Higher Education Savings Accounts Act of 2015

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Savings Accounts 
Act of 2015''.

SEC. 2. HIGHER EDUCATION PLEDGE ACCOUNTS PILOT PROGRAM.

    (a) In General.--The Secretary shall carry out a pilot program 
under which savings accounts (to be known as ``higher education pledge 
accounts'') are established for the benefit of eligible students in 
accordance with this section.
    (b) Eligibility and Selection of Participants.--
            (1) Eligible students.--To be eligible to participate in 
        the pilot program, a student must be--
                    (A) enrolled in the 9th or 10th grade at a 
                secondary school; and
                    (B) eligible to receive free or reduced price 
                lunches under the Richard B. Russell National School 
                Lunch Act (42 U.S.C. 1751 et seq.).
            (2) Selection of eligible students.--The Secretary shall 
        select eligible students for participation in the pilot program 
        based on such criteria as the Secretary determines to be 
        appropriate.
    (c) Deposits.--
            (1) Initial deposit.--
                    (A) In general.--The Secretary shall deposit an 
                initial amount into each higher education pledge 
                account.
                    (B) Amount of initial deposit.--The amount of the 
                initial deposit described in subparagraph (A) shall be 
                equal to the amount of the maximum Federal Pell Grant 
                under section 401(b) of the Higher Education Act of 
                1965, as specified in the last enacted appropriation 
                Act applicable to that award year.
            (2) Subsequent deposits.--
                    (A) In general.--The Secretary may make additional 
                deposits into a higher education pledge account based 
                on an evaluation of the academic progress of the 
                student in accordance with subsection (g).
                    (B) Amount of subsequent deposits.--The amount of 
                an additional deposit made under subparagraph (A) for 
                an award year beginning after the date of the initial 
                deposit under paragraph (1) shall be not less than the 
                amount of the maximum Federal Pell Grant under section 
                401(b) of the Higher Education Act of 1965, as 
                specified in the last enacted appropriation Act 
                applicable to that award year.
    (d) Distributions.--A student may use funds from the student's 
higher education pledge account only to pay the cost of attendance at a 
qualified institution.
    (e) Tax Treatment of Accounts.--
            (1) In general.--A higher education pledge account is 
        exempt from taxation under subtitle A of the Internal Revenue 
        Code of 1986.
            (2) Contributions and distributions.--For purposes of such 
        subtitle--
                    (A) any contribution to a higher education pledge 
                account by the Secretary under this Act shall not be 
                includible in gross income; and
                    (B) any distribution from a higher education pledge 
                account which is permitted under this Act shall not be 
                includible in the gross income of the individual for 
                whose benefit such account is maintained.
    (f) Offset of Federal Pell Grant Amounts.--The amount of any 
Federal Pell Grant awarded to a student attending a qualified 
institution shall be reduced by the amount in such student's higher 
education pledge account.
    (g) Monitoring of Academic Progress.--The Secretary shall monitor 
the academic progress of each student for whose benefit a higher 
education pledge account is maintained.
    (h) Financial Counseling.--The Secretary shall ensure that each 
student for whose benefit a higher education pledge account is 
maintained receives not less than 12 hours of financial counseling with 
respect to--
            (1) the rules pertaining to deposits, distributions, and 
        the tax treatment of funds in the higher education pledge 
        account; and
            (2) sources of Federal financial assistance for higher 
        education.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Cost of attendance.--The term ``cost of attendance'' 
        has the meaning given the term in section 472 of the Higher 
        Education Act of 1965 (20 U.S.C. 1087ll).
            (2) Federal financial assistance.--The term ``Federal 
        financial assistance'' means any grant, loan, or other 
        financial assistance that may be provided to an individual 
        student under the Higher Education Act of 1965.
            (3) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given the 
        term in section 102(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1002(a)) except that such term does not include 
        proprietary institutions of higher education (as defined in 
        section 102(b) of such Act (20 U.S.C. 1002(b))).
            (4) Qualified institution.--The term ``qualified 
        institution'' means an institution of higher education that--
                    (A) has in effect a program participation agreement 
                under section 487 of the Higher Education Act of 1965 
                (20 U.S.C. 1094); and
                    (B) is eligible to participate in programs under 
                title IV of such Act (20 U.S.C. 1070 et seq.).
            (5) Secondary school.--The term ``secondary school'' has 
        the meaning given the term in section 9101 of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 7801).
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.

Summary: Higher Education Savings Accounts Act of 2015 This bill requires the Department of Education (ED) to carry out a pilot program under which tax-exempt savings accounts are established for the benefit of 9th and 10th grade students who are eligible to receive free or reduced price lunches under the Richard B. Russell National School Lunch Act. ED: (1) shall deposit into each account for a selected student an initial amount equal to the amount of the maximum federal Pell Grant for the award year, and (2) may make additional deposits of such amount based on the student's academic progress. A student may use funds from such account only to pay the cost of attendance at a qualified institution. Any contribution to or distribution from such account shall not be includible in gross income. The amount of any Pell Grant awarded to a student attending a qualified institution shall be reduced by the amount in such student's account. ED shall: (1) monitor the academic progress of each student for whose benefit an account is maintained. And (2) ensure that each such student receives at least 12 hours of financial counseling on the rules pertaining to deposits, distributions, and the tax treatment of funds in the account and on sources of federal financial assistance for higher education.