To amend the Elementary and Secondary Education Act of 1965 to provide grants to local educational agencies for teacher recruitment, retention, and training, and to amend the Higher Education Act of 1965 to expand the program of loan forgiveness for teachers.

Summary: Amends the Elementary and Secondary Education Act of 1965 to establish a new program for teacher recruitment, retention, and training. Authorizes the Secretary of Education to award grants to local educational agencies to recruit, retain, and train high-quality teachers through one or more specified types of activities.Amends the Higher Education Act of 1965 to revise student loan forgiveness for teachers under the Federal Family Education Loan and Federal Direct Loan programs. Expands forgiveness eligibility by: (1) eliminating requirements allowing only certain new borrowers to participate; and (2) increasing the types of eligible teaching locations and subjects. Eliminates a service requirement that an individual teach at least five consecutive complete school years before being eligible for program benefits. Increases to $20,000 the aggregate amount of an individual teacher's student loan obligation which may be forgiven, and revises the rate of repayment.

SECTION 1. TEACHER RECRUITMENT, RETENTION, AND TRAINING.

    (a) In General.--Title II of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 6601 et seq.) is amended--
            (1) by redesignating part E as part F;
            (2) by redesignating sections 2401 and 2402 as sections 
        2501 and 2502, respectively; and
            (3) by inserting after part D the following:

         ``PART E--TEACHER RECRUITMENT, RETENTION, AND TRAINING

``SEC. 2401. PROGRAM AUTHORIZED.

    ``(a) In General.--The Secretary is authorized to make grants to 
local educational agencies to permit such agencies to recruit, retain, 
and train high-quality teachers by carrying out one or more of the 
activities described in subsection (b).
    ``(b) Uses of Funds.--
            ``(1) Recruitment, retention, and training activities.--A 
        local educational agency that receives a grant under this part 
        may use the grant funds for any of the following recruitment, 
        retention, and training activities:
                    ``(A) Providing signing bonuses for teachers.
                    ``(B) Carrying out merit pay programs.
                    ``(C) Providing performance bonuses to teachers.
                    ``(D) Providing scholarships to teachers to pursue 
                advanced course work.
                    ``(E) Providing mentoring programs for teachers.
                    ``(F) Coordinating with institutions of higher 
                education to provide professional development for 
                teachers.
                    ``(G) Any other activity that the local educational 
                agency believes to be effective in recruiting, 
                retaining, or training high-quality teachers.

``SEC. 2402. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this part such 
sums as may be necessary for each of fiscal years 2002 through 2004.''.
    (b) Conforming Amendments.--Section 2003 of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6603) is amended--
            (1) in subsection (a), by striking ``part C)'' and 
        inserting ``parts C and E)''; and
            (2) in subsection (b), by inserting ``(other than parts C 
        and E)'' after ``title''.

SEC. 2. LOAN FORGIVENESS FOR TEACHERS.

    (a) Elimination of New Borrower Restrictions.--
            (1) FFEL program.--Section 428J(b) of the Higher Education 
        Act of 1965 (20 U.S.C. 1078-10(b)) is amended by striking ``for 
        any new borrower on or after October 1, 1998, who'' and 
        inserting ``for any borrower who''.
            (2) Federal direct loan program.--Section 460(b)(1) of such 
        Act (20 U.S.C. 1087j(b)(1)) is amended by striking ``for any 
        new borrower on or after October 1, 1998, who'' and inserting 
        ``for any borrower who''.
    (b) Expansion of Eligible Teaching Locations and Subjects; 
Eliminating Delay in Service Benefit.--
            (1) FFEL program.--Section 428J(b)(1) of such Act is 
        amended by striking everything preceding subparagraph (B) and 
        inserting the following:
            ``(1) has been employed as a full-time teacher--
                    ``(A)(i) in a school that qualifies under section 
                465(a)(2)(A) for loan cancellation for Perkins loan 
                recipients who teach in such schools;
                    ``(ii) as a full-time special education teacher, as 
                described in section 465(a)(2)(C); or
                    ``(iii) as a full-time teacher in any field of 
                expertise where the State educational agency determines 
                there is a shortage of qualified teachers;''.
            (2) Federal direct loan program.--Section 460(b)(1)(A) of 
        such Act (20 U.S.C. 1087j(b)(1)(A)) is amended by striking 
        everything preceding clause (ii) and inserting the following:
                    ``(A) has been employed as a full-time teacher--
                            ``(i)(I) in a school that qualifies under 
                        section 465(a)(2)(A) for loan cancellation for 
                        Perkins loan recipients who teach in such 
                        schools;
                            ``(II) as a full-time special education 
                        teacher, as described in section 465(a)(2)(C); 
                        or
                            ``(III) as a full-time teacher in any field 
                        of expertise where the State educational agency 
                        determines there is a shortage of qualified 
                        teachers;''.
    (c) Amounts Subject to Forgiveness.--
            (1) FFEL program.--Section 428J(c) of the Higher Education 
        Act of 1965 (20 U.S.C. 1078-10(c)) is amended by striking 
        paragraph (1) and inserting the following:
            ``(1) Amount and rate of repayment.--The Secretary shall 
        repay an amount that is not more than $20,000 in the aggregate 
        of the loan obligation on a loan made under section 428 or 428H 
        that is outstanding after the completion of the first complete 
        school year of teaching described in subsection (b)(1) for 
        which the borrower seeks repayment under this section. Such 
        amount shall be repaid at the rate of 15 percent for the first 
        or second year of such service, 20 percent for the third or 
        fourth year of such service, and 30 percent for the fifth year 
        of such service. No borrower may receive a reduction of loan 
        obligations under both this section and section 460.''.
            (2) Federal direct loan program.--Section 460(c) of such 
        Act (20 U.S.C. 1087j(c)) is amended by striking paragraph (1) 
        and inserting the following:
            ``(1) Amount and rate of repayment.--The Secretary shall 
        cancel an amount that is not more than $20,000 in the aggregate 
        of the loan obligation on a loan made under section 428 or 428H 
        that is outstanding after the completion of the first complete 
        school year of teaching described in subsection (b)(1)(A). Such 
        amount shall be canceled at the rate of 15 percent for the 
        first or second year of such service, 20 percent for the third 
        or fourth year of such service, and 30 percent for the fifth 
        year of such service.''.