SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Public Service Scholarship Act of 
2008''.

SEC. 2. ESTABLISHMENT OF PUBLIC SERVICE SCHOLARSHIP PROGRAM.

    Part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1070 et seq.) is amended by adding at the end the following new 
subpart:

            ``Subpart 10--Public Service Scholarship Program

``SEC. 420Q. SCHOLARSHIPS FOR PUBLIC SERVICE.

    ``(a) Statement of Purpose.--It is the purpose of this subpart to 
establish a Public Service Scholarship Program to promote public 
service by exceptionally able students who show promise of continued 
excellence.
    ``(b) Scholarships Authorized.--
            ``(1) Program authority.--The Secretary is authorized, in 
        accordance with the provisions of this subpart, to make grants 
        to States to enable the States to award scholarships to 
        individuals who have demonstrated outstanding academic 
        achievement, who show promise of continued academic 
        achievement, and who enter into an agreement in accordance with 
        subsection (e)(3).
            ``(2) Period of award.--Scholarships under this section 
        shall be awarded for a period of not less than 1 or more than 4 
        years during the first 4 years of study at any institution of 
        higher education eligible to participate in any programs 
        assisted under this title. The State educational agency 
        administering the program in a State shall have discretion to 
        determine the period of the award (within the limits specified 
        in the preceding sentence).
            ``(3) Use at any institution permitted.--A student awarded 
        a scholarship under this subpart may attend any institution of 
        higher education.
            ``(4) Public service scholars.--Individuals awarded 
        scholarships under this subpart shall be known as `Public 
        Service Scholars'.
    ``(c) Allocation Among States.--
            ``(1) Allocation formula.--From the sums appropriated 
        pursuant to subsection (i) for any fiscal year, the Secretary 
        shall allocate to each State that has an agreement under 
        subsection (d) an amount equal to $10,000 multiplied by the 
        number of scholarships determined by the Secretary to be 
        available to such State in accordance with paragraph (2).
            ``(2) Number of scholarships available.--The number of 
        scholarships to be made available in a State for any fiscal 
        year shall bear the same ratio to the number of scholarships 
        made available to all States as the State's population ages 5 
        through 17 bears to the population ages 5 through 17 in all the 
        States, except that not less than 10 scholarships shall be made 
        available to any State.
            ``(3) Use of census data.--For the purpose of this 
        subsection, the population ages 5 through 17 in a State and in 
        all the States shall be determined by the most recently 
        available data, satisfactory to the Secretary, from the Bureau 
        of the Census.
    ``(d) Agreements With States.--The Secretary shall enter into an 
agreement with each State desiring to participate in the scholarship 
program authorized by this subpart. Each such agreement shall include 
provisions designed to assure that--
            ``(1) the State educational agency will administer the 
        scholarship program authorized by this subpart in the State;
            ``(2) the State educational agency will comply with the 
        eligibility and selection provisions of this subpart;
            ``(3) the State educational agency will conduct outreach 
        activities to publicize the availability of scholarships under 
        this subpart to all eligible students in the State, with 
        particular emphasis on activities designed to assure that 
        students from low-income and moderate-income families have 
        access to the information on the opportunity for full 
        participation in the scholarship program authorized by this 
        subpart; and
            ``(4) the State educational agency will pay to each 
        individual in the State who is awarded a scholarship for any 
        academic year under this subpart $10,000 for such academic 
        year.
    ``(e) Eligibility of Scholars.--
            ``(1) High school graduation or equivalent and admission to 
        institution required.--Each student awarded a scholarship under 
        this subpart shall--
                    ``(A) be a graduate of a public or private 
                secondary school (or a home school, whether treated as 
                a home school or a private school under State law) or 
                have the equivalent of a certificate of graduation as 
                recognized by the State in which the student resides; 
                and
                    ``(B) have been admitted for enrollment at an 
                institution of higher education.
            ``(2) Selection based on promise of academic achievement.--
        Each student awarded a scholarship under this subpart must 
        demonstrate outstanding academic achievement and show promise 
        of continued academic achievement.
            ``(3) Public service agreements.--
                    ``(A) In general.--To be eligible to receive a 
                scholarship under this subpart, a student shall enter 
                into a written agreement with the Secretary that 
                specifies that--
                            ``(i) the student will seek to obtain 
                        employment, and will remain employed, as an 
                        employee of the Federal Government for a 
                        required period of service of not less than 5 
                        years, unless the student fails to obtain or is 
                        involuntarily separated from that employment;
                            ``(ii) if the student fails to obtain such 
                        employment, or is involuntarily separated from 
                        such employment on account of misconduct, or 
                        voluntarily separates from such employment, 
                        before the end of the period specified in the 
                        agreement, the student will repay the Secretary 
                        the sum of the amounts of any scholarships 
                        received by such student under this subpart;
                            ``(iii) if the student is required to repay 
                        an amount to the Secretary under clause (ii) 
                        and fails to repay such amount, a sum equal to 
                        that amount shall be recoverable by the Federal 
                        Government from the student by such methods as 
                        are provided by law for the recovery of amounts 
                        owed to the Federal Government; and
                            ``(iv) the Secretary may waive, in whole or 
                        in part, a right of recovery under this 
                        subsection if the individual is permanently and 
                        totally disabled at the time of the waiver 
                        request or the Secretary determines, on the 
                        basis of a demonstration submitted by or on 
                        behalf of the individual, that--
                                    ``(I) recovery would cause the 
                                individual a substantial economic or 
                                personal hardship; or
                                    ``(II) recovery would be otherwise 
                                contrary to the public interest;
                    ``(B) Repayments.--
                            ``(i) In general.--Any amount repaid by, or 
                        recovered from, an individual under this 
                        paragraph shall be credited to the 
                        appropriation account from which the amount 
                        involved was originally paid as a scholarship.
                            ``(ii) Merger.--Any amount credited under 
                        clause (i) shall be merged with other sums in 
                        such account and shall be available for the 
                        same purposes and period, and subject to the 
                        same limitations, if any, as the sums with 
                        which the amount was merged.
    ``(f) Selection of Scholars.--
            ``(1) Establishment of criteria.--The State educational 
        agency is authorized to establish the criteria for the 
        selection of scholars under this subpart.
            ``(2) Adoption of procedures.--The State educational agency 
        shall adopt selection procedures designed to ensure an 
        equitable geographic distribution of awards within the State 
        (and in the case of the Guam, the Virgin Islands, American 
        Samoa, the Commonwealth of the Northern Mariana Islands, or the 
        Freely Associated States, not to exceed 10 individuals will be 
        selected from such entities).
            ``(3) Consultation requirement.--In carrying out its 
        responsibilities under paragraphs (1) and (2), the State 
        educational agency shall consult with school administrators, 
        school boards, teachers, counselors, and parents.
            ``(4) Timing of selection.--The selection process shall be 
        completed, and the awards made, prior to the end of each 
        secondary school academic year.
    ``(g) Stipends and Scholarship Conditions.--
            ``(1) Amount of award.--Each student awarded a scholarship 
        under this subpart shall receive a stipend of $10,000 for each 
        academic year of study for which the scholarship is awarded, 
        except that in no case shall--
                    ``(A) the total amount of financial aid awarded to 
                such student exceed such student's total cost-of-
                attendance for any such academic year; or
                    ``(B) the total amount of financial aid awarded to 
                such student under this subpart exceed a total of 
                $40,000 for all such academic years.
            ``(2) Use of award.--The State educational agency shall 
        establish procedures to assure that a scholar awarded a 
        scholarship under this subpart pursues a course of study at an 
        institution of higher education.
    ``(h)  Construction of Needs Provisions.--Except as provided in 
section 471, nothing in this subpart, or any other Act, shall be 
construed to permit the receipt of a scholarship under this subpart to 
be counted for any needs test in connection with the awarding of any 
grant or the making of any loan under this Act or any other provision 
of Federal law relating to educational assistance.
    ``(i) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this subpart for fiscal year 2009 and each of 
the 3 succeeding fiscal years such sums as may be necessary to award 
10,000 Public Service Scholarships during each of the academic years 
that begin in such fiscal years.''.
Public Service Scholarship Act of 2008 - Amends the Higher Education Act of 1965 to establish a Public Service Scholarship program authorizing the Secretary of Education to make grants to states for scholarships to exceptionally able students who show promise of continued excellence and agree to serve as federal employees for at least five years.

Allocates scholarship funds among states on the basis of each state's share of the nation's population of five- through 17-year olds; but sets the minimum allocation at a level allowing grantees to award at least 10 scholarships per year.
To establish a Public Service Scholarship Program, and for other purposes.