SECTION 1. SHORT TITLE.
    This Act may be cited as the ``Third Higher Education Extension Act 
of 2006''.
SEC. 2. EXTENSION OF PROGRAMS.
    Section 2(a) of the Higher Education Extension Act of 2005 (P.L. 
109-81; 20 U.S.C. 1001 note) is amended by striking ``September 30, 
2006'' and inserting ``June 30, 2007''.
SEC. 3. ELIGIBLE LENDER TRUSTEE RELATIONSHIPS WITH ELIGIBLE 
INSTITUTIONS.
    (a) Amendment.--Section 435(d) of the Higher Education Act of 1965 
(20 U.S.C. 1085(d)) is amended by adding at the end the following new 
paragraph:
        ``(7) Eligible lender trustees.--Notwithstanding any other 
    provision of this subsection, an eligible lender may not make or 
    hold a loan under this part as trustee for an institution of higher 
    education, or for an organization affiliated with an institution of 
    higher education, unless--
            ``(A) the eligible lender is serving as trustee for that 
        institution or organization as of the date of enactment of the 
        Third Higher Education Extension Act of 2006 under a contract 
        that was originally entered into before the date of enactment 
        of such Act and that continues in effect or is renewed after 
        such date; and
            ``(B) the institution or organization, and the eligible 
        lender, with respect to its duties as trustee, each comply on 
        and after January 1, 2007, with the requirements of paragraph 
        (2), except that--
                ``(i) the requirements of clauses (i), (ii), (vi), and 
            (viii) of paragraph (2)(A) shall, subject to clause (ii) of 
            this subparagraph, only apply to the institution (including 
            both an institution for which the lender serves as trustee 
            and an institution affiliated with an organization for 
            which the lender serves as trustee);
                ``(ii) in the case of an organization affiliated with 
            an institution--

                    ``(I) the requirements of clauses (iii) and (v) of 
                paragraph (2)(A) shall apply to the organization; and
                    ``(II) the requirements of clause (viii) of 
                paragraph (2)(A) shall apply to the institution or the 
                organization (or both), if the institution or 
                organization receives (directly or indirectly) the 
                proceeds described in such clause;

                ``(iii) the requirements of clauses (iv) and (ix) of 
            paragraph (2)(A) shall not apply to the eligible lender, 
            institution, or organization; and
                ``(iv) the eligible lender, institution, and 
            organization shall ensure that the loans made or held by 
            the eligible lender as trustee for the institution or 
            organization, as the case may be, are included in a 
            compliance audit in accordance with clause (vii) of 
            paragraph (2)(A).''.
    (b) Effective Date.--The amendment made by subsection (a) shall not 
apply with respect to any loan under part B of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1071 et seq.) disbursed before January 
1, 2007.
SEC. 4. HISPANIC-SERVING INSTITUTIONS.
    (a) Definition Changes.--Section 502(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1101a(a)) is amended--
        (1) in paragraph (5)--
            (A) by inserting ``and'' after the semicolon at the end of 
        subparagraph (A);
            (B) in subparagraph (B)--
                (i) by striking ``at the time of application,''; and
                (ii) by inserting ``at the end of the award year 
            immediately preceding the date of application'' after 
            ``Hispanic students'';
            (C) by striking ``; and'' at the end of subparagraph (B) 
        and inserting a period; and
            (D) by striking subparagraph (C); and
        (2) by striking paragraph (7).
    (b) Wait-Out Period Eliminated.--Section 504(a) of such Act (20 
U.S.C. 1101c(a)) is amended to read as follows:
    ``(a) Award Period.--The Secretary may award a grant to a Hispanic-
serving institution under this title for 5 years.''.
SEC. 5. GUARANTY AGENCY ACCOUNT MAINTENANCE FEES.
    Section 458(b) of the Higher Education Act of 1965 (20 U.S.C. 
1087h(b)) is amended by striking ``shall not exceed'' and inserting 
``shall be calculated on''.
SEC. 6. CANCELLATION OF STUDENT LOAN INDEBTEDNESS FOR SURVIVORS OF 
VICTIMS OF THE SEPTEMBER 11, 2001, ATTACKS.
    (a) Definitions.--For purposes of this section:
        (1) Eligible public servant.--The term ``eligible public 
    servant'' means an individual who, as determined in accordance with 
    regulations of the Secretary--
            (A) served as a police officer, firefighter, other safety 
        or rescue personnel, or as a member of the Armed Forces; and
            (B) died (or dies) or became (or becomes) permanently and 
        totally disabled due to injuries suffered in the terrorist 
        attack on September 11, 2001.
        (2) Eligible victim.--The term ``eligible victim'' means an 
    individual who, as determined in accordance with regulations of the 
    Secretary, died (or dies) or became (or becomes) permanently and 
    totally disabled due to injuries suffered in the terrorist attack 
    on September 11, 2001.
        (3) Eligible parent.--The term ``eligible parent'' means the 
    parent of an eligible victim if--
            (A) the parent owes a Federal student loan that is a 
        consolidation loan that was used to repay a PLUS loan incurred 
        on behalf of such eligible victim; or
            (B) the parent owes a Federal student loan that is a PLUS 
        loan incurred on behalf of an eligible victim.
        (4) Secretary.--The term ``Secretary'' means the Secretary of 
    Education.
        (5) Federal student loan.--The term ``Federal student loan'' 
    means any loan made, insured, or guaranteed under part B, D, or E 
    of title IV of the Higher Education Act of 1965.
    (b) Relief From Indebtedness.--
        (1) In general.--The Secretary shall provide for the discharge 
    or cancellation of--
            (A) the Federal student loan indebtedness of the spouse of 
        an eligible public servant, as determined in accordance with 
        regulations of the Secretary, including any consolidation loan 
        that was used jointly by the eligible public servant and his or 
        her spouse to repay the Federal student loans of the spouse and 
        the eligible public servant;
            (B) the portion incurred on behalf of the eligible victim 
        (other than an eligible public servant), of a Federal student 
        loan that is a consolidation loan that was used jointly by the 
        eligible victim and his or her spouse, as determined in 
        accordance with regulations of the Secretary, to repay the 
        Federal student loans of the eligible victim and his or her 
        spouse;
            (C) the portion of the consolidation loan indebtedness of 
        an eligible parent that was incurred on behalf of an eligible 
        victim; and
            (D) the PLUS loan indebtedness of an eligible parent that 
        was incurred on behalf of an eligible victim.
        (2) Method of discharge or cancellation.--A loan required to be 
    discharged or canceled under paragraph (1) shall be discharged or 
    canceled by the method used under section 437(a), 455(a)(1), or 
    464(c)(1)(F) of the Higher Education Act of 1965 (20 U.S.C. 
    1087(a), 1087e(a)(1), 1087dd(c)(1)(F)), whichever is applicable to 
    such loan.
    (c) Facilitation of Claims.--The Secretary shall--
        (1) establish procedures for the filing of applications for 
    discharge or cancellation under this section by regulations that 
    shall be prescribed and published within 90 days after the date of 
    enactment of this Act and without regard to the requirements of 
    section 553 of title 5, United States Code, and section 437 of the 
    General Education Provisions Act (20 U.S.C. 1232); and
        (2) take such actions as may be necessary to publicize the 
    availability of discharge or cancellation of Federal student loan 
    indebtedness under this section.
    (d) Availability of Funds for Payments.--Funds available for the 
purposes of making payments to lenders in accordance with section 
437(a) for the discharge of indebtedness of deceased or disabled 
individuals shall be available for making payments under section 437(a) 
to lenders of loans as required by this section.
    (e) Applicable to Outstanding Debt.--The provisions of this section 
shall be applied to discharge or cancel only Federal student loans 
(including consolidation loans) on which amounts were owed on September 
11, 2001, except that nothing in this section shall be construed to 
authorize any refunding of any repayment of a loan.
    (f) Deadlines and Procedures.--Sections 482(c) and 492 of the 
Higher Education Act of 1965 (20 U.S.C. 1089(c), 1098(a)) shall not 
apply to any regulations required by this section.
SEC. 7. RULE OF CONSTRUCTION.
    Nothing in this Act, or in the Higher Education Extension Act of 
2005 as amended by this Act, shall be construed to limit or otherwise 
alter the authorizations of appropriations for, or the durations of, 
programs contained in the amendments made by the Higher Education 
Reconciliation Act of 2005 (P.L. 109-171) to the provisions of the 
Higher Education Act of 1965 and the Taxpayer-Teacher Protection Act of 
2004.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
Third Higher Education Extension Act of 2006 - Amends the Higher Education Extension Act of 2005 to extend the programs under the Higher Education Act of 1965 through June 30, 2007.

Amends the Higher Education Act of 1965 to bar trustees of institutions of higher education (IHEs), or of institution-affiliated organizations, from serving as eligible lenders under the Federal Family Education Loan (FFEL) program, unless the trusteeship continues pursuant to a contract entered into before the enactment of this Act. Imposes specified requirements on exempt lender-trustees and the IHEs or institution-affiliated organizations they serve. Subjects exempt lender-trustee loans to compliance audits.

Alters the grant program for Hispanic-serving IHEs to: (1) move the time at which at least 25% of their full-time students must be Hispanic, from the time such IHEs apply for a new grant back to the end of the preceding grant year; (2) eliminate the requirement that at least 50% of their Hispanic students be poor; and (3) eliminate the two-year waiting period between grant applications.

Requires that account maintenance fees payable to guarantee agencies under the FFEL program be calculated on the basis of .10% of the original principal amount of such outstanding loans on which insurance was issued. (Currently, such fees are capped at such percentage.)

Directs the Secretary of Education to discharge or cancel the federal student loan indebtedness of spouses and parents of individuals who died (or die) or who became (or become) permanently and totally disabled from injuries suffered in the terrorist attacks on September 11, 2001.

States that, in the case of a consolidation loan used jointly by a victim of such attacks and his or her spouse, the discharge or cancellation shall apply only to that portion of debt incurred on behalf of the victim; except that, where the victim served as a police officer, firefighter, other safety or rescue personnel, or member of the Armed Forces, all of the debt on such loan shall be discharged or canceled.
To temporarily extend the programs under the Higher Education Act of 1965, and for other purposes.