A bill to amend the Higher Education Act of 1965 to improve higher education, and for other purposes.

Summary: Higher Education Opportunity Through Pell Grant Expansion Act - Expresses the sense of the Senate that: (1) eligible undergraduate students should receive the maximum Federal Pell Grant amount established by this Act's amendment to the Higher Education Act of 1965 (HEA); and (2) sufficient funds should be appropriated to allow the awarding of such amount.

Authorizes and makes additional appropriations in a specified amount for FY 2006 to carry out HEA provisions for Federal Pell Grants.

Amends HEA to revise the maximum amount of a Federal Pell Grant to $5,100 for academic year 2005-2006.

Directs the Secretary of Education to adjust such maximum amount cumulatively every two academic years to account for any percentage increase in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

Prohibits the application of the annual updates (published in the Federal Register on December 23, 2004) to the allowance for State and other taxes in the tables used in the Federal Needs Analysis Methodology to determine a student's expected family contribution for the award year 2005-2006, to the extent such updates will reduce the amount of Federal student assistance for which the student is eligible.

Terminates special allowance payments for lenders or holders of student loans: (1) made or purchased after enactment of this Act; (2) not qualified for such payments before such enactment; or (3) made or purchased before such enactment, but having retired or defeased obligations after such enactment, or having a maturity or retirement date extended after such enactment.

Requires windfall profit offset payments from eligible lenders of student loans.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Opportunity Through 
Pell Grant Expansion Act''.

SEC. 2. SENSE OF THE SENATE.

    (a) Findings.--The Senate makes the following findings:
            (1) Federal Pell Grants are need-based and are used by 
        5,300,000 undergraduate students to fund their college 
        educations.
            (2) Over 90 percent of Federal Pell Grant recipients come 
        from a family with a combined income of less than $40,000.
            (3) Because of the rising cost of college tuition, the 
        maximum Federal Pell Grant amount of $4,050 for academic year 
        2004-2005 is $700 less in real terms than the maximum Federal 
        Pell Grant amount for academic year 1975-1976.
            (4) Federal Pell Grants for academic year 2003-2004 cover 
        only 23 percent of the total cost of the average 4-year public 
        college.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) eligible undergraduate students should receive the 
        maximum Federal Pell Grant amount established by the amendment 
        made by section 3(b) of this Act; and
            (2) sufficient funds should be appropriated to allow the 
        awarding of the maximum Federal Pell Grant amount for which 
        students are eligible pursuant to the amendment made by section 
        3(b) of this Act.

SEC. 3. FEDERAL PELL GRANTS.

    (a) Appropriation of Funds for Federal Pell Grants.--In addition to 
any amounts otherwise appropriated to carry out subpart 1 of part A of 
title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a) for the 
fiscal year ending September 30, 2006, there are authorized to be 
appropriated and there are appropriated, out of any money in the 
Treasury not otherwise appropriated for the fiscal year ending 
September 30, 2006, for carrying out such subpart 1, an additional 
$2,000,000,000.
    (b) Authorization Amount and Maximum Federal Pell Grant.--Section 
401(b)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 
1070a(b)(2)(A)) is amended to read as follows:
    ``(2)(A)(i) The amount of a Federal Pell Grant for a student 
eligible under this part shall be $5,100 for academic year 2005-2006, 
less an amount equal to the amount determined to be the expected family 
contribution with respect to that student for that year.
    ``(ii) The Secretary shall cumulatively adjust the amount in clause 
(i) every 2 academic years beginning with academic year 2006-2007 to 
account for any percentage increase in the Consumer Price Index for All 
Urban Consumers published by the Bureau of Labor Statistics of the 
Department of Labor.''.

SEC. 4. ALLOWANCE FOR STATE AND OTHER TAXES.

    Notwithstanding any other provision of law, the annual updates to 
the allowance for State and other taxes in the tables used in the 
Federal Needs Analysis Methodology to determine a student's expected 
family contribution for the award year 2005-2006 under part F of title 
IV of the Higher Education Act of 1965 (20 U.S.C. 1087kk et seq.), 
published in the Federal Register on Thursday, December 23, 2004 (69 
Fed. Reg. 76926), shall not apply to a student to the extent the 
updates will increase the student's expected family contribution under 
such part F.

SEC. 5. TERMINATION OF EXCESSIVE ALLOWANCES.

    Section 438(b)(2)(B) of the Higher Education Act of 1965 (20 U.S.C. 
1087-1(b)(2)(B)) is amended by striking clause (v) and inserting the 
following:
                            ``(v) This subparagraph shall not apply 
                        to--
                                    ``(I) any loan made or purchased 
                                after the date of enactment of the 
                                Higher Education Opportunity Through 
                                Pell Grant Expansion Act;
                                    ``(II) any loan that had not 
                                qualified before such date of enactment 
                                for receipt of a special allowance 
                                payment determined under this 
                                subparagraph; or
                                    ``(III) any loan made or purchased 
                                before such date of enactment with 
                                funds described in the first or second 
                                sentence of clause (i) if--
                                            ``(aa) the obligation 
                                        described in the first such 
                                        sentence has, after such date 
                                        of enactment, matured, or been 
                                        retired or defeased; or
                                            ``(bb) the maturity date or 
                                        the date of retirement of the 
                                        obligation described in the 
                                        first such sentence has, after 
                                        such date of enactment, been 
                                        extended.''.

SEC. 6. WINDFALL PROFIT OFFSET.

    Section 438 of the Higher Education Act of 1965 (20 U.S.C. 1087-1) 
is further amended by adding at the end the following:
    ``(g) Windfall Profit Offset.--At the end of every fiscal quarter 
for which an eligible lender does not receive a special allowance 
payment under this section, the eligible lender shall pay to the 
Secretary of the Treasury for deposit into the Treasury as 
miscellaneous receipts a windfall profit offset payment for the fiscal 
quarter equal to the amount by which--
            ``(1) the aggregate amount of all payments of interest 
        received by the eligible lender from borrowers on all loans 
        made, insured, or guaranteed under this part during the fiscal 
        quarter; exceeds
            ``(2) interest guaranteed the lender under this section for 
        the fiscal quarter, irrespective of the amount received under 
        subparagraph (A).''.