A bill to amend the Higher Education Act of 1965 in order to increase unsubsidized Stafford loan limits for undergraduate students, provide for a secondary market for FFEL loans, allow for the in-school deferment of PLUS loans, augment the maximum Federal Pell Grant for the lowest income students, and expand the number of students eligible to obtain loans under the lender-of-last-resort program, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strengthening Student Aid for All 
Act''.

SEC. 2. INCREASING UNSUBSIDIZED STAFFORD LOAN LIMITS FOR UNDERGRADUATE 
              STUDENTS.

    (a) Amendments.--Section 428H(d) of the Higher Education Act of 
1965 (20 U.S.C. 1078-8(d)) is amended--
            (1) in paragraph (1), by striking ``paragraphs (2) and 
        (3)'' and inserting ``paragraphs (2) through (5)''; and
            (2) by adding at the end the following:
            ``(4) Annual and aggregate limits for undergraduate 
        dependent students.--
                    ``(A) Annual limits.--The maximum annual amount of 
                loans under this section an undergraduate dependent 
                student (except an undergraduate dependent student 
                whose parents are unable to borrow under section 428B 
                or the Federal Direct PLUS Loan Program) may borrow in 
                any academic year (as defined in section 481(a)(2)) or 
                its equivalent shall be the sum of the amount 
                determined under paragraph (1), plus $1,000.
                    ``(B) Aggregate limits.--The maximum aggregate 
                amount of loans under this section a student described 
                in subparagraph (A) may borrow shall be $29,500. 
                Interest capitalized shall not be deemed to exceed such 
                maximum aggregate amount.
            ``(5) Annual and aggregate limits for undergraduate 
        independent students.--
                    ``(A) Annual limits.--The maximum annual amount of 
                loans under this section an undergraduate independent 
                student, or an undergraduate dependent student whose 
                parents are unable to borrow under section 428B or the 
                Federal Direct PLUS Loan Program, may borrow in any 
                academic year (as defined in section 481(a)(2)) or its 
                equivalent shall be the sum of the amount determined 
                under paragraph (1), plus--
                            ``(i) in the case of such a student 
                        attending an eligible institution who has not 
                        completed such student's first 2 years of 
                        undergraduate study--
                                    ``(I) $6,000, if such student is 
                                enrolled in a program whose length is 
                                at least one academic year in length; 
                                or
                                    ``(II) if such student is enrolled 
                                in a program of undergraduate education 
                                which is less than one academic year, 
                                the maximum annual loan amount that 
                                such student may receive may not exceed 
                                the amount that bears the same ratio to 
                                the amount specified in clause (i) as 
                                the length of such program measured in 
                                semester, trimester, quarter, or clock 
                                hours bears to one academic year;
                            ``(ii) in the case of such a student at an 
                        eligible institution who has successfully 
                        completed such first and second years but has 
                        not successfully completed the remainder of a 
                        program of undergraduate education--
                                    ``(I) $7,000; or
                                    ``(II) if such student is enrolled 
                                in a program of undergraduate 
                                education, the remainder of which is 
                                less than one academic year, the 
                                maximum annual loan amount that such 
                                student may receive may not exceed the 
                                amount that bears the same ratio to the 
                                amount specified in subclause (I) as 
                                such remainder measured in semester, 
                                trimester, quarter, or clock hours 
                                bears to one academic year; and
                            ``(iii) in the case of such a student 
                        enrolled in coursework specified in sections 
                        484(b)(3)(B) and 484(b)(4)(B), $6,000 for 
                        coursework necessary for enrollment in an 
                        undergraduate degree or certificate program.
                    ``(B) Aggregate limits.--The maximum aggregate 
                amount of loans under this section a student described 
                in subparagraph (A) may borrow shall be $57,500. 
                Interest capitalized shall not be deemed to exceed such 
                maximum aggregate amount.''.
    (b) Conforming Amendments.--Section 428H(d) of the Higher Education 
Act of 1965 (as amended by subsection (a)) (20 U.S.C. 1078-8(d)) is 
further amended--
            (1) in paragraph (2)--
                    (A) in the paragraph heading, by striking 
                ``independent, graduate,'' and inserting ``graduate'';
                    (B) in the matter preceding subparagraph (A), by 
                striking ``an independent student'' and all that 
                follows through ``Program)'' and inserting ``a student 
                who is a graduate or professional student'';
                    (C) by striking subparagraphs (A) and (B);
                    (D) in subparagraph (D)--
                            (i) in the matter preceding clause (i), by 
                        inserting ``graduate'' before ``student'';
                            (ii) in clause (i), by striking ``$4,000'' 
                        and all that follows through ``degree,''; and
                            (iii) in clause (ii), by striking ``in the 
                        case'' and all that follows through 
                        ``degree,''; and
                    (E) by redesignating subparagraphs (C) and (D) (as 
                amended by subparagraph (D)) as subparagraphs (A) and 
                (B), respectively; and
            (2) in the paragraph heading of paragraph (3), by striking 
        ``independent, graduate,'' and inserting ``graduate''.

SEC. 3. IN-SCHOOL DEFERMENT OF PLUS LOANS.

    Section 428B(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 
1078-2(d)(1)) is amended--
            (1) by striking ``deferral during'' and inserting 
        ``deferral--
                    ``(B) during''; and
            (2) by inserting before subparagraph (B) (as added by 
        paragraph (1)) the following:
                    ``(A) in the case of the parents of a dependent 
                student, until the student ceases to be enrolled in an 
                undergraduate program of study at an institution of 
                higher education on at least a half-time basis; or''.

SEC. 4. SECONDARY MARKET OF LAST RESORT.

    (a) In General.--Part B of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1071 et seq.) is amended by adding at the end the 
following:

``SEC. 440B. SECONDARY MARKET OF LAST RESORT.

    ``(a) In General.--Notwithstanding any other provision of this Act 
and subject to subsections (b), (c), and (d), the Secretary--
            ``(1) shall serve as the secondary market of last resort 
        for loans under section 428, 428B, 428C, or 428H;
            ``(2) shall buy any such loan that an eligible lender 
        wishes to sell to the Secretary, at a price equal to the sum 
        of--
                    ``(A) the total of the outstanding principal of 
                such loan and any accrued, unpaid interest due on such 
                loan; and
                    ``(B) a premium in the amount equal to the cost of 
                originating a similar loan under part D;
            ``(3) shall hold and service such loan under section 428, 
        428B, 428C or 428H in the same manner as the Secretary holds 
        and services similar loans under part D; and
            ``(4) may not alter the terms and conditions of a 
        promissory note of such loan under section 428, 428B, 428C, or 
        428H except as necessary to comply with paragraphs (1) through 
        (3), and shall not require the execution of a new promissory 
        note.
    ``(b) Representative Subset of Loans.--An eligible lender that 
wishes to sell to the Secretary loans under section 428, 428B, 428C, or 
428H, that do not represent 100 percent of all loans under such 
sections that are held by the lender, shall offer for sale to the 
Secretary a subset of the loans under such sections held by the lender 
that is representative (including representative with respect to risk 
of default) of the lender's total portfolio of loans under such 
sections.
    ``(c) Sunset Provision.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        authority provided to the Secretary under subsection (a) shall 
        expire on July 1, 2009.
            ``(2) Extension.--If the Secretary determines that economic 
        circumstances necessitate extending the authority provided 
        under subsection (a) in order to continue to ensure timely, 
        uninterrupted access to student loans, the Secretary may extend 
        the sunset provision under paragraph (1). The Secretary may 
        make multiple extensions under this paragraph, except that each 
        such extension may not be for a period of more than 12 
        months.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 5. NEGATIVE EXPECTED FAMILY CONTRIBUTION.

    (a) Dependent Students.--Section 475 of the Higher Education Act of 
1965 (20 U.S.C. 1087oo) is amended--
            (1) in subsection (b)(3)--
                    (A) in subparagraph (C)--
                            (i) by striking ``dividing the assessment 
                        resulting under paragraph (2)'' and inserting 
                        ``if the amount of the assessment resulting 
                        under paragraph (2) is a positive number, 
                        dividing such assessment''; and
                            (ii) by striking the semicolon and 
                        inserting a period; and
                    (B) by striking the matter following subparagraph 
                (C); and
            (2) in subsection (g)(6), by inserting ``and the absolute 
        value of the amount of the lowest assessment of adjusted 
        available income in the table described in section 475(e) (or a 
        successor table prescribed by the Secretary under section 
        478),'' after ``subsection (c)(1)''.
    (b) Independent Students Without Dependents Other Than a Spouse.--
Section 476 of the Higher Education Act of 1965 (20 U.S.C. 1087pp) is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (2), by striking ``dividing the 
                sum resulting under paragraph (1)'' and inserting ``if 
                the sum resulting under paragraph (1) is a positive 
                number, dividing such sum''; and
                    (B) in the matter following paragraph (3)(B), by 
                striking ``less than zero'' and inserting ``less than 
                the amount of the lowest assessment of adjusted 
                available income in the table described in section 
                477(d) (or a successor table prescribed by the 
                Secretary under section 478)''; and
            (2) in paragraph (b)(5), by inserting before the period at 
        the end ``, except that in no case shall the assessed amount be 
        less than the amount of the lowest assessment of adjusted 
        available income in the table described in section 477(d) (or a 
        successor table prescribed by the Secretary under section 
        478).''.
    (c) Independent Students With Dependents Other Than a Spouse.--
Section 477(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087qq(a)) is amended--
            (1) in paragraph (3), by striking ``dividing the assessment 
        resulting under paragraph (2)'' and inserting ``if the amount 
        of the assessment resulting under paragraph (2) is a positive 
        number, dividing such assessment'';
            (2) in paragraph (4)(B), by striking the semicolon and 
        inserting a period; and
            (3) by striking the matter following paragraph (4)(B).
    (d) Assessment Schedules and Rates.--Section 478(e)(1) of the 
Higher Education Act of 1965 (20 U.S.C. 1087rr(e)(1)) is amended by 
striking ``increasing'' and inserting ``adjusting''.
    (e) Simplified Needs Tests.---
            (1) Simplified needs tests.--Section 479(c) of the Higher 
        Education Act of 1965 (20 U.S.C. 1087ss) is further amended--
                    (A) in the subsection heading, by striking 
                ``Expected''; and
                    (B) in the matter preceding paragraph (1), by 
                striking ``equal to zero'' and inserting ``equal to the 
                amount of the lowest assessment of adjusted available 
                income in the table described in section 477(d) (or a 
                successor table prescribed by the Secretary under 
                section 478)''.
            (2) Conforming amendments to the college cost reduction and 
        access act.--
                    (A) Amendment.--Section 602(a)(3) of the College 
                Cost Reduction and Access Act (Public Law 110-84) is 
                amended in the quoted material inserted by subparagraph 
                (C), by striking ``zero expected family contribution'' 
                and inserting ``expected family contribution under this 
                subsection.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall take effect on July 1, 2009, as 
                if enacted on the date of enactment of the College Cost 
                Reduction and Access Act (Public Law 110-84).
    (f) Federal Pell Grants.--Section 401(b) of the Higher Education 
Act of 1965 (20 U.S.C. 1070a(b)) is amended by inserting after 
paragraph (7) the following:
    ``(8) Increased Amount for Students With Negative Expected Family 
Contribution.--
            ``(A) In general.--Notwithstanding paragraph (2)(A) and any 
        other provision of law and subject to subparagraph (B) and (C), 
        in the case of a student whose expected family contribution is 
        a negative number, such student shall be eligible for a Federal 
        Pell Grant under this section in the amount equal to the sum 
        of--
                    ``(i) the maximum Federal Pell Grant for which a 
                student shall be eligible during an award year, as 
                specified in the last enacted appropriation Act 
                applicable to that award year;
                    ``(ii) the Federal Pell Grant increase described in 
                paragraph (9) applicable to that award year; and
                    ``(iii) an additional amount equal to the absolute 
                value of the student's expected family contribution.
            ``(B) Cost of attendance limit.--Notwithstanding paragraph 
        (3), in the case of a student whose expected family 
        contribution is a negative number, the student's Federal Pell 
        Grant under this subpart, as calculated under subparagraph (A), 
        shall not exceed the student's cost of attendance at such 
        institution, and if the amount of the student's Federal Pell 
        Grant exceeds such cost of attendance for that year, such 
        amount shall be reduced accordingly.
            ``(C) Formula otherwise unaffected.--Except as provided in 
        subparagraphs (A) and (B), nothing in this paragraph shall be 
        construed to alter the requirements of this section, or 
        authorize the imposition of additional requirements, for the 
        determination and allocation of Federal Pell Grants under this 
        section.''.

SEC. 6. LENDER-OF-LAST-RESORT.

    (a) In General.--Section 428(j) of the Higher Education Act of 1965 
(20 U.S.C. 1078(j)) is amended--
            (1) in the first sentence of paragraph (1), by striking 
        ``part.'' and inserting ``part or who attend an institution of 
        higher education in the State that is designated under 
        paragraph (4).'';
            (2) in paragraph (2)(B), by inserting ``, in the case of 
        students applying for loans under this subsection because of an 
        inability to otherwise obtain loans under this part,'' after 
        ``lender, nor'';
            (3) in paragraph (3)(C)--
                    (A) in the first sentence, by inserting ``or 
                designates an institution of higher education for 
                participation in the program under this subsection 
                under paragraph (4),'' after ``under this part''; and
                    (B) in the third sentence, by inserting ``or to 
                eligible borrowers who attend an institution in the 
                State that is designated under paragraph (4)'' after 
                ``problems''; and
            (4) by adding at the end the following:
            ``(4) Institution-wide student qualification.--Upon the 
        request of an institution of higher education, the Secretary 
        shall designate such institution for participation in the 
        lender-of-last-resort program under this paragraph in the State 
        where the institution is located. If the Secretary designates 
        an institution under this paragraph, the guaranty agency shall 
        make loans, in the same manner as such loans are made under 
        paragraph (1), to students of the designated institution who 
        are eligible to receive interest benefits paid on the students' 
        behalf under subsection (a) of this section, regardless of 
        whether the students are otherwise unable to obtain loans under 
        this part.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 7. MANDATORY ADVANCES.

    (a) In General.--Section 421(b) of the Higher Education Act of 1965 
(20 U.S.C. 1071(b)) is amended--
            (1) in paragraph (4), by striking ``programs, and'' and 
        inserting ``programs,'';
            (2) in paragraph (5), by striking ``agencies.'' and 
        inserting ``agencies, and''; and
            (3) by adding at the end the following:
            ``(6) there is authorized to be appropriated, and there are 
        appropriated, out of any money in the Treasury not otherwise 
        appropriated, such sums as may be necessary for the purpose of 
        carrying out section 427(c)(7).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 8. EFFECTIVE DATE.

    Except as otherwise provided, the amendments made by this Act shall 
take effect on July 1, 2008.

Summary: Strengthening Student Aid for All Act - Amends the Higher Education Act of 1965 to increase the maximum annual and aggregate unsubsidized Stafford loan amounts that may be provided to undergraduate students under the Federal Family Education Loan (FFEL) program. Allows parents of dependent students to defer PLUS FFEL principal repayment until such students cease to be enrolled as undergraduates on at least a half-time basis. Directs the Secretary of Education to act as the secondary market of last resort for FFELs, until July 2009, by purchasing such loans from lenders who cannot sell them in the private financial markets and thereby raise the capital needed to make new loans. Permits the Secretary to act in such capacity after such date if economic conditions threaten timely, uninterrupted access to student loans. Changes title IV need analyses by allowing the calculation of a negative expected family contribution. Increases the Pell Grant available to students whose expected family contribution is a negative number. Allows institutions of higher education (IHEs) to participate in the FFEL lender-of-last-resort program, thereby requiring guaranty agencies serving as lenders of last resort to make FFELs to students of such IHEs regardless of their ability to otherwise obtain such loans. Authorizes the Secretary to advance needed funds to guaranty agencies acting as lenders of last resort in such situations.