To limit excessive fluctuations in tuition to help students and families plan for college costs.

Summary: Truth-in-Tuition Act of 2007 - Amends the Higher Education Act of 1965 to require institutions of higher education (IHEs) that are participating in the Act's student assistance programs to provide each prospective cohort of students applying to enter their undergraduate or graduate programs with a binding, multi-year tuition and fee schedule for the normal duration of such studies.

Requires the Secretary of Education to waive the application of such requirement to IHEs that are unable to comply because of events causing them severe economic distress.

Directs the Secretary to award: (1) competitive grants to IHEs that, for an academic year, have a net tuition (tuition and fees, minus grant amounts) increase that does not exceed the percentage change in the higher education price index; and (2) bonus amounts to IHEs that guarantee that their net tuition will not outpace changes in such index over specified periods of time. Requires IHEs to distribute such grants and bonuses as need-based grant aid to students who are eligible for federal Pell Grants.

Requires IHEs whose annual net tuition increase outpaces such index to issue an explanatory report to the Secretary that includes actions being taken to remedy the situation.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Truth-in-Tuition Act of 2007''.

SEC. 2. PURPOSE.

    It is the purpose of this Act to assist students and families in 
multi-year financial planning for the full cost of a post-secondary 
education program, while not restricting the ability of institutions of 
higher education to raise tuition and fee levels from one year to the 
next.

SEC. 3. COMMITMENT TO AND NOTICE OF TUITION LEVELS.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 
1094(a)) is amended by adding at the end the following new paragraph:
            ``(24)(A) The institution will provide to each perspective 
        cohort of students applying to enter a program of undergraduate 
        or graduate education a binding, multi-year tuition and fee 
        schedule for that cohort of students for the duration of the 
        normal length of the relevant undergraduate or graduate 
        program.
            ``(B) At the discretion of the institution, the multi-year 
        tuition and fee schedules required by subparagraph (A)--
                    ``(i) are not limited in their year-to-year growth;
                    ``(ii) may include a percentage or dollar increase 
                from one year to the next for a relevant cohort of 
                students: and
                    ``(iii) may reflect a consistent per year dollar 
                amount for the normal length of the relevant 
                undergraduate or graduate program.
            ``(C) The Secretary shall waive the requirements of 
        subparagraph (A), and of the binding commitment made therender, 
        if the institution demonstrates to the Secretary that the 
        institution is unable to comply because of the occurrence of 
        one or more events causing the institution severe economic 
        distress.''.

SEC. 4. INCENTIVES AND REWARDS FOR LOW TUITION.

    (a) Rewards for Low Tuition.--
            (1) Competitive grants.--The Secretary of Education shall 
        award grants on a competitive basis to institutions of higher 
        education that, for academic year 2008-2009 or any succeeding 
        academic year, have an annual net tuition increase (expressed 
        as a percentage) for the most recent academic year for which 
        satisfactory data is available that is equal to or less than 
        the percentage change in the higher education price index for 
        such academic year.
            (2) Use of funds.--Funds awarded to an institution of 
        higher education under paragraph (1) shall be distributed by 
        the institution in the form of need-based grant aid to students 
        who are eligible for Federal Pell Grants, except that no 
        student shall receive an amount under this section that would 
        cause the amount of total financial aid received by such 
        student to exceed the cost of attendance of the institution.
    (b) Rewards for Guaranteed Tuition.--
            (1) Bonus.--For each institution of higher education that 
        the Secretary of Education of Education determines complies 
        with the requirements of paragraph (2) or (3) of this 
        subsection, the Secretary of Education shall provide to such 
        institution a bonus amount. Such institution shall award the 
        bonus amount first to students who are eligible for Federal 
        Pell Grants who were in attendance at the institution during 
        the award year that such institution satisfied the eligibility 
        criteria for maintaining low tuition and fees, then to students 
        who are eligible for Federal Pell Grants who were not in 
        attendance at the institution during such award year, in the 
        form of need-based aid.
            (2) 4-year institutions.--An institution of higher 
        education that provides a program of instruction for which it 
        awards a bachelor's degree complies with the requirements of 
        this paragraph if such institution guarantees that for any 
        academic year beginning on or after July 1, 2008, and for each 
        of the 4 succeeding continuous academic years, the net tuition 
        charged to an undergraduate student will not exceed--
                    (A) the amount that the student was charged for an 
                academic year at the time he or she first enrolled in 
                the institution of higher education, plus
                    (B) the product of the percentage increase in the 
                higher education price index for the prior academic 
                year, or the most recent prior academic year for which 
                data is available, multiplied by the amount determined 
                under subparagraph (A).
            (3) Less-than 4-year institutions.--An institution of 
        higher education that does not provide a program of instruction 
        for which it awards a bachelor's degree complies with the 
        requirements of this paragraph if such institution guarantees 
        that for any academic year (or the equivalent) beginning on or 
        after July 1, 2008, and for each of the 1.5 succeeding 
        continuous academic years, the net tuition charged to an 
        undergraduate student will not exceed--
                    (A) the amount that the student was charged for an 
                academic year at the time he or she first enrolled in 
                the institution of higher education, plus
                    (B) the product of the percentage increase in the 
                higher education price index for the prior academic 
                year, or the most recent prior academic year for which 
                data is available, multiplied by the amount determined 
                under subparagraph (A).
    (c) Maintaining Affordable Tuition.--
            (1) Institution reports.--If an institution of higher 
        education has an increase in annual net tuition (expressed as a 
        percentage), for the most recent academic year for which 
        satisfactory data is available, that is greater than the 
        percentage increase in the higher education price index for 
        such academic year, the institution or a representative 
        association is required to submit to the Secretary of Education 
        the following information, within 6 months of such 
        determination--
                    (A) a report on the factors contributing to the 
                increase in the institution's costs and the increase in 
                net tuition and fees charged to students, including 
                identification of the major areas in the institution's 
                budget with the greatest cost increases;
                    (B) the institution's 3 most recent Form 990s 
                submitted to the Internal Revenue Service, as required 
                under section 6033 of the Internal Revenue Code of 
                1986;
                    (C) a description of the major areas of 
                expenditures in the institution's budget with the 
                greatest increase for such academic year; and
                    (D) actions being taken by the institution to 
                reduce net tuition.
            (2) Report to congress.--The Secretary of Education shall 
        compile the information submitted under this subsection and 
        shall provide to the relevant authorizing committees an annual 
        report relating to such information.
    (d) Definitions.--In this section:
            (1) Net tuition.--The term ``net tuition'' means the 
        average tuition and fees charged to a full-time undergraduate 
        student by an institution of higher education for an academic 
        year, minus the average grant amount received by such a student 
        for such academic year.
            (2) Higher education price index.--The term ``higher 
        education price index'' means the higher education price index 
        developed pursuant to section 133(b).
            (3) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning provided in 
        section 102 of Higher Education Act of 1965 (20 U.S.C. 1002).