SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Recruiting and Retaining Effective 
School Leaders Act''.

SEC. 2. LOAN FORGIVENESS FOR PRINCIPALS IN HIGH NEEDS SCHOOLS.

    Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1087a et seq.) is amended by adding at the end the following:

``SEC. 460A. LOAN FORGIVENESS FOR PRINCIPALS IN HIGH NEEDS SCHOOLS.

    ``(a) Loan Forgiveness Authorized.--The Secretary shall carry out a 
program of canceling the obligation to repay a qualified loan amount in 
accordance with subsection (b) for loans made under this part, which 
were first disbursed on or after July 1, 2010, to any borrower who--
            ``(1) has graduated from a high-quality program, as 
        determined by the appropriate State agency for higher 
        education, in consultation with the Secretary;
            ``(2) has been employed as a full-time principal, as 
        defined by, for not less than 1 complete school year in a 
        school or location that qualifies under section 465(a)(2)(A) 
        for loan cancellation for Perkins loan recipients who teach in 
        such schools or locations; and
            ``(3) is not in default on a loan for which the borrower 
        seeks forgiveness.
    ``(b) Qualified Loan Amounts.--
            ``(1) In general.--
                    ``(A) First 4 years.--Subject to paragraph (2), 
                after the completion of service as a principal as 
                described in subsection (a)(2) for a complete school 
                year for any school year after the first complete 
                school year of such service through the fourth complete 
                school year of such service, the Secretary shall 
                cancel--
                            ``(i) 15 percent of the loan obligation on 
                        a loan made under this part, which was first 
                        disbursed on or after July 1, 2010; and
                            ``(ii) the total amount of interest that 
                        accrued during such school year.
                    ``(B) Succeeding years.--Subject to paragraph (2), 
                after the completion of service as a principal as 
                described in subsection (a)(2) for a complete school 
                year for any school year after the fourth complete 
                school year of such service through the seventh 
                complete school year of such service, the Secretary 
                shall cancel--
                            ``(i) 20 percent of the loan obligation on 
                        a loan made under this part, which was first 
                        disbursed on or after July 1, 2010; and
                            ``(ii) the total amount of interest that 
                        accrued during such school year.
            ``(2) Limitations.--To be eligible for loan cancellation 
        under subparagraph (A) or (B) of paragraph (1) for any school 
        year after the first complete school year of service, a 
        principal--
                    ``(A) shall be serving as a principal in the school 
                or location in which the principal served for such 
                first year, except that a principal may serve as a 
                principal in a different school or location described 
                in subsection (a)(2) for a school year after such first 
                year if the local educational agency involved places 
                the principal in such different school or location; and
                    ``(B) may stop serving as a principal for not more 
                than 1 complete school year after such first year.
            ``(3) Treatment of consolidation loans.--A loan amount for 
        a Federal Direct Consolidation Loan, which was first disbursed 
        on or after July 1, 2010, may be a qualified loan amount for 
        the purposes of this subsection only to the extent that such 
        loan amount was used to repay a Federal Direct Stafford Loan, a 
        Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        PLUS Loan for enrollment in a graduate or professional program 
        or a loan made under section 428, 428H, or 428B for enrollment 
        in a graduate or professional program, for a borrower who meets 
        the requirements of subsection (a), as determined in accordance 
        with regulations prescribed by the Secretary.
    ``(c) List.--If the list of schools in which a high need principal 
may perform service pursuant to subsection (a)(2) is not available 
before May 1 of any year, the Secretary may use the list for the year 
preceding the year for which the determination is made to make such 
service determination.
    ``(d) Continuing Eligibility.--Any principal who performs service 
as in a school that--
            ``(1) meets the requirements of subsection (a)(2) in any 
        year during such service; and
            ``(2) in a subsequent year fails to meet the requirements 
        of such subsection, may continue to serve as a principal in 
        such school and shall be eligible for loan cancellation 
        pursuant to subsection (a).
    ``(e) Forgiveness Not Considered Income.--The amount of a loan, and 
interest on a loan, which is canceled under this section shall not be 
considered income for purposes of the Internal Revenue Code of 1986.
    ``(f) Construction.--Nothing in this subsection shall be construed 
to authorize refunding of any refunding of any canceled loan.
    ``(g) No Double Benefit.--No borrower may, for the same service, 
receive a benefit under both this section and subtitle D of title I of 
the National and Community Service Act of 1990 (42 U.S.C. 12601 et 
seq.).
    ``(h) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out this section.
    ``(i) Definitions.--For the purpose of this section:
            ``(1) Principal.--The term `principal' has the meaning 
        given such term in section 2102 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6602).
            ``(2) Year.--The term `year' where applied to service as a 
        teacher means an academic year as defined by the Secretary.''.
Recruiting and Retaining Effective School Leaders Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Department of Education to establish a student loan forgiveness program for school principals employed in schools where at least 30% of students meet federal poverty guidelines. Loans are forgiven over a seven-year period. 
Recruiting and Retaining Effective School Leaders Act