To increase the amount of student loans that may be forgiven for highly qualified teachers in mathematics, science, and special education and for reading specialists.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Teacher Shortage Response Act of 
2004''.

SEC. 2. INCREASED QUALIFIED LOAN AMOUNTS.

    (a) FFEL Loans.--Section 428J(c) of the Higher Education Act of 
1965 (20 U.S.C. 1078-10(c)) is amended by adding at the end the 
following new paragraph:
            ``(3) Increased amounts for teachers in mathematics, 
        science, or special education.--
                    ``(A) Service qualifying for increased amounts.--
                Notwithstanding the amount specified in paragraph (1), 
                the aggregate amount that the Secretary shall repay 
                under this section shall not be more than $17,500 in 
                the case of--
                            ``(i) a secondary school teacher--
                                    ``(I) who meets the requirements of 
                                subsection (b), subject to subparagraph 
                                (D) of this paragraph; and
                                    ``(II) whose qualifying employment 
                                for purposes of such subsection has 
                                been teaching mathematics or science on 
                                a full-time basis;
                            ``(ii) an elementary or secondary school 
                        teacher--
                                    ``(I) who meets the requirements of 
                                subsection (b), subject to subparagraph 
                                (D) of this paragraph;
                                    ``(II) whose qualifying employment 
                                for purposes of such subsection has 
                                been as a special education teacher 
                                whose primary responsibility is to 
                                provide special education to children 
                                with disabilities (as those terms are 
                                defined in section 602 of the 
                                Individuals with Disabilities Act); and
                                    ``(III) who, as certified by the 
                                chief administrative officer of the 
                                public or nonprofit private elementary 
                                or secondary school in which the 
                                borrower is employed, is teaching 
                                children with disabilities that 
                                correspond with the borrower's special 
                                education training and has demonstrated 
                                knowledge and teaching skills in the 
                                content areas of the elementary or 
                                secondary school curriculum that the 
                                borrower is teaching; and
                            ``(iii) an elementary or secondary school 
                        teacher who primarily teaches reading and--
                                    ``(I) who meets the requirements of 
                                subsection (b), subject to subparagraph 
                                (D) of this paragraph;
                                    ``(II) who has obtained a separate 
                                reading instruction credential from the 
                                State in which the teacher is employed; 
                                and
                                    ``(III) who is certified by the 
                                chief administrative officer of the 
                                public or nonprofit private elementary 
                                or secondary school in which the 
                                borrower is employed to teach reading--
                                            ``(aa) as being proficient 
                                        in teaching the essential 
                                        components of reading 
                                        instruction as defined in 
                                        section 1208 of the Elementary 
                                        and Secondary Education Act of 
                                        1965; and
                                            ``(bb) as having such 
                                        credential.
                    ``(B) Accelerated payment.--Notwithstanding the 
                requirements of subsection (b)(1) and paragraph (1) of 
                this subsection that 5 consecutive complete years of 
                service have been completed prior to the receipt of 
                loan forgiveness, in the case of service described in 
                subparagraph (A) of this paragraph, the Secretary shall 
                repay a portion of a borrower's loan obligation 
                outstanding at the commencement of the qualifying 
                service under this subsection, not to exceed a total of 
                $17,500, in the following increments:
                            ``(i) up to $1,750, or 10 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the second year of such 
                        service;
                            ``(ii) up to $2,625, or 15 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the third year of such 
                        service;
                            ``(iii) up to $4,375, or 25 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the fourth year of such 
                        service; and
                            ``(iv) up to $8,750, or 50 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the fifth year of such 
                        service.
                    ``(C) Promise to complete service required for 
                accelerated payment.--Any borrower who receives 
                accelerated payment under this paragraph shall enter 
                into an agreement to continue in the qualifying service 
                for not less than 5 consecutive complete school years, 
                or, upon a failure to complete such 5 years, to repay 
                the United States, in accordance with regulations 
                prescribed by the Secretary, the amount of the loans 
                repaid by the Secretary under this paragraph, together 
                with interest thereon and, to the extent required in 
                such regulations, the reasonable costs of collection. 
                Such regulations may provide for waiver by the 
                Secretary of such repayment obligations upon proof of 
                economic hardship as specified in such regulations.
                    ``(D) Higher poverty enrollment required.--In order 
                to qualify for an increased repayment amount under this 
                paragraph, section 465(a)(2)(A) shall, for purposes of 
                subsection (b)(1)(A) of this section, be applied by 
                substituting `40 percent of the total enrollment' for 
                `30 percent of the total enrollment'.''.
    (b) Direct Loans.--Section 460(c) of the Higher Education Act of 
1965 (20 U.S.C. 1087j(c)) is amended by adding at the end the following 
new paragraph:
            ``(3) Increased amounts for teachers in mathematics, 
        science, or special education.--
                    ``(A) Service qualifying for increased amounts.--
                Notwithstanding the amount specified in paragraph (1), 
                the aggregate amount that the Secretary shall repay 
                under this section shall not be more than $17,500 in 
                the case of--
                            ``(i) a secondary school teacher--
                                    ``(I) who meets the requirements of 
                                subsection (b)(1), subject to 
                                subparagraph (D) of this paragraph; and
                                    ``(II) whose qualifying employment 
                                for purposes of such subsection has 
                                been teaching mathematics or science on 
                                a full-time basis;
                            ``(ii) an elementray or secondary school 
                        teacher--
                                    ``(I) who meets the requirements of 
                                subsection (b)(1), subject to 
                                subparagraph (D) of this paragraph;
                                    ``(II) whose qualifying employment 
                                for purposes of such subsection has 
                                been as a special education teacher 
                                whose primary responsibility is to 
                                provide special education to children 
                                with disabilities (as those terms are 
                                defined in section 602 of the 
                                Individuals with Disabilities Act); and
                                    ``(III) who, as certified by the 
                                chief administrative officer of the 
                                public or nonprofit private elementary 
                                or secondary school in which the 
                                borrower is employed, is teaching 
                                children with disabilities that 
                                correspond with the borrower's special 
                                education training and has demonstrated 
                                knowledge and teaching skills in the 
                                content areas of the elementary or 
                                secondary school curriculum that the 
                                borrower is teaching; and
                            ``(iii) an elementary or secondary school 
                        teacher who primarily teaches reading and--
                                    ``(I) who meets the requirements of 
                                subsection (b), subject to subparagraph 
                                (D) of this paragraph;
                                    ``(II) who has obtained a separate 
                                reading instruction credential from the 
                                State in which the teacher is employed; 
                                and
                                    ``(III) who is certified by the 
                                chief administrative officer of the 
                                public or nonprofit private elementary 
                                or secondary school in which the 
                                borrower is employed to teach reading--
                                            ``(aa) as being proficient 
                                        in teaching the essential 
                                        components of reading 
                                        instruction as defined in 
                                        section 1208 of the Elementary 
                                        and Secondary Education Act of 
                                        1965; and
                                            ``(bb) as having such 
                                        credential.
                    ``(B) Accelerated payment.--Notwithstanding the 
                requirements of subsection (b)(1)(A) and paragraph (1) 
                of this subsection that 5 consecutive complete years of 
                service have been completed prior to the receipt of 
                loan forgiveness, in the case of service described in 
                subparagraph (A) of this paragraph, the Secretary shall 
                repay a portion of a borrower's loan obligation 
                outstanding at the commencement of the qualifying 
                service under this subsection, not to exceed a total of 
                $17,500, in the following increments:
                            ``(i) up to $1,750, or 10 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the second year of such 
                        service;
                            ``(ii) up to $2,625, or 15 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the third year of such 
                        service;
                            ``(iii) up to $4,375, or 25 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the fourth year of such 
                        service; and
                            ``(iv) up to $8,750, or 50 percent of such 
                        outstanding loan obligation, whichever is less, 
                        at the completion of the fifth year of such 
                        service.
                    ``(C) Promise to complete service required for 
                accelerated payment.--Any borrower who receives 
                accelerated payment under this paragraph shall enter 
                into an agreement to continue in the qualifying service 
                for not less than 5 consecutive complete school years, 
                or, upon a failure to complete such 5 years, to repay 
                the United States, in accordance with regulations 
                prescribed by the Secretary, the amount of the loans 
                repaid by the Secretary under this paragraph, together 
                with interest thereon and, to the extent required in 
                such regulations, the reasonable costs of collection. 
                Such regulations may provide for waiver by the 
                Secretary of such repayment obligations upon proof of 
                economic hardship as specified in such regulations.
                    ``(D) Higher poverty enrollment required.--In order 
                to qualify for an increased repayment amount under this 
                paragraph, section 465(a)(2)(A) shall, for purposes of 
                subsection (b)(1)(A)(i) of this section, be applied by 
                substituting `40 percent of the total enrollment' for 
                `30 percent of the total enrollment'.''.

SEC. 3. IMPLEMENTING HIGHLY QUALIFIED TEACHER REQUIREMENTS.

    (a) Amendments.--
            (1) FFEL loans.--Section 428J(b)(1) of the Higher Education 
        Act of 1965 (20 U.S.C. 1078-10(b)(1)) is amended--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (A); and
                    (B) by striking subparagraphs (B) and (C) and 
                inserting the following:
                    ``(B) if employed as an elementary or secondary 
                school teacher, is highly qualified as defined in 
                section 9101(23) of the Elementary Secondary Education 
                Act of 1965; and''.
            (2) Direct loans.--Section 460(b)(1)(A) of such Act (20 
        U.S.C. 1087j(b)(1)(A)) is amended--
                    (A) by inserting ``and'' after the semicolon at the 
                end of clause (i); and
                    (B) by striking clauses (ii) and (iii) and 
                inserting the following:
                            ``(ii) if employed as an elementary or 
                        secondary school teacher, is highly qualified 
                        as defined in section 9101(23) of the 
                        Elementary Secondary Education Act of 1965; 
                        and''.
    (b) Transition Rule.--
            (1) Rule.--The amendments made by subsection (a) of this 
        section to sections 428J(b)(1) and 460(b)(1)(A) of the Higher 
        Education Act of 1965 shall not be applied to disqualify any 
        individual who, before the date of enactment of this Act, 
        commenced service that met and continues to meet the 
        requirements of such sections as in effect before such date of 
        enactment.
            (2) Rule not applicable to increased qualified loan 
        amounts.--Paragraph (1) of this subsection shall not apply for 
        purposes of obtaining increased qualified loan amounts under 
        sections 428J(b)(3) and 460(b)(3) of the Higher Education Act 
        of 1965 as added by section 2 of this Act.

SEC. 4. INFORMATION ON BENEFITS TO RURAL SCHOOL DISTRICTS.

    The Secretary shall--
            (1) notify local educational agencies eligible to 
        participate in the Small Rural Achievement Program authorized 
        under subpart 1 of part B of title VI of the Elementary and 
        Secondary Education Act of 1965 of the benefits available under 
        the amendments made by this Act; and
            (2) encourage such agencies to notify their teachers of 
        such benefits.

Summary: Teacher Shortage Response Act of 2004 - Amends the Higher Education Act of 1965 to increase the amount of student loans that may be forgiven for highly qualified teachers in mathematics, science, and special education and for reading specialists. Directs the Secretary of Education to notify local educational agencies eligible to participate in the Small Rural Achievement Program under the Elementary and Secondary Education Act of 1965 of the benefits available under the amendments made by this Act, and to encourage such agencies to notify their teachers of such increased benefits.