
the conference on the disagreeing votes of the two Houses on
the amendment of the Senate to the bill (H.R. 2669), to provide
for reconciliation pursuant to section 601 of the concurrent
resolution on the budget for fiscal year 2008, submit the
following joint statement to the House and the Senate in
explanation of the effect of the action agreed upon by the
managers and recommended in the accompanying conference report:
The Senate amendment struck all of the House bill after
the enacting clause and inserted a substitute text.
The House recedes from its disagreement to the amendment
of the Senate with an amendment that is a substitute for the
House bill and the Senate amendment. The differences between
the House bill, the Senate amendment, and the substitute agreed
to in conference are noted below, except for clerical
corrections, conforming changes made necessary by agreements
reached by the conferees, and minor drafting and clarifying
changes.
SECTION 1. SHORT TITLE
The House bill's short title is the ``College Cost
Reduction Act.''
The Senate amendment provides that the Act may be cited
as the ``Higher Education Access Act of 2007'' and that, unless
otherwise indicated, references in the bill are made to the
Higher Education Act of 1965.
The House recedes with an amendment to provide a new
short title of the ``College Cost Reduction and Access Act.''
The Conferees adopt the Senate amendment as amended by the
House.
TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER
EDUCATION
SECTION 101. TUITION SENSITIVITY
The House bill (Sec. 101) eliminates the Pell grant
``tuition sensitivity'' provision that prevents low-income
students attending low-cost institutions, such as community
colleges, to benefit fully from the Pell Grant. Authorizes and
appropriates $5,000,000 for fiscal year 2008.
The Senate amendment (Sec. 101) also eliminates the Pell
grant ``tuition sensitivity'' provision and authorizes and
appropriates $5,000,000 for fiscal year 2008.
The House and the Senate recede with an amendment to
authorize and appropriate $11,000,000 for fiscal year 2008 to
ensure that all eligible students in award year 2007-2008
receive funding. The Conferees concur and adopt the amendment.
SECTION 102. MANDATORY PELL GRANT INCREASES
The House bill (Sec. 101) authorizes and appropriates new
mandatory funding to increase the maximum Pell grant award,
above the appropriated level, by: $200 in 2008-09; $200 in
2009-10; $300 in 2010-11; $500 in 2011-12; and $500 in 2012 and
each subsequent award year.
The Senate amendment (Sec. 102) creates ``Promise
grants''--a new grant program for low-income, Pell-eligible
students to be established in addition to the Pell grant
program. Promise grants shall be awarded in the same way Pell
grants are awarded, except that they shall be awarded only to
students who are already eligible for Pell grants. Grants shall
be awarded to those students with the greatest need, as
determined under Section 471. Grants awarded under this
subsection shall be used to supplement and not supplant other
Federal, State and institutional grant funds. The Senate
amendment authorizes and appropriates new mandatory funding to
increase the maximum Pell grant award, above the appropriated
level, by: $790 in 2008-09; $890 in 2009-10; $990 in 2010-11;
$1,090 in 2011-12; and $1,090 in 2012.
The House and Senate recede with an amendment that
provides new mandatory funding for Pell grants and makes the
following increases in the Pell maximum under current law:
$490 in 2008-2009 and 2009-2010;
$690 in 2010-2011 and 2011-2012; and
$1,090 in 2012-2013.
The Conferees concur and adopt the amendment as proposed
by both the House and the Senate. Combined with an appropriated
level of $4,310, as it is in current law, the maximum Pell
Grant award will reach $4,800 in the 2008-2009 academic year,
$4,800 in the 2009-2010 academic year, $5,000 in the 2010-2011
academic year, $5,000 in the 2011-2012 academic year, and
$5,400 in the 2012-2013 academic year.
The Conferees intend that in awarding the funds under
this section, the Secretary shall determine the universe of
students who are eligible to receive a Pell grant, without
regard to this section, and award grants under this section
only to such students. The Conferees further intend that the
allocated funds for all academic years be distributed in the
same manner as funds are awarded under the Pell grant program,
in accordance with the eligibility determination, needs
analysis formula and regulations used for the distribution of
Pell grant awards from discretionary funds. The Conferees
intend that students who receive a maximum Pell grant under the
discretionary maximum award level will be eligible to receive
the maximum award allowed under this section, and students who
receive Pell grants that are less than the maximum under the
discretionary funding would be eligible to receive grants under
this section proportionate to the size of the Pell grant the
student received under the discretionary funding level, in
accordance with the Pell grant formula.
The Conferees intend that the funding provided in this
section be used to supplement, and in no way supplant, current
or future discretionary funding for the Pell grant program or
increases in such funding.
SECTION 103. UPWARD BOUND
The House bill (Sec. 412) restricts the Secretary's use
of funds for the purposes of evaluating and selecting
participants of the Upward Bound program. The bill also
provides an additional $228 million to restore Upward Bound
funding to unfunded programs from the FY07 competition.
The Senate amendment contains no similar provision.
The Senate recedes with an amendment to strike the
provision that restricts the Secretary's use of funds for the
purposes of evaluating and selecting participants of the Upward
Bound Program. The Conferees adopt the provision in the House
bill as amended by the Senate.
SECTION 104. TEACH GRANTS
The House bill (Sec. 301) creates new TEACH Grants that
provide up-front pre-paid tuition assistance of $4,000/year
(with a maximum of $16,000) for high-achieving graduate and
undergraduate students who commit to teaching a high-need
subject in a high-need school for four years. Bonus grants are
provided to students who are enrolled in a qualified teacher
education program and teach in a science or mathematics field.
The Senate amendment contains no similar provision.
The Senate recedes with an amendment striking the bonus
grants in the House proposal. The Conferees adopt the provision
in the House bill as amended by the Senate.
The Conferees intend that the Department of Education may
operate this program through a pre-existing office, and does
not require the creation of a new office.
TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS
SECTION 201. INTEREST RATE REDUCTIONS
The House bill (Sec. 111) reduces interest rates on
subsidized Stafford loans for undergraduates to 6.12 percent on
July 1, 2008; 5.44 percent on July 1, 2009; 4.76 percent on
July 1, 2010; 4.08 percent on July 1, 2011 and 3.4 percent on
July 1, 2012.
The Senate amendment contains no similar provision.
The Senate recedes with an amendment, to reduce interest
rates on subsidized Stafford loans for undergraduates to 6.0
percent on July 1, 2008; 5.6 percent on July 1, 2009; 4.5
percent on July 1, 2010; and 3.4 percent on July 1, 2011. The
Conferees adopt the provision in the House bill as amended by
the Senate.
SECTION 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED
FORCES
The Senate amendment (Sec. 202) eliminates a three-year
limitation on the period for which certain members of the armed
forces may receive deferments on their student loan payments.
It allows deferments until 180 days after such member is
demobilized. It also provides that such benefits are available
regardless of when the student loan was originated. As in
current law, members of the armed forces who qualify for this
deferment are limited to those who are serving on active duty
or performing qualifying National Guard duty during a war or
other military operation in a national emergency.
The House bill contains no similar provision.
The House recedes.
SECTION 203. INCOME-BASED REPAYMENT
The House bill (Sec. 133) builds on the tenets of the
Income Contingent Repayment program by guaranteeing that all
borrowers' loan payments will be limited to 15 percent of their
discretionary income, or 15 percent of the amount by which a
borrower's adjusted gross income exceeds 150 percent of the
poverty line, divided by 12. Under this section, unpaid
interest and principal are capitalized and any outstanding loan
balance is forgiven after 20 years of repayment.
In the Senate amendment, unpaid interest on subsidized
loans is paid or forgiven by the Secretary and outstanding loan
balance is forgiven after 25 years of repayment. The amendment
provides that borrowers repaying loans according to income-
contingent repayment or income-sensitive repayment plans prior
to enactment of this Act shall have the option of continuing to
repay under the terms and conditions of those programs as they
existed prior to enactment of this Act or may elect to use the
income-based repayment plan created by this section.
The House and Senate recede with an amendment adopting
the structure of the House proposal, and requiring the
Secretary to pay any unpaid interest on subsidized loans for up
to three years. The amendment also provides for loan
forgiveness of unpaid principal balances after 25 years of
repayment in the income-based repayment program. The Conferees
adopt the provision as proposed by both the House and the
Senate.
SECTION 204. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY
The House bill (Sec. 137) allows active duty members of
the armed services, including members of the National Guard or
other reserve component of the armed forces who were enrolled
in college or left college within six months of deployment to
receive extended repayment on loan terms of up to 13 months
upon return from active duty.
The Senate amendment contains no similar provision.
The Senate recedes.
SECTION 205. MAXIMUM REPAYMENT PERIOD
The House bill (Sec. 136) amends provisions concerning
the maximum repayment period in the income-contingent repayment
program.
The Senate amendment contains no similar provision.
The Senate recedes.
TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM
SECTION 301. GUARANTY AGENCY COLLECTION RETENTION
The House bill (Sec. 116) reduces the percentage which
guaranty agencies shall be allowed to retain from payments made
through collections on defaulted loans from 23 percent to 16
percent.
The Senate amendment (Sec. 302) contains the same
provision.
The Conferees adopt the language of the identical
provisions in both the House and Senate.
SECTION 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS
The House bill (Sec. 114) eliminates the provision that
allows lenders designated as ``exceptional performers'' to
receive 99 percent insurance on defaulted loans if they are in
full compliance with due diligence requirements.
The Senate amendment (Sec. 303) also eliminates the
provision that allows lenders designated as ``exceptional
performers.'' The Senate amendment makes the change effective
October 1, 2007, except that lenders designated as exceptional
performers as of that date shall be allowed to continue such
designation for the remainder of the year for which the
designation was made.
The House recedes.
In a July 26, 2007 report concerning the exceptional
performer designation, the Government Accountability Office
(GAO) found that the designation has not materially affected
loan servicing, and that default claims have not declined as a
result. In addition, GAO found that providing an extra 2
percent reimbursement rate for default claims serviced by
exceptional performers is not in the fiscal interest of the
federal government, because lenders are being paid a premium to
perform due diligence activities that are already required of
all lenders. Accordingly, GAO recommended that the exceptional
performer designation be eliminated. The Conferees concur with
the GAO recommendation and adopt the Senate amendment.
SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE
The House bill (Sec. 115) reduces the insurance rate from
97 percent to 95 percent of the unpaid principal of such loans.
The Senate amendment (Sec. 301) maintains the level of
insurance paid by the Federal government on defaulted loans
guaranteed under title IV, currently set at 97 percent.
The House recedes with an amendment to reduce the lender
insurance rate in 2013 to 95 percent. The Conferees adopt the
Senate amendment as amended by the House.
SECTION 304. DEFINITIONS
Economic hardship
The House bill (Sec. 134) changes the definition of
economic hardship to create a uniform definition that applies
to all borrowers, based on income less than 150 percent of the
poverty level for the borrower's family size.
The Senate amendment (Sec. 304) changes part of the
definition of economic hardship to income less than 150 percent
of the poverty level for the borrower's family size.
The Senate recedes.
Eligible not-for-profit holder
The House bill (Sec. 118) defines a not-for-profit holder
for the purposes of determining which lenders qualify for the
elimination of the origination fee. As such not-for-profit
holders are defined as any holder that is a unit of a state or
local government or a nonprofit private entity; and is not
owned in whole or in part by, or controlled, by a for-profit
entity.
The Senate amendment (Sec. 304) establishes a definition
of eligible not-for-profit holder for the purposes of
determining the special allowance payment for which a lender is
eligible. Eligible not-for-profit holder means an eligible
lender that is a State, or a political subdivision, authority,
agency or other instrumentality thereof, or an entity with not-
for-profit status under the tax code, or a trustee acting as an
eligible lender on behalf of one of these entities. The
amendment establishes that no eligible not-for-profit holder
shall be owned or controlled, in whole or in part, by a for-
profit entity, and that if an eligible not-for-profit holder
sells loans on which the Secretary is paying the higher special
allowance payment designated for eligible not-for-profit
holders described in Section 305 of the Senate amendment, to a
for-profit entity or an entity that is not an eligible not-for-
profit holder, such loans shall from the date of sale instead
receive the special allowance payment designated for other such
lenders, as described in Section 305. The Senate amendment
requires that the Secretary promulgate regulations implementing
this provision no later than one year after the date of
enactment.
The House recedes with an amendment (1) clarifying that
an eligible not-for-profit holder will not be considered to be
owned or controlled by a for-profit entity if an eligible
lender trustee merely holds the loan in trust for the eligible
not-for-profit holder and does not receive any benefit from the
loan beyond reasonable and customary fees; and (2) specifying
that a not-for-profit entity on whose behalf a trustee is
acting as an eligible lender will not be deemed owned or
controlled by a for-profit entity, as a result of granting a
security interest in, or otherwise pledging as collateral,
loans or the income from a loan to secure a debt obligation in
the operation of the trustee relationship. The amendment also
specifies that an eligible not-for-profit holder must have been
in operation and serving as an eligible lender on the date of
enactment of the College Cost Reduction and Access Act, and
that a trustee, in order to be an eligible not-for-profit
lender, must be a trustee acting on behalf of such an eligible
lender. The amendment specifies that a state may elect to waive
this requirement for a new eligible not-for-profit holder
determined by the State to be necessary to fill a public
purpose, except that a State may not waive any of the
requirements related to trustees.
The Conferees adopt the Senate amendment as amended by
the House.
SECTION 305. SPECIAL ALLOWANCES
Reduction of lender special allowance payments
The House bill (Sec. 113) reduces the special allowance
payment rate for lenders, which is currently set for student
loans at the Commercial Paper (CP) lending rate plus 1.74
percent while borrowers are in school or in a grace period, and
CP plus 2.34 percent while borrowers are in repayment, and is
currently set for PLUS loans at CP plus 2.64 percent, and for
consolidation loans at CP plus 2.64 percent (less the 1.05
percent annual rebate fee). The House bill reduces these
payment rates by 0.55 percentage points (or 55 basis points)
for loans held by all lenders and equalizes the special
allowance payment rate for Stafford and PLUS loans.
The Senate amendment (Sec. 305) reduces these payments
for loans held by for-profit lenders by 0.50 percentage points
(or 50 basis points), and by 0.35 percentage points (35 basis
points) for loans held by not-for-profit lenders and equalizes
the SAP rate for Stafford and PLUS loans.
The House recedes with an amendment that reduces the SAP
payments by 40 basis points for non-profit lenders and by 55
basis points for all other lenders. The amendment also
equalizes the SAP rate for Stafford and PLUS loans. The
Conferees adopt the Senate amendment as amended by the House.
Increased loan fees from lenders
The House bill (Sec. 118) increases the fee the Secretary
shall collect under Section 438(d) of title IV on each loan
disbursed from 0.50 percent to 1 percent for certain for-profit
lenders. The fee is eliminated for non-profit lenders and small
lenders, defined as those that collectively hold the lowest 15
percent of total loan volume.
The Senate amendment (Sec. 305) increases the fee the
Secretary shall collect from all lenders under Section 438(d)
of title IV on each loan disbursed from 0.50 percent to 1
percent.
The House recedes.
SECTION 306. ACCOUNT MAINTENANCE FEES
The House bill (Sec. 117) reduces account maintenance
fees from 0.1 percent to 0.06 percent.
The Senate amendment (Sec. 402) changes the method by
which account maintenance fees are calculated from a
calculation based on the total amount of loan principal to a
per-loan basis.
The Senate recedes.
TITLE IV--LOAN FORGIVENESS
SECTION 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES
The House bill (Sec. 132) amends the current Income-
Contingent Repayment program in the Direct Loan program to
provide loan forgiveness for public sector employees. The
change provides that the Secretary shall forgive the remaining
loan balance on a loan under part D of title IV for a borrower
who has been employed in a public sector job and has made
payments on such loan for a period of ten years.
The Senate amendment (Sec. 401) creates a new loan
forgiveness plan for public service employees. The plan
provides that the Secretary shall forgive the remaining loan
balance for a borrower who has been employed in a public sector
job and has made payments on such loan for a period of ten
years (which need not be consecutive). Such borrowers shall be
eligible to have \1/10\ of the remaining loan balance forgiven
for each of the ten years in which the borrower earned $65,000
or less.
The House recedes with an amendment to modify the
definition of public service employees and eliminate the
$65,000 income cap.
The Conferees adopt the Senate amendment as amended by
the House.
TITLE V--FEDERAL PERKINS LOANS
SECTION 501. DISTRIBUTION OF LATE COLLECTIONS
The House bill (Sec. 141) provides $100 million per year
for the Perkins Loan Federal Contribution program for fiscal
years 2008-2012.
The Senate amendment (Sec. 501) postpones the date on
which institutions must return late collections on Perkins
loans to the Secretary to September 30, 2012.
The House recedes.
TITLE VI--NEED ANALYSIS
SECTION 601. SUPPORT FOR WORKING STUDENTS
The House bill (Sec. 102) includes provisions to increase
students' eligibility for student aid, including the Pell
grant, through phased-in increases in the Income Protection
Allowance for all students. The protected income for unmarried
independent students without dependents will be $6,690 by 2009.
For dependent students the protected income will be $3,750 by
2009. These amounts will increase by 10 percent each year until
2012.
The Senate amendment (Sec. 601) also increases the Income
Protection Allowance in the following ways: (1) for dependent
students, it increases the amount of the income protection
allowance to $3,750 for the 2009-2010 academic year; $4,500 for
the 2010-2011 academic year; $5,250 for the 2011-2012 academic
year; and $6,000 for the 2012-2013 academic year; (2) for
independent students without dependents other than a spouse,
who are single, separated, or married with both spouses
enrolled, it increases the amount of the income protection
allowance to $7,000 for the 2009-2010 academic year; $7,780 for
the 2010-2011 academic year; $8,550 for the 2011-2012 academic
year; and $9,330 for the 2012-2013 academic year. For
independent students without dependents other than a spouse,
who are married and whose spouse is not enrolled, it increases
the amount of the income protection allowance to $11,220 for
the 2009-2010 academic year; $12,460 for the 2010-2011 academic
year; $13,710 for the 2011-2012 academic year; and $14,690 for
the 2012-2013 academic year. For independent students with
dependents other than a spouse, it increases the amount of the
income protection allowance as specified by the tables
contained in this section, for a total increase of 50 percent
over four years. Under this section, for all students, the
income protection allowance reverts to current law after the
2012-2013 academic year.
The House recedes with an amendment to continue the
changes beyond the 2012-2013 academic year. The Conferees adopt
the Senate amendment as amended by the House.
SECTION 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO IMPROVEMENTS
Simplified needs test
The House bill (Sec. 103) extends the time that an
individual who has participated in a federal means-tested
benefit program can qualify for a simplified needs test to 24
months from 12 months, and allows dislocated workers to be
eligible for the simplified application form.
The Senate amendment contains no similar provision.
The Senate recedes.
Automatic zero
The House bill (Sec. 103) increases the family income
level under which a student is automatically eligible for the
maximum Pell grant, or the ``auto-zero,'' from the current
level of $20,000 to $30,000 and indexes this level to the
Consumer Price Index (CPI).
The Senate amendment (Sec. 602) also increases the family
income level under which a student is automatically eligible
for the maximum Pell grant to $30,000.
The Senate recedes.
SECTION 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS
The House bill (Sec. 104) allows financial aid
administrators to use discretion in calculating the expected
student or family contribution in cases where a family member
is a dislocated worker (as defined in section 101 of the
Workforce Investment Act of 1998).
The Senate amendment (Sec. 603) clarifies and expands the
conditions under which financial aid administrators may use
discretion in calculating the expected student or family
contribution to include an independent student's loss of
employment or a change in a student's housing status that
results in homelessness. The Senate amendment (Sec. 605)
authorizes and appropriates $10,000,000 for fiscal year 2008 to
pay for the estimated increased cost in the Pell program for
award year 2007-2008 resulting from the amendments made by
sections 603 and 604.
Both the House and Senate recede with an amendment to
change the effective date to July 1, 2009. The Conferees concur
and adopt the amendment as proposed by the House and Senate.
SECTION 604. DEFINITIONS
The House bill (Sec. 104) clarifies definitions for
dislocated workers and means-tested federal benefits. The House
bill amends the provisions concerning untaxed income and
benefits in current law. Specifically, the bill excludes TANF
(welfare benefits), Earned Income Tax Credits, and Social
Security from the income calculation in the needs analysis. The
House bill clarifies the asset calculation in this section of
the bill to ensure that 529 plans are counted as the asset of
the parent for independent students.
The Senate amendment (Sec. 604) makes changes to the
definition of independent student. It expands the definition of
independent students to include: individuals in foster care
anytime after age 13; emancipated minors or individuals in
legal guardianships as determined by an appropriate court in
such an individual's State of legal residence; and any
individual who has been adequately verified as an unaccompanied
youth who is a homeless child or youth, as defined in the
McKinney-Vento Homeless Assistance Act. It clarifies that
financial aid administrators may make determinations regarding
a student's independent status based on a documented
determination of independence by another financial aid
administrator in the same year.
Both the House and Senate recede with an amendment
clarifying that foster students do not lose their independent
student status during non-school terms with regard to housing
and other benefits. The Conferees concur and adopt the
amendment as proposed by the House and Senate.
TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM
SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM
The House bill (Sec. 119) requires a study by the
Secretaries of Education and Treasury with the Congressional
Budget Office, the Office of Management and Budget, and the
Government Accountability Office to identify and select among
the best mechanisms for a loan auction.
Based on the information from the study, a pilot program
shall be implemented by the Secretary of Education using 10
percent of loan volume under Part B in the first year of the
pilot study and 20 percent the second year of the pilot study.
The Senate amendment (Sec. 801) establishes a new
competitive loan auction pilot program. The Secretary is
directed to carry out a pilot program to establish a mechanism
for the auction of all eligible PLUS loans. Such loans are
loans made to parents of dependent students. The Secretary
shall administer one auction for each state, in which eligible
lenders shall compete to originate all eligible PLUS loans at
institutions of higher education within the state.
The House recedes.
The Conferees believe this loan auction pilot should be
closely evaluated by the Secretary of Education in consultation
with the Secretary of Treasury, the Office of Management and
Budget, the Congressional Budget Office, and the Comptroller
General. Additionally, the Conferees believe the evaluation
should consider the extent of the savings generated through the
pilot program; the number of lenders participating in the pilot
program and the extent to which the pilot program generated
competition among lenders; and the effect of transition to and
operation of the pilot program on the feasibility of using
other market mechanisms to operate the loan programs.
The Conferees intend to include an evaluation of the loan
auction and other market mechanisms during reauthorization of
the Higher Education Act which we are committed to moving
forward in this session.
TITLE VIII--PARTNERSHIP GRANTS
SECTION 801. COLLEGE ACCESS CHALLENGE GRANTS
The House bill (Sec. 411) establishes ``College Access
Challenge Grants,'' which leverage federal funds to increase
the number of students from underserved populations who enter
and complete college through matching grants to philanthropic
organizations. The federal government will provide a 2 to 1
match for private and other public funds for these purposes.
The philanthropic organizations will work with states,
institutions of higher education, and local education agencies
and other organizations to raise funds and provide outreach and
student support programs.
The Senate amendment (Sec. 801) establishes a College
Access Partnership Grant program, to make payments to States to
assist them in carrying out specified activities to increase
college access for low-income students in the state. The
federal share of the matching grant is \2/3\ and the state
share is \1/3\. Activities may be carried out under this grant
by state agencies or not-for-profit organizations that the
state designates, including not-for-profit lenders, and must be
made available to all qualifying students in the state, with
priority given to students and families living below the
poverty line. The amendment provides that authority to carry
out this section shall expire on September 30, 2009.
The House recedes with an amendment changing the name of
the program to ``College Access Challenge Grants'' and
incorporating a House provision allowing philanthropic
organizations to apply to the Secretary for a grant in the case
where a state does not meet the matching requirements or
chooses not to apply for a grant. The Conferees adopt the
Senate amendment as amended by the House.
The Conferees intend that states, entities, or
organizations providing activities under the College Access
Challenge Grants program created by this Act coordinate such
activities with existing state partnership programs designed to
increase college access, particularly the state's Leveraging
Educational Assistance Partnership program (LEAP) under title
IV, Part A, Subpart 4, if a state has such a program.
SECTION 802. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
AND MINORITY SERVING INSTITUTIONS
The House bill (Sec. 401) provides a total $500 million
over the next five years to the following designated
institutions with the following amounts:
$200 million to Hispanic-Serving Institutions to be
distributed to the institutions in the same competitive
manner as is done under title V of the Higher Education
Act, and for uses under title V with priority to those
applications that will increase the number of low-
income students attaining degrees in the fields of
science, technology, engineering, or math and to
applications that develop model transfer articulation
agreements.
$170 million to Historically Black Colleges and
Universities to be distributed for use through some of
the activities described in section 323(a) of the
Higher Education Act including the purchase of
laboratory equipment, the funding of instruction, the
purchase of materials, and the establishment or
enhancement of a teacher education program.
Additionally, funds may be used in a manner consistent
with the institution's comprehensive plan and designed
to increase the institution's capacity to prepare
students for careers in the physical and natural
sciences, math, computer science, information
technology, engineering, language instruction and other
specified areas.
$30 million to Predominately Black Institutions to
award 50 grants of $600,000 for programs in the fields
of science, technology, engineering, health education,
teacher education, or programs that improve the
educational outcomes of African American males.
$60 million to Tribal Colleges and Universities to
be distributed in the manner that the funds are used
under current law in section 316 of the Higher
Education Act including the purchase of laboratory
equipment, the funding of instruction, the purchase of
materials, or the establishment or enhancement of
teacher education and outreach programs.
$30 million to Alaska/Hawaiian Native Institutions
to be distributed in the manner that the funds are used
under current law in section 317 of the Higher
Education Act including the purchase of laboratory
equipment, the funding of instruction, the purchase of
materials, and the creation of academic tutoring
programs.
$10 million to Asian American and Pacific Islander
Institutions to be distributed to institutions as
defined in this section, and used in a manner that may
include the purchase of laboratory equipment, the
funding of instruction, the purchase of materials, and
the creation of tutoring programs.
The House bill defines the following for the purposes of
distributing funds:
Predominately Black Institutions as institutions that
have an enrollment of financially needy undergraduate students;
an enrollment of undergraduate students at least 40% of whom
are Black; and, that has at least 1,000 undergraduate students
of whom not less than 50% enrolled at the institution are low-
income or first generation and registered in a BA or AA program
leading to a degree.
Asian and Pacific Islander-serving institution as
institutions that have an enrollment of undergraduate students
that is at least 10% Asian American and Pacific Islander and
has a significant enrollment of financially needy students.
The Senate amendment contains no similar provision.
The Senate recedes with an amendment that $255 million
shall be authorized in each of 2008 and 2009, for a total
investment of $510 million. The amendment adds $10 million for
Native American Serving, Nontribal Institutions to be
distributed to institutions as defined in this section, and
used in a manner that may include the purchase of laboratory
equipment, the funding of instruction, the purchase of
materials, and the creation of tutoring programs. The Conferees
agree to the House bill as amended by the Senate.
The amendment defines Native American Serving, Nontribal
Institutions for the purposes of distributing funds at
institutions that have an enrollment of undergraduate students
that is at least 10% Native American and is not a Tribal
College or University.
These institutions, which serve groups who were
historically denied access to postsecondary education because
of discrimination, have an important role in higher education.
They help to preserve cultural traditions and to ensure a
diverse pool of qualified professionals in the nation's
economy. At the same time, they offer affordable, high quality
college education to thousands of students as well as provide
much needed job training. These institutions also provide
crucial support services and add hope to communities that have
high rates of poverty and unemployment. Today, a high quality
education greatly depends on the technology and resources
available to students. The Conferees recognize that HBCUs,
HSIs, and other Minority Serving Institutions (MSIs) do not
have sufficient financial ability to provide these
opportunities and satisfy the unique needs of these schools
without Federal assistance.
MSIs have an important role in providing equal
educational opportunities to qualified minority students.
According to the Institute for Higher Education Policy,
approximately 2.3 million students, or about one-third of all
African Americans, American Indians/Alaska Natives, and
Hispanics in all higher education institutions in the United
States and Puerto Rico, were enrolled at HBCUs, HSIs, TCUs,
Alaska and Hawaiian Native institutions. These numbers have
grown rapidly in recent years--in fact, enrollment at these
institutions--accelerated by 66 percent from 1995 to 2003,
compared to only 20 percent at all postsecondary institutions.
The importance of these unique institutions is
underscored by the fact that they provide postsecondary
educational opportunities specifically tailored to students who
traditionally have been denied access to adequately funded
elementary and secondary schools, especially low-income,
educationally disadvantaged students. The Conferees believe
that this section offers an opportunity to help these
institutions fulfill their missions to assist students to meet
their educational goals.
COMPLIANCE WITH HOUSE RULE XXI
Pursuant to clause 9 of rule XXI of the Rules of the
House of Representatives, this conference report contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.
George Miller,
Robert E. Andrews,
Bobby Scott,
Ruben Hinojosa,
John F. Tierney,
David Wu,
Susan A. Davis,
Danny K. Davis,
Timothy Bishop,
Mazie K. Hirono,
Jason Altmire,
John Yarmuth,
Joe Courtney,
Managers on the Part of the House.
Ted Kennedy,
Chris Dodd,
Tom Harkin,
Barbara A. Mikulski,
Jeff Bingaman,
Patty Murray,
Jack Reed,
Hillary Rodham Clinton,
Barack Obama,
Bernard Sanders,
Sherrod Brown,
Michael B. Enzi,
Lamar Alexander,
Orrin G. Hatch,
Managers on the Part of the Senate.
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