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[110th Congress Public Law 84]
[From the U.S. Government Printing Office]

[DOCID: f:publ084.110]

[[Page 783]]

                  COLLEGE COST REDUCTION AND ACCESS ACT

[[Page 121 STAT. 784]]

Public Law 110-84
110th Congress

                                 An Act

 
To provide for reconciliation pursuant to section 601 of the concurrent 
    resolution on the budget for fiscal year 2008. <<NOTE: Sept. 27, 
                         2007 -  [H.R. 2669]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: College Cost Reduction and 
Access Act. 20 USC 1001 note.>> assembled,
SECTION 1. SHORT TITLE; REFERENCES.

    (a) Short Title.--This Act may be cited as the ``College Cost 
Reduction and Access Act''.
    (b) References.--Except as otherwise expressly provided, whenever in 
this Act an amendment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Higher 
Education Act of 1965 (20 U.S.C. 1001 et seq.).
    (c) <<NOTE: 20 USC 1070a note.>> Effective Date.--Except as 
otherwise expressly provided, the amendments made by this Act shall be 
effective on October 1, 2007.

  TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER 
                                EDUCATION

SEC. 101. TUITION SENSITIVITY.

    (a) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is amended--
            (1) by striking paragraph (3); and
            (2) by redesignating paragraphs (4) through (9) as 
        paragraphs (3) through (8), respectively.

    (b) <<NOTE: 20 USC 1070a note.>> Effective Date.--The amendments 
made by subsection (a) shall be effective with respect to determinations 
of Federal Pell Grant amounts for award years beginning on or after July 
1, 2007.

    (c) Authorization and Appropriation of Funds.--There is authorized 
to be appropriated, and there is appropriated, out of any money in the 
Treasury not otherwise appropriated, for the Department of Education to 
carry out the amendment made by subsection (a), $11,000,000 for fiscal 
year 2008.
SEC. 102. MANDATORY PELL GRANT INCREASES.

    (a) Extension of Authority.--Section 401(a) (20 U.S.C. 1070a(a)) is 
amended by striking ``fiscal year 2004'' and inserting ``fiscal year 
2017''.

[[Page 121 STAT. 785]]

    (b) Funding for Increases.--Section 401(b) (20 U.S.C. 1070a(b)) is 
amended by adding at the end the following new paragraph:
            ``(9) Additional funds.--
                    ``(A) In general.--There are authorized to be 
                appropriated, and there are appropriated, to carry out 
                subparagraph (B) of this paragraph (in addition to any 
                other amounts appropriated to carry out this section and 
                out of any money in the Treasury not otherwise 
                appropriated) the following amounts--
                          ``(i) $2,030,000,000 for fiscal year 2008;
                          ``(ii) $2,090,000,000 for fiscal year 2009;
                          ``(iii) $3,030,000,000 for fiscal year 2010;
                          ``(iv) $3,090,000,000 for fiscal year 2011;
                          ``(v) $5,050,000,000 for fiscal year 2012;
                          ``(vi) $105,000,000 for fiscal year 2013;
                          ``(vii) $4,305,000,000 for fiscal year 2014;
                          ``(viii) $4,400,000,000 for fiscal year 2015;
                          ``(ix) $4,600,000,000 for fiscal year 2016; 
                      and
                          ``(x) $4,900,000,000 for fiscal year 2017.
                    ``(B) Increase in federal pell grants.--The amounts 
                made available pursuant to subparagraph (A) of this 
                paragraph shall be used to increase the amount of 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, 
                by--
                          ``(i) $490 for each of the award years 2008-
                      2009 and 2009-2010;
                          ``(ii) $690 for each of the award years 2010-
                      2011 and 2011-2012; and
                          ``(iii) $1,090 for award year 2012-2013.
                    ``(C) Eligibility.--The Secretary shall only award 
                an increased amount of a Federal Pell Grant under this 
                section for any award year pursuant to the provisions of 
                this paragraph to students who qualify for a Federal 
                Pell Grant award under the maximum grant award enacted 
                in the annual appropriation Act for such award year 
                without regard to the provisions of this paragraph.
                    ``(D) Formula otherwise unaffected.--Except as 
                provided in subparagraphs (B) and (C), 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.
                    ``(E) Ratable increases and decreases.--The amounts 
                specified in subparagraph (B) shall be ratably increased 
                or decreased to the extent that funds available under 
                subparagraph (A) exceed or are less than (respectively) 
                the amount required to provide the amounts specified in 
                subparagraph (B).
                    ``(F) Use of fiscal year funds for award years.--The 
                amounts made available by subparagraph (A) for any 
                fiscal year shall be available and remain available for 
                use under subparagraph (B) for the award year that 
                begins in such fiscal year.''.

[[Page 121 STAT. 786]]

SEC. 103. UPWARD BOUND.

    Section 402C <<NOTE: 20 USC 1070a-13.>> is further amended by adding 
at the end the following new subsection:

    ``(f) Additional Funds.--
            ``(1) Authorization and appropriation.--There are authorized 
        to be appropriated, and there are appropriated to the Secretary, 
        from funds not otherwise appropriated, $57,000,000 for each of 
        the fiscal years 2008 through 2011 to carry out paragraph (2), 
        except that any amounts that remain unexpended for such purpose 
        for each of such fiscal years may be available for technical 
        assistance and administration costs for the Upward Bound 
        program. The authority to award grants under this subsection 
        shall expire at the end of fiscal year 2011.
            ``(2) Use of funds.--The amounts made available by paragraph 
        (1) shall be available to provide assistance to all Upward Bound 
        projects that did not receive assistance in fiscal year 2007 and 
        that have a grant score above 70. Such assistance shall be made 
        available in the form of 4-year grants.''.
SEC. 104. TEACH GRANTS.

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

                        ``Subpart 9--TEACH Grants

``SEC. <<NOTE: 20 USC 1070g.>> 420L. DEFINITIONS.

    ``For the purposes of this subpart:
            ``(1) Eligible institution.--The term `eligible institution' 
        means an institution of higher education, as defined in section 
        102, that the Secretary determines--
                    ``(A) provides high quality teacher preparation and 
                professional development services, including extensive 
                clinical experience as a part of pre-service 
                preparation;
                    ``(B) is financially sound;
                    ``(C) provides pedagogical course work, or 
                assistance in the provision of such coursework, 
                including the monitoring of student performance, and 
                formal instruction related to the theory and practices 
                of teaching; and
                    ``(D) provides supervision and support services to 
                teachers, or assistance in the provision of such 
                services, including mentoring focused on developing 
                effective teaching skills and strategies.
            ``(2) Post-baccalaureate.--The term `post-baccalaureate' 
        means a program of instruction for individuals who have 
        completed a baccalaureate degree, that does not lead to a 
        graduate degree, and that consists of courses required by a 
        State in order for a teacher candidate to receive a professional 
        certification or licensing credential that is required for 
        employment as a teacher in an elementary school or secondary 
        school in that State, except that such term shall not include 
        any program of instruction offered by an eligible institution 
        that offers a baccalaureate degree in education.
            ``(3) Teacher candidate.--The term `teacher candidate' means 
        a student or teacher described in subparagraph (A) or (B) of 
        section 420N(a)(2).

[[Page 121 STAT. 787]]

``SEC. <<NOTE: 20 USC 1070g-1.>> 420M. PROGRAM ESTABLISHED.

    ``(a) Program Authority.--
            ``(1) Payments required.--The Secretary shall pay to each 
        eligible institution such sums as may be necessary to pay to 
        each teacher candidate who files an application and agreement in 
        accordance with section 420N, and who qualifies under paragraph 
        (2) of section 420N(a), a TEACH Grant in the amount of $4,000 
        for each academic year during which that teacher candidate is in 
        attendance at the institution.
            ``(2) References.--Grants made under paragraph (1) shall be 
        known as `Teacher Education Assistance for College and Higher 
        Education Grants' or `TEACH Grants'.

    ``(b) Payment Methodology.--
            ``(1) Prepayment.--Not <<NOTE: Federal Register, 
        publication.>> less than 85 percent of any funds provided to an 
        eligible institution under subsection (a) shall be advanced to 
        the eligible institution prior to the start of each payment 
        period and shall be based upon an amount requested by the 
        institution as needed to pay teacher candidates until such time 
        as the Secretary determines and publishes in the Federal 
        Register with an opportunity for comment, an alternative payment 
        system that provides payments to institutions in an accurate and 
        timely manner, except that this sentence shall not be construed 
        to limit the authority of the Secretary to place an institution 
        on a reimbursement system of payment.
            ``(2) Direct payment.--Nothing in this section shall be 
        interpreted to prohibit the Secretary from paying directly to 
        teacher candidates, in advance of the beginning of the academic 
        term, an amount for which teacher candidates are eligible, in 
        cases where the eligible institution elects not to participate 
        in the disbursement system required by paragraph (1).
            ``(3) Distribution of grants to teacher candidates.--
        Payments under this subpart shall be made, in accordance with 
        regulations promulgated by the Secretary for such purpose, in 
        such manner as will best accomplish the purposes of this 
        subpart. Any disbursement allowed to be made by crediting the 
        teacher candidate's account shall be limited to tuition and fees 
        and, in the case of institutionally-owned housing, room and 
        board. The teacher candidate may elect to have the institution 
        provide other such goods and services by crediting the teacher 
        candidate's account.

    ``(c) Reductions in Amount.--
            ``(1) Part-time students.--In any case where a teacher 
        candidate attends an eligible institution on less than a full-
        time basis (including a teacher candidate who attends an 
        eligible institution on less than a half-time basis) during any 
        academic year, the amount of a grant under this subpart for 
        which that teacher candidate is eligible shall be reduced in 
        proportion to the degree to which that teacher candidate is not 
        attending on a full-time basis, in accordance with a schedule of 
        reductions established by the Secretary for the purposes of this 
        subpart, computed in accordance with this subpart. 
        Such <<NOTE: Regulations. Federal Register, 
        publication.>> schedule of reductions shall be established by 
        regulation and published in the Federal Register in accordance 
        with section 482 of this Act.
            ``(2) No exceeding cost.--The amount of a grant awarded 
        under this subpart, in combination with Federal assistance

[[Page 121 STAT. 788]]

        and other student assistance, shall not exceed the cost of 
        attendance (as defined in section 472) at the eligible 
        institution at which that teacher candidate is in attendance. 
        If, with respect to any teacher candidate for any academic year, 
        it is determined that the amount of a TEACH Grant exceeds the 
        cost of attendance for that year, the amount of the TEACH Grant 
        shall be reduced until such grant does not exceed the cost of 
        attendance at the eligible institution.

    ``(d) Period of Eligibility for Grants.--
            ``(1) Undergraduate and post-baccalaureate students.--The 
        period during which an undergraduate or post-baccalaureate 
        student may receive grants under this subpart shall be the 
        period required for the completion of the first undergraduate 
        baccalaureate or post-baccalaureate course of study being 
        pursued by the teacher candidate at the eligible institution at 
        which the teacher candidate is in attendance, except that--
                    ``(A) any period during which the teacher candidate 
                is enrolled in a noncredit or remedial course of study 
                as described in paragraph (3) shall not be counted for 
                the purpose of this paragraph; and
                    ``(B) the total amount that a teacher candidate may 
                receive under this subpart for undergraduate or post-
                baccalaureate study shall not exceed $16,000.
            ``(2) Graduate students.--The period during which a graduate 
        student may receive grants under this subpart shall be the 
        period required for the completion of a master's degree course 
        of study pursued by the teacher candidate at the eligible 
        institution at which the teacher candidate is in attendance, 
        except that the total amount that a teacher candidate may 
        receive under this subpart for graduate study shall not exceed 
        $8,000.
            ``(3) Remedial course; study abroad.--Nothing in this 
        section shall be construed to exclude from eligibility courses 
        of study which are noncredit or remedial in nature (including 
        courses in English language acquisition) which are determined by 
        the eligible institution to be necessary to help the teacher 
        candidate be prepared for the pursuit of a first undergraduate 
        baccalaureate or post-baccalaureate degree or certificate or, in 
        the case of courses in English language instruction, to be 
        necessary to enable the teacher candidate to utilize already 
        existing knowledge, training, or skills. Nothing in this section 
        shall be construed to exclude from eligibility programs of study 
        abroad that are approved for credit by the home institution at 
        which the teacher candidate is enrolled.
``SEC. <<NOTE: 20 USC 1070g-2.>> 420N. APPLICATIONS; ELIGIBILITY.

    ``(a) Applications; Demonstration of Eligibility.--
            ``(1) Filing required.--The Secretary shall periodically set 
        dates by which teacher candidates shall file applications for 
        grants under this subpart. Each teacher candidate desiring a 
        grant under this subpart for any year shall file an application 
        containing such information and assurances as the Secretary may 
        determine necessary to enable the Secretary to carry out the 
        functions and responsibilities of this subpart.

[[Page 121 STAT. 789]]

            ``(2) Demonstration of teach grant eligibility.--Each 
        application submitted under paragraph (1) shall contain such 
        information as is necessary to demonstrate that--
                    ``(A) if the applicant is an enrolled student--
                          ``(i) the student is an eligible student for 
                      purposes of section 484;
                          ``(ii) the student--
                                    ``(I) has a grade point average that 
                                is determined, under standards 
                                prescribed by the Secretary, to be 
                                comparable to a 3.25 average on a zero 
                                to 4.0 scale, except that, if the 
                                student is in the first year of a 
                                program of undergraduate education, such 
                                grade point average shall be determined 
                                on the basis of the student's cumulative 
                                secondary school grade point average; or
                                    ``(II) displayed high academic 
                                aptitude by receiving a score above the 
                                75th percentile on at least one of the 
                                batteries in an undergraduate, post-
                                baccalaureate, or graduate school 
                                admissions test; and
                          ``(iii) the student is completing coursework 
                      and other requirements necessary to begin a career 
                      in teaching, or plans to complete such coursework 
                      and requirements prior to graduating; or
                    ``(B) if the applicant is a current or prospective 
                teacher applying for a grant to obtain a graduate 
                degree--
                          ``(i) the applicant is a teacher or a retiree 
                      from another occupation with expertise in a field 
                      in which there is a shortage of teachers, such as 
                      mathematics, science, special education, English 
                      language acquisition, or another high-need 
                      subject; or
                          ``(ii) the applicant is or was a teacher who 
                      is using high-quality alternative certification 
                      routes, such as Teach for America, to get 
                      certified.

    ``(b) Agreements to Serve.--Each application under subsection (a) 
shall contain or be accompanied by an agreement by the applicant that--
            ``(1) the applicant will--
                    ``(A) serve as a full-time teacher for a total of 
                not less than 4 academic years within 8 years after 
                completing the course of study for which the applicant 
                received a TEACH Grant under this subpart;
                    ``(B) teach in a school described in section 
                465(a)(2)(A);
                    ``(C) teach in any of the following fields--
                          ``(i) mathematics;
                          ``(ii) science;
                          ``(iii) a foreign language;
                          ``(iv) bilingual education;
                          ``(v) special education;
                          ``(vi) as a reading specialist; or
                          ``(vii) another field documented as high-need 
                      by the Federal Government, State government, or 
                      local educational agency, and approved by the 
                      Secretary;
                    ``(D) <<NOTE: Certification.>> submit evidence of 
                such employment in the form of a certification by the 
                chief administrative officer of the school upon 
                completion of each year of such service; and

[[Page 121 STAT. 790]]

                    ``(E) comply with the requirements for being a 
                highly qualified teacher as defined in section 9101 of 
                the Elementary and Secondary Education Act of 1965; and
            ``(2) in the event that the applicant is determined to have 
        failed or refused to carry out such service obligation, the sum 
        of the amounts of any TEACH Grants received by such applicant 
        will be treated as a loan and collected from the applicant in 
        accordance with subsection (c) and the regulations thereunder.

    ``(c) Repayment for Failure to Complete Service.--In the event that 
any recipient of a grant under this subpart fails or refuses to comply 
with the service obligation in the agreement under subsection (b), the 
sum of the amounts of any TEACH Grants received by such recipient shall, 
upon a determination of such a failure or refusal in such service 
obligation, be treated as a Federal Direct Unsubsidized Stafford Loan 
under part D of title IV, and shall be subject to repayment, together 
with interest thereon accruing from the date of the grant award, in 
accordance with terms and conditions specified by the Secretary in 
regulations under this subpart.
``SEC. <<NOTE: 20 USC 1070g-3.>> 420O. PROGRAM PERIOD AND FUNDING.

    ``Beginning on July 1, 2008, there shall be available to the 
Secretary to carry out this subpart, from funds not otherwise 
appropriated, such sums as may be necessary to provide TEACH Grants in 
accordance with this subpart to each eligible applicant.''.

         TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS

SEC. 201. INTEREST RATE REDUCTIONS.

    (a) FFEL Interest Rates.--
            (1) Section 427A(l) (20 U.S.C. 1077a(l)) is amended by 
        adding at the end the following new paragraph:
            ``(4) Reduced rates for undergraduate subsidized loans.--
        Notwithstanding subsection (h) and paragraph (1) of this 
        subsection, with respect to any loan to an undergraduate student 
        made, insured, or guaranteed under this part (other than a loan 
        made pursuant to section 428B, 428C, or 428H) for which the 
        first disbursement is made on or after July 1, 2006, and before 
        July 1, 2012, the applicable rate of interest shall be as 
        follows:
                    ``(A) For a loan for which the first disbursement is 
                made on or after July 1, 2006, and before July 1, 2008, 
                6.8 percent on the unpaid principal balance of the loan.
                    ``(B) For a loan for which the first disbursement is 
                made on or after July 1, 2008, and before July 1, 2009, 
                6.0 percent on the unpaid principal balance of the loan.
                    ``(C) For a loan for which the first disbursement is 
                made on or after July 1, 2009, and before July 1, 2010, 
                5.6 percent on the unpaid principal balance of the loan.
                    ``(D) For a loan for which the first disbursement is 
                made on or after July 1, 2010, and before July 1, 2011, 
                4.5 percent on the unpaid principal balance of the loan.

[[Page 121 STAT. 791]]

                    ``(E) For a loan for which the first disbursement is 
                made on or after July 1, 2011, and before July 1, 2012, 
                3.4 percent on the unpaid principal balance of the 
                loan.''.
            (2) Special allowance cross reference.--Section 
        438(b)(2)(I)(ii)(II) (20 U.S.C. 1087-1(b)(2)(I)(ii)(II)) is 
        amended by striking ``section 427A(l)(1)'' and inserting 
        ``section 427A(l)(1) or (l)(4)''.

    (b) Direct Loan Interest Rates.--Section 455(b)(7) (20 U.S.C. 
1087e(b)(7)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Reduced rates for undergraduate fdsl.--
                Notwithstanding the preceding paragraphs of this 
                subsection and subparagraph (A) of this paragraph, for 
                Federal Direct Stafford Loans made to undergraduate 
                students for which the first disbursement is made on or 
                after July 1, 2006, and before July 1, 2012, the 
                applicable rate of interest shall be as follows:
                          ``(i) For a loan for which the first 
                      disbursement is made on or after July 1, 2006, and 
                      before July 1, 2008, 6.8 percent on the unpaid 
                      principal balance of the loan.
                          ``(ii) For a loan for which the first 
                      disbursement is made on or after July 1, 2008, and 
                      before July 1, 2009, 6.0 percent on the unpaid 
                      principal balance of the loan.
                          ``(iii) For a loan for which the first 
                      disbursement is made on or after July 1, 2009, and 
                      before July 1, 2010, 5.6 percent on the unpaid 
                      principal balance of the loan.
                          ``(iv) For a loan for which the first 
                      disbursement is made on or after July 1, 2010, and 
                      before July 1, 2011, 4.5 percent on the unpaid 
                      principal balance of the loan.
                          ``(v) For a loan for which the first 
                      disbursement is made on or after July 1, 2011, and 
                      before July 1, 2012, 3.4 percent on the unpaid 
                      principal balance of the loan.''.
SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE ARMED 
                        FORCES.

    (a) Federal Family Education Loans.--Section 428(b)(1)(M)(iii) (20 
U.S.C. 1078(b)(1)(M)(iii)) is amended--
            (1) in the matter preceding subclause (I), by striking ``not 
        in excess of 3 years'';
            (2) in subclause (II), by striking ``; or'' and inserting a 
        comma; and
            (3) by adding at the end the following:
                      ``and for the 180-day period following the 
                      demobilization date for the service described in 
                      subclause (I) or (II); or''.

    (b) Direct Loans.--Section 455(f)(2)(C) (20 U.S.C. 1087e(f)(2)(C)) 
is amended--
            (1) in the matter preceding clause (i), by striking ``not in 
        excess of 3 years'';
            (2) in clause (ii), by striking ``; or'' and inserting a 
        comma; and
            (3) by adding at the end the following:

[[Page 121 STAT. 792]]

                ``and for the 180-day period following the 
                demobilization date for the service described in clause 
                (i) or (ii); or''.

    (c) Perkins Loans.--Section 464(c)(2)(A)(iii) (20 U.S.C. 
1087dd(c)(2)(A)(iii)) is amended--
            (1) in the matter preceding subclause (I), by striking ``not 
        in excess of 3 years'';
            (2) in subclause (II), by striking the semicolon and 
        inserting a comma; and
            (3) by adding at the end the following:

``and for the 180-day period following the demobilization date for the 
service described in subclause (I) or (II);''.
    (d) Applicability.--Section 8007(f) of the Higher Education 
Reconciliation Act of 2005 (20 U.S.C. 1078 note) is amended by striking 
``loans for which'' and all that follows through the period at the end 
and inserting ``all loans under title IV of the Higher Education Act of 
1965.''.
SEC. 203. INCOME-BASED REPAYMENT.

    (a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.) is 
amended by adding at the end the following:
``SEC. <<NOTE: 20 USC 1098e.>> 493C. INCOME-BASED REPAYMENT.

    ``(a) Definitions.--In this section:
            ``(1) Excepted plus loan.--The term `excepted PLUS loan' 
        means a loan under section 428B, or a Federal Direct PLUS Loan, 
        that is made, insured, or guaranteed on behalf of a dependent 
        student.
            ``(2) Excepted consolidation loan.--The term `excepted 
        consolidation loan' means a consolidation loan under section 
        428C, or a Federal Direct Consolidation Loan, if the proceeds of 
        such loan were used to the discharge the liability on an 
        excepted PLUS loan.
            ``(3) Partial financial hardship.--The term `partial 
        financial hardship', when used with respect to a borrower, means 
        that for such borrower--
                    ``(A) the annual amount due on the total amount of 
                loans made, insured, or guaranteed under part B or D 
                (other than an excepted PLUS loan or excepted 
                consolidation loan) to a borrower as calculated under 
                the standard repayment plan under section 
                428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year 
                repayment period; exceeds
                    ``(B) 15 percent of the result obtained by 
                calculating, on at least an annual basis, the amount by 
                which--
                          ``(i) the borrower's, and the borrower's 
                      spouse's (if applicable), adjusted gross income; 
                      exceeds
                          ``(ii) 150 percent of the poverty line 
                      applicable to the borrower's family size as 
                      determined under section 673(2) of the Community 
                      Services Block Grant Act (42 U.S.C. 9902(2)).

    ``(b) Income-Based Repayment Program Authorized.--Notwithstanding 
any other provision of this Act, the Secretary shall carry out a program 
under which--
            ``(1) a borrower of any loan made, insured, or guaranteed 
        under part B or D (other than an excepted PLUS loan or excepted 
        consolidation loan) who has a partial financial hardship 
        (whether or not the borrower's loan has been submitted to a 
        guaranty agency for default aversion or is already in default) 
        may elect, during any period the borrower has the

[[Page 121 STAT. 793]]

        partial financial hardship, to have the borrower's aggregate 
        monthly payment for all such loans not exceed the result 
        described in subsection (a)(3)(B) divided by 12;
            ``(2) the holder of such a loan shall apply the borrower's 
        monthly payment under this subsection first toward interest due 
        on the loan, next toward any fees due on the loan, and then 
        toward the principal of the loan;
            ``(3) any interest due and not paid under paragraph (2)--
                    ``(A) shall, on subsidized loans, be paid by the 
                Secretary for a period of not more than 3 years after 
                the date of the borrower's election under paragraph (1), 
                except that such period shall not include any period 
                during which the borrower is in deferment due to an 
                economic hardship described in section 435(o); and
                    ``(B) be capitalized--
                          ``(i) in the case of a subsidized loan, 
                      subject to subparagraph (A), at the time the 
                      borrower--
                                    ``(I) ends the election to make 
                                income-based repayment under this 
                                subsection; or
                                    ``(II) begins making payments of not 
                                less than the amount specified in 
                                paragraph (6)(A); or
                          ``(ii) in the case of an unsubsidized loan, at 
                      the time the borrower--
                                    ``(I) ends the election to make 
                                income-based repayment under this 
                                subsection; or
                                    ``(II) begins making payments of not 
                                less than the amount specified in 
                                paragraph (6)(A);
            ``(4) any principal due and not paid under paragraph (2) 
        shall be deferred;
            ``(5) the amount of time the borrower makes monthly payments 
        under paragraph (1) may exceed 10 years;
            ``(6) if the borrower no longer has a partial financial 
        hardship or no longer wishes to continue the election under this 
        subsection, then--
                    ``(A) the maximum monthly payment required to be 
                paid for all loans made to the borrower under part B or 
                D (other than an excepted PLUS loan or excepted 
                consolidation loan) shall not exceed the monthly amount 
                calculated under section 428(b)(9)(A)(i) or 
                455(d)(1)(A), based on a 10-year repayment period, when 
                the borrower first made the election described in this 
                subsection; and
                    ``(B) the amount of time the borrower is permitted 
                to repay such loans may exceed 10 years;
            ``(7) the Secretary shall repay or cancel any outstanding 
        balance of principal and interest due on all loans made under 
        part B or D (other than a loan under section 428B or a Federal 
        Direct PLUS Loan) to a borrower who--
                    ``(A) at any time, elected to participate in income-
                based repayment under paragraph (1); and
                    ``(B) for a period of time prescribed by the 
                Secretary, not to exceed 25 years, meets 1 or more of 
                the following requirements--
                          ``(i) has made reduced monthly payments under 
                      paragraph (1) or paragraph (6);
                          ``(ii) has made monthly payments of not less 
                      than the monthly amount calculated under section 
                      428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-
                      year

[[Page 121 STAT. 794]]

                      repayment period, when the borrower first made the 
                      election described in this subsection;
                          ``(iii) has made payments of not less than the 
                      payments required under a standard repayment plan 
                      under section 428(b)(9)(A)(i) or 455(d)(1)(A) with 
                      a repayment period of 10 years;
                          ``(iv) has made payments under an income-
                      contingent repayment plan under section 
                      455(d)(1)(D); or
                          ``(v) has been in deferment due to an economic 
                      hardship described in section 435(o);
            ``(8) a borrower who is repaying a loan made under part B or 
        D pursuant to income-based repayment may elect, at any time, to 
        terminate repayment pursuant to income-based repayment and repay 
        such loan under the standard repayment plan; and
            ``(9) the special allowance payment to a lender calculated 
        under section 438(b)(2)(I), when calculated for a loan in 
        repayment under this section, shall be calculated on the 
        principal balance of the loan and on any accrued interest unpaid 
        by the borrower in accordance with this section.

    ``(c) Eligibility Determinations.--
The <<NOTE: Procedures.>> Secretary shall establish procedures for 
annually determining the borrower's eligibility for income-based 
repayment, including verification of a borrower's annual income and the 
annual amount due on the total amount of loans made, insured, or 
guaranteed under part B or D (other than an excepted PLUS loan or 
excepted consolidation loan), and such other procedures as are necessary 
to effectively implement income-based repayment under this section. The 
Secretary shall consider, but is not limited to, the procedures 
established in accordance with section 455(e)(1) or in connection with 
income sensitive repayment schedules under section 428(b)(9)(A)(iii) or 
428C(b)(1)(E).''.

    (b) Conforming Amendments.--
            (1) Section 428C (20 U.S.C. 1078-3) is amended--
                    (A) in subsection (a)(3)(B)(i), by amending 
                subclause (V) to read as follows:
                                    ``(V) an individual may obtain a 
                                subsequent consolidation loan under 
                                section 455(g) only--
                                            ``(aa) for the purposes of 
                                        obtaining an income contingent 
                                        repayment plan, and only if the 
                                        loan has been submitted to the 
                                        guaranty agency for default 
                                        aversion; or
                                            ``(bb) for the purposes of 
                                        using the public service loan 
                                        forgiveness program under 
                                        section 455(m).'';
                    (B) in the first sentence of subsection (b)(5), by 
                inserting ``or chooses to obtain a consolidation loan 
                for the purposes of using the public service loan 
                forgiveness program offered under section 455(m),'' 
                after ``from such a lender,''; and
                    (C) in the second sentence of such subsection, by 
                inserting before the period the following: ``, except 
                that if a borrower intends to be eligible to use the 
                public service loan forgiveness program under section 
                455(m), such loan shall be repaid using one of the 
                repayment options described in section 455(m)(1)(A)''.

[[Page 121 STAT. 795]]

            (2) Section 428C (20 U.S.C. 1078-3) (as amended by paragraph 
        (1) of this subsection) is amended--
                    (A) in subsection (a)(3)(B)(i)(V)(aa)--
                          (i) by striking ``an income contingent 
                      repayment plan,'' and inserting ``income 
                      contingent repayment or income-based repayment,''; 
                      and
                          (ii) by inserting ``or if the loan is already 
                      in default'' before the semicolon;
                    (B) in the first sentence of subsection (b)(5), by 
                inserting ``or income-based repayment terms'' after 
                ``income-sensitive repayment terms''; and
                    (C) in the second sentence of such subsection, by 
                inserting ``, pursuant to income-based repayment under 
                section 493C,'' after ``part D of this title''.
            (3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D)) is 
        amended by inserting ``made on behalf of a dependent student'' 
        after ``PLUS loan''.

    (c) <<NOTE: 20 USC 1078-3 note.>> Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall be effective on July 1, 
        2009.
            (2) Exception.--The amendments made by subsection (b)(1) 
        shall be effective on July 1, 2008.
SEC. 204. <<NOTE: National Guard. Armed Forces.>> DEFERRAL OF LOAN 
                        REPAYMENT FOLLOWING ACTIVE DUTY.

    Part G of title IV is further amended by adding after section 493C 
(as added by section 203 of this Act) the following new section:
``SEC. <<NOTE: 20 USC 1098f.>> 493D. DEFERRAL OF LOAN REPAYMENT 
                          FOLLOWING ACTIVE DUTY.

    ``(a) Deferral of Loan Repayment Following Active Duty.--In addition 
to any deferral of repayment of a loan made under this title pursuant to 
section 428(b)(1)(M)(iii), 455(f)(2)(C), or 464(c)(2)(A)(iii), a 
borrower of a loan under this title who is a member of the National 
Guard or other reserve component of the Armed Forces of the United 
States, or a member of such Armed Forces in a retired status, is called 
or ordered to active duty, and is enrolled, or was enrolled within six 
months prior to the activation, in a program of instruction at an 
eligible institution, shall be eligible for a deferment during the 13 
months following the conclusion of such service, except that a deferment 
under this subsection shall expire upon the borrower's return to 
enrolled student status.
    ``(b) Active Duty.--Notwithstanding section 481(d), in this section, 
the term `active duty' has the meaning given such term in section 
101(d)(1) of title 10, United States Code, except that such term--
            ``(1) does not include active duty for training or 
        attendance at a service school; but
            ``(2) includes, in the case of members of the National 
        Guard, active State duty.''.
SEC. 205. MAXIMUM REPAYMENT PERIOD.

    Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at the end 
the following:

[[Page 121 STAT. 796]]

            ``(7) Maximum repayment period.--In calculating the extended 
        period of time for which an income contingent repayment plan 
        under this subsection may be in effect for a borrower, the 
        Secretary shall include all time periods during which a borrower 
        of loans under part B, part D, or part E--
                    ``(A) is not in default on any loan that is included 
                in the income contingent repayment plan; and
                    ``(B)(i) is in deferment due to an economic hardship 
                described in section 435(o);
                    ``(ii) makes monthly payments under paragraph (1) or 
                (6) of section 493C(b);
                    ``(iii) makes monthly payments of not less than the 
                monthly amount calculated under section 428(b)(9)(A)(i) 
                or subsection (d)(1)(A), based on a 10-year repayment 
                period, when the borrower first made the election 
                described in section 493C(b)(1);
                    ``(iv) makes payments of not less than the payments 
                required under a standard repayment plan under section 
                428(b)(9)(A)(i) or subsection (d)(1)(A) with a repayment 
                period of 10 years; or
                    ``(v) makes payments under an income contingent 
                repayment plan under subsection (d)(1)(D).''.

            TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 301. GUARANTY AGENCY COLLECTION RETENTION.

    Clause (ii) of section 428(c)(6)(A) (20 U.S.C. 1078(c)(6)(A)(ii)) is 
amended to read as follows:
                          ``(ii) <<NOTE: Applicability.>> an amount 
                      equal to 24 percent of such payments for use in 
                      accordance with section 422B, except that--
                                    ``(I) beginning October 1, 2003 and 
                                ending September 30, 2007, this clause 
                                shall be applied by substituting `23 
                                percent' for `24 percent'; and
                                    ``(II) beginning October 1, 2007, 
                                this clause shall be applied by 
                                substituting `16 percent' for `24 
                                percent'.''.
SEC. 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.

    (a) Elimination of Status.--Part B of title IV (20 U.S.C. 1071 et 
seq.) is amended by striking section 428I (20 U.S.C. 1078-9).
    (b) Conforming Amendments.--Part B of title IV is further amended--
            (1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
                    (A) by striking subparagraph (D); and
                    (B) by redesignating subparagraphs (E) through (H) 
                as subparagraphs (D) through (G), respectively; and
            (2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by 
        striking the matter following subparagraph (B).

    (c) Effective Date.--The <<NOTE: Applicability. 20 USC 1078 
note.>> amendments made by subsections (a) and (b) shall be effective on 
October 1, 2007, except that section 428I of the Higher Education Act of 
1965 (as in effect on the day before the date of enactment of this Act) 
shall apply to eligible

[[Page 121 STAT. 797]]

lenders that received a designation under subsection (a) of such section 
prior to October 1, 2007, for the remainder of the year for which the 
designation was made.
SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.

    (a) Amendment.--Subparagraph (G) of section 428(b)(1) (20 U.S.C. 
1078(b)(1)(G)) is amended to read as follows:
                    ``(G) insures 95 percent of the unpaid principal of 
                loans insured under the program, except that--
                          ``(i) such program shall insure 100 percent of 
                      the unpaid principal of loans made with funds 
                      advanced pursuant to section 428(j) or 439(q); and
                          ``(ii) notwithstanding the preceding 
                      provisions of this subparagraph, such program 
                      shall insure 100 percent of the unpaid principal 
                      amount of exempt claims as defined in subsection 
                      (c)(1)(G);''.

    (b) <<NOTE: 20 USC 1078 note.>> Effective Date.--The amendment made 
by subsection (a) shall be effective on October 1, 2012, and shall apply 
with respect to loans made on or after such date.
SEC. 304. DEFINITIONS.

    Section 435 (20 U.S.C. 1085) is amended--
            (1) in subsection (o)(1)--
                    (A) in subparagraph (A)(ii)--
                          (i) by striking ``100 percent of the poverty 
                      line for a family of 2'' and inserting ``150 
                      percent of the poverty line applicable to the 
                      borrower's family size''; and
                          (ii) by inserting ``or'' after the semicolon;
                    (B) by striking subparagraph (B); and
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B);
            (2) in subsection (o)(2), by striking ``(1)(C)'' and 
        inserting ``(1)(B)''; and
            (3) by adding at the end the following:

    ``(p) Eligible Not-for-Profit Holder.--
            ``(1) Definition.--Subject to the limitations in paragraph 
        (2) and the prohibition in paragraph (3), the term `eligible 
        not-for-profit holder' means an eligible lender under subsection 
        (d) (except for an eligible lender described in subsection 
        (d)(1)(E)) that requests a special allowance payment under 
        section 438(b)(2)(I)(vi)(II) or a payment under section 771 and 
        that is--
                    ``(A) a State, or a political subdivision, 
                authority, agency, or other instrumentality thereof, 
                including such entities that are eligible to issue bonds 
                described in section 1.103-1 of title 26, Code of 
                Federal Regulations, or section 144(b) of the Internal 
                Revenue Code of 1986;
                    ``(B) an entity described in section 150(d)(2) of 
                such Code that has not made the election described in 
                section 150(d)(3) of such Code;
                    ``(C) an entity described in section 501(c)(3) of 
                such Code; or
                    ``(D) a trustee acting as an eligible lender on 
                behalf of a State, political subdivision, authority, 
                agency, instrumentality, or other entity described in 
                subparagraph (A), (B), or (C).
            ``(2) Limitations.--

[[Page 121 STAT. 798]]

                    ``(A) Existing on date of enactment.--
                          ``(i) In general.--An eligible lender shall 
                      not be an eligible not-for-profit holder under 
                      this Act unless such lender--
                                    ``(I) was a State, political 
                                subdivision, authority, agency, 
                                instrumentality, or other entity 
                                described in paragraph (1)(A), (B), or 
                                (C) that was, on the date of the 
                                enactment of the College Cost Reduction 
                                and Access Act, acting as an eligible 
                                lender under subsection (d) (other than 
                                an eligible lender described in 
                                subsection (d)(1)(E)); or
                                    ``(II) is a trustee acting as an 
                                eligible lender under this Act on behalf 
                                of such a State, political subdivision, 
                                authority, agency, instrumentality, or 
                                other entity described in subclause (I) 
                                of this clause.
                          ``(ii) Exception.--Notwithstanding clause (i), 
                      a State may elect, in accordance with regulations 
                      of the Secretary, to waive the requirements this 
                      subparagraph for a new not-for-profit holder 
                      determined by the State to be necessary to carry 
                      out a public purpose of such State, except that a 
                      State may not make such election with respect the 
                      requirements of clause (i)(II).
                    ``(B) No for-profit ownership or control.--No 
                political subdivision, authority, agency, 
                instrumentality, or other entity described in paragraph 
                (1)(A), (B), or (C) shall be an eligible not-for-profit 
                holder under this Act if such entity is owned or 
                controlled, in whole or in part, by a for-profit entity.
                    ``(C) Sole ownership of loans and income.--No State, 
                political subdivision, authority, agency, 
                instrumentality, or other entity described in paragraph 
                (1)(A), (B), or (C) shall be an eligible not-for-profit 
                holder under this Act with respect to any loan, or 
                income from any loan, unless the State, political 
                subdivision, authority, agency, instrumentality, or 
                other entity described in paragraph (1)(A), (B), or (C) 
                is the sole owner of the beneficial interest in such 
                loan and the income from such loan.
                    ``(D) Trustee compensation limitations.--A trustee 
                described in paragraph (1)(D) shall not receive 
                compensation as consideration for acting as an eligible 
                lender on behalf of an entity described in described in 
                paragraph (1)(A), (B), or (C) in excess of reasonable 
                and customary fees.
                    ``(E) Rule of construction.--For purposes of 
                subparagraphs (B), (C), and (D) of this paragraph, a 
                State, political subdivision, authority, agency, 
                instrumentality, or other entity described in paragraph 
                (1)(A), (B), or (C) shall not--
                          ``(i) be deemed to be owned or controlled, in 
                      whole or in part, by a for-profit entity, or
                          ``(ii) lose its status as the sole owner of a 
                      beneficial interest in a loan and the income from 
                      a loan by that political subdivision, authority, 
                      agency, instrumentality, or other entity,
                by granting a security interest in, or otherwise 
                pledging as collateral, such loan, or the income from 
                such loan,

[[Page 121 STAT. 799]]

                to secure a debt obligation in the operation of an 
                arrangement described in paragraph (1)(D).
            ``(3) Prohibition.--In the case of a loan for which the 
        special allowance payment is calculated under section 
        438(b)(2)(I)(vi)(II) and that is sold by the eligible not-for-
        profit holder holding the loan to an entity that is not an 
        eligible not-for-profit holder under this Act, the special 
        allowance payment for such loan shall, beginning on the date of 
        the sale, no longer be calculated under section 
        438(b)(2)(I)(vi)(II) and shall be calculated under section 
        438(b)(2)(I)(vi)(I) instead.
            ``(4) Regulations.--Not <<NOTE: Deadline.>> later than 1 
        year after the date of enactment of the College Cost Reduction 
        and Access Act, the Secretary shall promulgate regulations in 
        accordance with the provisions of this subsection.''.
SEC. 305. SPECIAL ALLOWANCES.

    (a) Reduction of Lender Special Allowance Payments.--Section 
438(b)(2)(I) (20 U.S.C. 1087-1(b)(2)(I)) is amended--
            (1) in clause (i), by striking ``clauses (ii), (iii), and 
        (iv)'' and inserting ``the following clauses'';
            (2) in clause (v)(III), by striking ``clauses (ii), (iii), 
        and (iv)'' and inserting ``clauses (ii), (iii), (iv), and 
        (vi)''; and
            (3) by adding at the end the following:
                          ``(vi) Reduction for loans disbursed on or 
                      after october 1, 2007.--With respect to a loan on 
                      which the applicable interest rate is determined 
                      under section 427A(l) and for which the first 
                      disbursement of principal is made on or after 
                      October 1, 2007, the special allowance payment 
                      computed pursuant to this subparagraph shall be 
                      computed--
                                    ``(I) for loans held by an eligible 
                                lender not described in subclause (II)--
                                            ``(aa) by substituting `1.79 
                                        percent' for `2.34 percent' each 
                                        place the term appears in this 
                                        subparagraph;
                                            ``(bb) by substituting `1.19 
                                        percent' for `1.74 percent' in 
                                        clause (ii);
                                            ``(cc) by substituting `1.79 
                                        percent' for `2.64 percent' in 
                                        clause (iii); and
                                            ``(dd) by substituting `2.09 
                                        percent' for `2.64 percent' in 
                                        clause (iv); and
                                    ``(II) for loans held by an eligible 
                                not-for-profit holder--
                                            ``(aa) by substituting `1.94 
                                        percent' for `2.34 percent' each 
                                        place the term appears in this 
                                        subparagraph;
                                            ``(bb) by substituting `1.34 
                                        percent' for `1.74 percent' in 
                                        clause (ii);
                                            ``(cc) by substituting `1.94 
                                        percent' for `2.64 percent' in 
                                        clause (iii); and
                                            ``(dd) by substituting `2.24 
                                        percent' for `2.64 percent' in 
                                        clause (iv).''.

    (b) Increased Loan Fees From Lenders.--Paragraph (2) of section 
438(d) (20 U.S.C. 1087-1(d)(2)) is amended to read as follows:

[[Page 121 STAT. 800]]

            ``(2) Amount of loan fees.--The amount of the loan fee which 
        shall be deducted under paragraph (1), but which may not be 
        collected from the borrower, shall be equal to--
                    ``(A) except as provided in subparagraph (B), 0.50 
                percent of the principal amount of the loan with respect 
                to any loan under this part for which the first 
                disbursement was made on or after October 1, 1993; and
                    ``(B) 1.0 percent of the principal amount of the 
                loan with respect to any loan under this part for which 
                the first disbursement was made on or after October 1, 
                2007.''.
SEC. 306. ACCOUNT MAINTENANCE FEES.

    Section 458(b) (20 U.S.C. 1087h(b)) is amended by striking ``0.10 
percent'' and inserting ``0.06 percent''.

                       TITLE IV--LOAN FORGIVENESS

SEC. 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    Section 455 (20 U.S.C. 1087e) is further amended by adding at the 
end the following:
    ``(m) Repayment Plan for Public Service Employees.--
            ``(1) In general.--The Secretary shall cancel the balance of 
        interest and principal due, in accordance with paragraph (2), on 
        any eligible Federal Direct Loan not in default for a borrower 
        who--
                    ``(A) has made 120 monthly payments on the eligible 
                Federal Direct Loan after October 1, 2007, pursuant to 
                any one or a combination of the following--
                          ``(i) payments under an income-based repayment 
                      plan under section 493C;
                          ``(ii) payments under a standard repayment 
                      plan under subsection (d)(1)(A), based on a 10-
                      year repayment period;
                          ``(iii) monthly payments under a repayment 
                      plan under subsection (d)(1) or (g) of not less 
                      than the monthly amount calculated under 
                      subsection (d)(1)(A), based on a 10-year repayment 
                      period; or
                          ``(iv) payments under an income contingent 
                      repayment plan under subsection (d)(1)(D); and
                    ``(B)(i) is employed in a public service job at the 
                time of such forgiveness; and
                    ``(ii) has been employed in a public service job 
                during the period in which the borrower makes each of 
                the 120 payments described in subparagraph (A).
            ``(2) Loan cancellation amount.--After the conclusion of the 
        employment period described in paragraph (1), the Secretary 
        shall cancel the obligation to repay the balance of principal 
        and interest due as of the time of such cancellation, on the 
        eligible Federal Direct Loans made to the borrower under this 
        part.
            ``(3) Definitions.--In this subsection:
                    ``(A) Eligible federal direct loan.--The term 
                `eligible Federal Direct Loan' means a Federal Direct 
                Stafford Loan, Federal Direct PLUS Loan, or Federal 
                Direct Unsubsidized Stafford Loan, or a Federal Direct 
                Consolidation Loan.

[[Page 121 STAT. 801]]

                    ``(B) Public service job.--The term `public service 
                job' means--
                          ``(i) a full-time job in emergency management, 
                      government, military service, public safety, law 
                      enforcement, public health, public education 
                      (including early childhood education), social work 
                      in a public child or family service agency, public 
                      interest law services (including prosecution or 
                      public defense or legal advocacy in low-income 
                      communities at a nonprofit organization), public 
                      child care, public service for individuals with 
                      disabilities, public service for the elderly, 
                      public library sciences, school-based library 
                      sciences and other school-based services, or at an 
                      organization that is described in section 
                      501(c)(3) of the Internal Revenue Code of 1986 and 
                      exempt from taxation under section 501(a) of such 
                      Code; or
                          ``(ii) teaching as a full-time faculty member 
                      at a Tribal College or University as defined in 
                      section 316(b) and other faculty teaching in high-
                      needs areas, as determined by the Secretary.''.

                     TITLE V--FEDERAL PERKINS LOANS

SEC. 501. DISTRIBUTION OF LATE COLLECTIONS.

    Section 466(b) (20 U.S.C. 1087ff(b)) is amended by striking ``March 
31, 2012'' and inserting ``October 1, 2012''.

                         TITLE VI--NEED ANALYSIS

SEC. 601. SUPPORT FOR WORKING STUDENTS.

    (a) Dependent Students.--Subparagraph (D) of section 475(g)(2) (20 
U.S.C. 1087oo(g)(2)(D)) is amended to read as follows:
                    ``(D) an income protection allowance of the 
                following amount (or a successor amount prescribed by 
                the Secretary under section 478)--
                          ``(i) for academic year 2009-2010, $3,750;
                          ``(ii) for academic year 2010-2011, $4,500;
                          ``(iii) for academic year 2011-2012, $5,250; 
                      and
                          ``(iv) for academic year 2012-2013, $6,000;''.

    (b) Independent Students Without Dependents Other Than a Spouse.--
Clause (iv) of section 476(b)(1)(A) (20 U.S.C. 1087pp(b)(1)(A)) is 
amended to read as follows:
                          ``(iv) an income protection allowance of the 
                      following amount (or a successor amount prescribed 
                      by the Secretary under section 478)--
                                    ``(I) for single or separated 
                                students, or married students where both 
                                are enrolled pursuant to subsection 
                                (a)(2)--
                                            ``(aa) for academic year 
                                        2009-2010, $7,000;
                                            ``(bb) for academic year 
                                        2010-2011, $7,780;
                                            ``(cc) for academic year 
                                        2011-2012, $8,550; and
                                            ``(dd) for academic year 
                                        2012-2013, $9,330; and

[[Page 121 STAT. 802]]

                                    ``(II) for married students where 1 
                                is enrolled pursuant to subsection 
                                (a)(2)--
                                            ``(aa) for academic year 
                                        2009-2010, $11,220;
                                            ``(bb) for academic year 
                                        2010-2011, $12,460;
                                            ``(cc) for academic year 
                                        2011-2012, $13,710; and
                                            ``(dd) for academic year 
                                        2012-2013, $14,960;''.

    (c) Independent Students With Dependents Other Than a Spouse.--
Paragraph (4) of section 477(b) (20 U.S.C. 1087qq(b)) is amended to read 
as follows:
            ``(4) Income protection allowance.--The income protection 
        allowance is determined by the tables described in subparagraphs 
        (A) through (D) (or a successor table prescribed by the 
        Secretary under section 478).
                    ``(A) Academic year 2009-2010.--For academic year 
                2009-2010, the income protection allowance is determined 
                by the following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
            (including student)                  1          2          3           4           5      additional
                                                                                                       subtract:
----------------------------------------------------------------------------------------------------------------
                     2                         $17,720    $14,690
                     3                          22,060     19,050    $16,020
                     4                          27,250     24,220     21,210     $18,170
                     5                          32,150     29,120     26,100      23,070     $20,060
                     6                          37,600     34,570     31,570      28,520      25,520      $3,020
For each
additional
  add:                                           4,240      4,240      4,240       4,240       4,240
----------------------------------------------------------------------------------------------------------------

                    ``(B) Academic year 2010-2011.--For academic year 
                2010-2011, the income protection allowance is determined 
                by the following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
            (including student)                  1          2          3           4           5      additional
                                                                                                       subtract:
----------------------------------------------------------------------------------------------------------------
                     2                         $19,690    $16,330
                     3                          24,510     21,160    $17,800
                     4                          30,280     26,910     23,560     $20,190
                     5                          35,730     32,350     29,000      25,640     $22,290
                     6                          41,780     38,410     35,080      31,690      28,350      $3,350
For each
additional
  add:                                           4,710      4,710      4,710       4,710       4,710
----------------------------------------------------------------------------------------------------------------

[[Page 121 STAT. 803]]

                    ``(C) Academic year 2011-2012.--For academic year 
                2011-2012, the income protection allowance is determined 
                by the following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
            (including student)                  1          2          3           4           5      additional
                                                                                                       subtract:
----------------------------------------------------------------------------------------------------------------
                     2                         $21,660    $17,960
                     3                          26,960     23,280    $19,580
                     4                          33,300     29,600     25,920     $22,210
                     5                          39,300     35,590     31,900      28,200     $24,520
                     6                          45,950     42,250     38,580      34,860      31,190      $3,690
For each
additional
  add:                                           5,180      5,180      5,180       5,180       5,180
----------------------------------------------------------------------------------------------------------------

                    ``(D) Academic year 2012-2013.--For academic year 
                2012-2013, the income protection allowance is determined 
                by the following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
            (including student)                  1          2          3           4           5      additional
                                                                                                       subtract:
----------------------------------------------------------------------------------------------------------------
                     2                         $23,630    $19,590
                     3                          29,420     25,400    $21,360
                     4                          36,330     32,300     28,280     $24,230
                     5                          42,870     38,820     34,800      30,770     $26,750
                     6                          50,130     46,100     42,090      38,030      34,020      $4,020
For each
additional
  add:                                           5,660      5,660      5,660       5,660       5,660         ''.
----------------------------------------------------------------------------------------------------------------

    (d) Updated Tables and Amounts.--Section 478(b) (20 U.S.C. 
1087rr(b)) is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) Revised tables.--
                    ``(A) In general.--For <<NOTE: Federal Register, 
                publication.>> each academic year after academic year 
                2008-2009, the Secretary shall publish in the Federal 
                Register a revised table of income protection allowances 
                for the purpose of sections 475(c)(4) and 477(b)(4), 
                subject to subparagraphs (B) and (C).
                    ``(B) Table for independent students.--
                          ``(i) Academic years 2009-2010 through 2012-
                      2013.--For each of the academic years 2009-2010 
                      through 2012-2013, the Secretary shall not develop 
                      a revised table of income protection allowances 
                      under section 477(b)(4) and the table specified 
                      for such academic year under subparagraphs (A) 
                      through (D) of such section shall apply.
                          ``(ii) Other academic years.--For each 
                      academic year after academic year 2012-2013, the 
                      Secretary

[[Page 121 STAT. 804]]

                      shall develop the revised table of income 
                      protection allowances by increasing each of the 
                      dollar amounts contained in the table of income 
                      protection allowances under section 477(b)(4)(D) 
                      by a percentage equal to the estimated percentage 
                      increase in the Consumer Price Index (as 
                      determined by the Secretary) between December 2011 
                      and the December next preceding the beginning of 
                      such academic year, and rounding the result to the 
                      nearest $10.
                    ``(C) Table for parents.--For each academic year 
                after academic year 2008-2009, the Secretary shall 
                develop the revised table of income protection 
                allowances under section 475(c)(4) by increasing each of 
                the dollar amounts contained in the table by a 
                percentage equal to the estimated percentage increase in 
                the Consumer Price Index (as determined by the 
                Secretary) between December 1992 and the December next 
                preceding the beginning of such academic year, and 
                rounding the result to the nearest $10.''; and
            (2) in paragraph (2), by striking ``shall be developed'' and 
        all that follows through the period at the end and inserting 
        ``shall be developed for each academic year after academic year 
        2012-2013, by increasing each of the dollar amounts contained in 
        such section for academic year 2012-2013 by a percentage equal 
        to the estimated percentage increase in the Consumer Price Index 
        (as determined by the Secretary) between December 2011 and the 
        December next preceding the beginning of such academic year, and 
        rounding the result to the nearest $10.''.

    (e) <<NOTE: 20 USC 1087oo note.>> Effective Date.--The amendments 
made by this section shall be effective on July 1, 2009.
SEC. 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO IMPROVEMENTS.

    (a) Simplified Needs Test.--Section 479 (20 U.S.C. 1087ss) is 
amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)(A)(i)--
                          (i) in subclause (II), by striking ``or'' 
                      after the semicolon;
                          (ii) by redesignating subclause (III) as 
                      subclause (IV);
                          (iii) by inserting after subclause (II) the 
                      following:
                                    ``(III) 1 of whom is a dislocated 
                                worker; or''; and
                          (iv) in subclause (IV) (as redesignated by 
                      clause (ii)), by striking ``12-month'' and 
                      inserting ``24-month''; and
                    (B) in paragraph (1)(B)(i)--
                          (i) in subclause (II), by striking ``or'' 
                      after the semicolon;
                          (ii) by redesignating subclause (III) as 
                      subclause (IV);
                          (iii) by inserting after subclause (II) the 
                      following:
                                    ``(III) 1 of whom is a dislocated 
                                worker; or''; and
                          (iv) in subclause (IV) (as redesignated by 
                      clause (ii)), by striking ``12-month'' and 
                      inserting ``24-month'';

[[Page 121 STAT. 805]]

            (2) in subsection (c)--
                    (A) in paragraph (1)--
                          (i) in subparagraph (A)--
                                    (I) in clause (ii), by striking 
                                ``or'' after the semicolon;
                                    (II) by redesignating clause (iii) 
                                as clause (iv);
                                    (III) by inserting after clause (ii) 
                                the following:
                          ``(iii) 1 of whom is a dislocated worker; 
                      or''; and
                                    (IV) in clause (iv) (as redesignated 
                                by subclause (II)), by striking ``12-
                                month'' and inserting ``24-month''; and
                          (ii) in subparagraph (B), by striking 
                      ``$20,000'' and inserting ``$30,000''; and
                    (B) in paragraph (2)--
                          (i) in subparagraph (A)--
                                    (I) in clause (ii), by striking 
                                ``or'' after the semicolon;
                                    (II) by redesignating clause (iii) 
                                as clause (iv);
                                    (III) by inserting after clause (ii) 
                                the following:
                          ``(iii) 1 of whom is a dislocated worker; 
                      or''; and
                                    (IV) in clause (iv) (as redesignated 
                                by subclause (II)), by striking ``12-
                                month'' and inserting ``24-month''; and
                          (ii) in subparagraph (B), by striking 
                      ``$20,000'' and inserting ``$30,000''; and
                    (C) in the flush matter following paragraph (2)(B), 
                by adding at the end the following: ``The Secretary 
                shall annually adjust the income level necessary to 
                qualify an applicant for the zero expected family 
                contribution. The income level shall be adjusted 
                according to increases in the Consumer Price Index, as 
                defined in section 478(f).''; and
            (3) in subsection (d)--
                    (A) by redesignating paragraphs (1) through (6) as 
                subparagraphs (A) through (F), respectively and moving 
                the margins of such subparagraphs 2 ems to the right; 
                and
                    (B) by striking ``(d) Definition'' and all that 
                follows through ``the term'' and inserting the 
                following:

    ``(d) Definitions.--In this section:
            ``(1) Dislocated worker.--The term `dislocated worker' has 
        the meaning given the term in section 101 of the Workforce 
        Investment Act of 1998 (29 U.S.C. 2801).
            ``(2) Means-tested federal benefit program.--The term''.

    (b) <<NOTE: 20 USC 1087ss note.>> Effective Date.--The amendments 
made by this section shall be effective on July 1, 2009.
SEC. 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    (a) Amendments.--The third sentence of section 479A(a) (20 U.S.C. 
1087tt(a)) is amended--
            (1) by inserting ``or an independent student'' after 
        ``family member'';
            (2) by inserting ``a family member who is a dislocated 
        worker (as defined in section 101 of the Workforce Investment 
        Act of 1998),'' before ``the number of parents''; and

[[Page 121 STAT. 806]]

            (3) by inserting ``a change in housing status that results 
        in an individual being homeless (as defined in section 103 of 
        the McKinney-Vento Homeless Assistance Act),'' after ``under 
        section 487,''.

    (b) <<NOTE: 20 USC 1087tt note.>> Effective Date.--The amendments 
made by this section shall take effect on July 1, 2009.
SEC. 604. DEFINITIONS.

    (a) In General.--Section 480 (20 U.S.C. 1087vv) is amended--
            (1) in subsection (a)(2)--
                    (A) by striking ``and no portion'' and inserting 
                ``no portion''; and
                    (B) by inserting ``and no distribution from any 
                qualified education benefit described in subsection 
                (f)(3) that is not subject to Federal income tax,'' 
                after ``1986,'';
            (2) by striking subsection (b) and inserting the following:

    ``(b) Untaxed Income and Benefits.--
            ``(1) The term `untaxed income and benefits' means--
                    ``(A) child support received;
                    ``(B) workman's compensation;
                    ``(C) veteran's benefits such as death pension, 
                dependency, and indemnity compensation, but excluding 
                veterans' education benefits as defined in subsection 
                (c);
                    ``(D) interest on tax-free bonds;
                    ``(E) housing, food, and other allowances (excluding 
                rent subsidies for low-income housing) for military, 
                clergy, and others (including cash payments and cash 
                value of benefits);
                    ``(F) cash support or any money paid on the 
                student`s behalf, except, for dependent students, funds 
                provided by the student's parents;
                    ``(G) untaxed portion of pensions;
                    ``(H) payments to individual retirement accounts and 
                Keogh accounts excluded from income for Federal income 
                tax purposes; and
                    ``(I) any other untaxed income and benefits, such as 
                Black Lung Benefits, Refugee Assistance, or railroad 
                retirement benefits, or benefits received through 
                participation in employment and training activities 
                under title I of the Workforce Investment Act of 1998 
                (29 U.S.C. 2801 et seq.).
            ``(2) The term `untaxed income and benefits' shall not 
        include the amount of additional child tax credit claimed for 
        Federal income tax purposes.'';
            (3) in subsection (d)--
                    (A) by redesignating paragraphs (1), (2), (3) 
                through (6), and (7) as subparagraphs (A), (B), (D) 
                through (G), and (I), respectively, and indenting 
                appropriately;
                    (B) by striking ``The term'' and inserting the 
                following:
            ``(1) Definition.--The term'';
                    (C) by striking subparagraph (B) (as redesignated by 
                subparagraph (A)) and inserting the following:
                    ``(B) is an orphan, in foster care, or a ward of the 
                court, at any time when the individual is 13 years of 
                age or older;
                    ``(C) is an emancipated minor or is in legal 
                guardianship as determined by a court of competent 
                jurisdiction in the individual's State of legal 
                residence;'';

[[Page 121 STAT. 807]]

                    (D) in subparagraph (G) (as redesignated by 
                subparagraph (A)), by striking ``or'' after the 
                semicolon;
                    (E) by inserting after subparagraph (G) (as 
                redesignated by subparagraph (A)) the following:
                    ``(H) has been verified during the school year in 
                which the application is submitted as either an 
                unaccompanied youth who is a homeless child or youth (as 
                such terms are defined in section 725 of the McKinney-
                Vento Homeless Assistance Act), or as unaccompanied, at 
                risk of homelessness, and self-supporting, by--
                          ``(i) a local educational agency homeless 
                      liaison, designated pursuant to section 
                      722(g)(1)(J)(ii) of the McKinney-Vento Homeless 
                      Assistance Act;
                          ``(ii) the director of a program funded under 
                      the Runaway and Homeless Youth Act or a designee 
                      of the director;
                          ``(iii) the director of a program funded under 
                      subtitle B of title IV of the McKinney-Vento 
                      Homeless Assistance Act (relating to emergency 
                      shelter grants) or a designee of the director; or
                          ``(iv) a financial aid administrator; or''; 
                      and
                    (F) by adding at the end the following:
            ``(2) Simplifying the dependency override process.--A 
        financial aid administrator may make a determination of 
        independence under paragraph (1)(I) based upon a documented 
        determination of independence that was previously made by 
        another financial aid administrator under such paragraph in the 
        same award year.'';
            (4) in subsection (e)--
                    (A) in paragraph (3), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (4), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(5) special combat pay.'';
            (5) in subsection (f), by striking paragraph (3) and 
        inserting the following:
            ``(3) A qualified education benefit shall be considered an 
        asset of--
                    ``(A) the student if the student is an independent 
                student; or
                    ``(B) the parent if the student is a dependent 
                student, regardless of whether the owner of the account 
                is the student or the parent.'';
            (6) in subsection (j)--
                    (A) in paragraph (2), by inserting ``, or a 
                distribution that is not includable in gross income 
                under section 529 of such Code, under another prepaid 
                tuition plan offered by a State, or under a Coverdell 
                education savings account under section 530 of such 
                Code,'' after ``1986''; and
                    (B) by adding at the end the following:
            ``(4) Notwithstanding paragraph (1), special combat pay 
        shall not be treated as estimated financial assistance for 
        purposes of section 471(3).''; and
            (7) by adding at the end the following:

[[Page 121 STAT. 808]]

    ``(n) Special Combat Pay.--The term `special combat pay' means pay 
received by a member of the Armed Forces because of exposure to a 
hazardous situation.''.
    (b) <<NOTE: 20 USC 1087vv note.>> Effective Date.--The amendments 
made by this section shall be effective on July 1, 2009.

            TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM

SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM.

    Title IV (20 U.S.C. 1070 et seq.) is further amended by adding at 
the end the following:

            ``PART I--COMPETITIVE LOAN AUCTION PILOT PROGRAM

``SEC. 499. <<NOTE: 20 USC 1099d.>> COMPETITIVE LOAN AUCTION PILOT 
                        PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Eligible federal plus loan.--The term `eligible 
        Federal PLUS Loan' means a loan described in section 428B made 
        to a parent of a dependent student who is a new borrower on or 
        after July 1, 2009.
            ``(2) Eligible lender.--The term `eligible lender' has the 
        meaning given the term in section 435.

    ``(b) Pilot Program.--The Secretary shall carry out a pilot program 
under which the Secretary establishes a mechanism for an auction of 
eligible Federal PLUS Loans in accordance with this subsection. The 
pilot program shall meet the following requirements:
            ``(1) Planning and implementation.--During <<NOTE: Effective 
        date. Termination date.>> the period beginning on the date of 
        enactment of this section and ending on June 30, 2009, the 
        Secretary shall plan and implement the pilot program under this 
        subsection. During the planning and implementation, the 
        Secretary shall consult with other Federal agencies with 
        knowledge of, and experience with, auction programs, including 
        the Federal Communication Commission and the Department of the 
        Treasury.
            ``(2) Origination and disbursement; applicability of section 
        428b.--Beginning <<NOTE: Effective date.>> on July 1, 2009, the 
        Secretary shall arrange for the origination and disbursement of 
        all eligible Federal PLUS Loans in accordance with the 
        provisions of this subsection and the provisions of section 428B 
        that are not inconsistent with this subsection.
            ``(3) Loan origination mechanism.--The Secretary shall 
        establish a loan origination auction mechanism that meets the 
        following requirements:
                    ``(A) Auction for each state.--The Secretary 
                administers an auction under this paragraph for each 
                State, under which eligible lenders compete to originate 
                eligible Federal PLUS Loans under this paragraph at all 
                institutions of higher education within such State.
                    ``(B) Prequalification process.--The Secretary 
                establishes a prequalification process for eligible 
                lenders desiring to participate in an auction under this 
                paragraph that contains, at a minimum--

[[Page 121 STAT. 809]]

                          ``(i) a set of borrower benefits and servicing 
                      requirements each eligible lender shall meet in 
                      order to participate in such an auction; and
                          ``(ii) an assessment of each such eligible 
                      lender's capacity, including capital capacity, to 
                      participate effectively.
                    ``(C) Timing and origination.--Each State auction 
                takes place every 2 years, and the eligible lenders with 
                the winning bids for the State are the only eligible 
                lenders permitted to originate eligible Federal PLUS 
                Loans made under this paragraph for the cohort of 
                students at the institutions of higher education within 
                the State until the students graduate from or leave the 
                institutions of higher education.
                    ``(D) Bids.--Each eligible lender's bid consists of 
                the amount of the special allowance payment (after the 
                application of section 438(b)(2)(I)(v)) the eligible 
                lender proposes to accept from the Secretary with 
                respect to the eligible Federal PLUS Loans made under 
                this paragraph in lieu of the amount determined under 
                section 438(b)(2)(I).
                    ``(E) Maximum bid.--The maximum bid allowable under 
                this paragraph shall not exceed the amount of the 
                special allowance payable on eligible Federal PLUS Loans 
                made under this paragraph computed under section 
                438(b)(2)(I) (other than clauses (ii), (iii), (iv), and 
                (vi) of such section), except that for purposes of the 
                computation under this subparagraph, section 
                438(b)(2)(I)(i)(III) shall be applied by substituting 
                `1.79 percent' for `2.34 percent'.
                    ``(F) Winning bids.--The winning bids for each State 
                auction shall be the 2 bids containing the lowest and 
                the second lowest proposed special allowance payments, 
                subject to subparagraph (E).
                    ``(G) Agreement with secretary.--Each eligible 
                lender having a winning bid under subparagraph (F) 
                enters into an agreement with the Secretary under which 
                the eligible lender--
                          ``(i) agrees to originate eligible Federal 
                      PLUS Loans under this paragraph to each borrower 
                      who--
                                    ``(I) seeks an eligible Federal PLUS 
                                Loan under this paragraph to enable a 
                                dependent student to attend an 
                                institution of higher education within 
                                the State;
                                    ``(II) is eligible for an eligible 
                                Federal PLUS Loan; and
                                    ``(III) elects to borrow from the 
                                eligible lender; and
                          ``(ii) agrees to accept a special allowance 
                      payment (after the application of section 
                      438(b)(2)(I)(v)) from the Secretary with respect 
                      to the eligible Federal PLUS Loans originated 
                      under clause (i) in the amount proposed in the 
                      second lowest winning bid described in 
                      subparagraph (F) for the applicable State auction.
                    ``(H) Sealed bids; confidentiality.--All bids are 
                sealed and the Secretary keeps the bids confidential, 
                including following the announcement of the winning 
                bids.
                    ``(I) Eligible lender of last resort.--

[[Page 121 STAT. 810]]

                          ``(i) In general.--In the event that there is 
                      no winning bid under subparagraph (F), the 
                      students at the institutions of higher education 
                      within the State that was the subject of the 
                      auction shall be served by an eligible lender of 
                      last resort, as determined by the Secretary.
                          ``(ii) Determination of eligible lender of 
                      last resort.--Prior to the start of any auction 
                      under this paragraph, eligible lenders that desire 
                      to serve as an eligible lender of last resort 
                      shall submit an application to the Secretary at 
                      such time and in such manner as the Secretary may 
                      determine. Such application shall include an 
                      assurance that the eligible lender will meet the 
                      prequalification requirements described in 
                      subparagraph (B).
                          ``(iii) Geographic location.--The Secretary 
                      shall identify an eligible lender of last resort 
                      for each State.
                          ``(iv) Notification timing.--The Secretary 
                      shall not identify any eligible lender of last 
                      resort until after the announcement of all the 
                      winning bids for a State auction for any year.
                          ``(v) Maximum special allowance.--The 
                      Secretary is authorized to set a special allowance 
                      payment that shall be payable to a lender of last 
                      resort for a State under this subparagraph, which 
                      special allowance payment shall be kept 
                      confidential, including following the announcement 
                      of winning bids. The Secretary shall set such 
                      special allowance payment so that it incurs the 
                      lowest possible cost to the Federal Government, 
                      taking into consideration the lowest bid that was 
                      submitted in an auction for such State and the 
                      lowest bid submitted in a similar State, as 
                      determined by the Secretary.
                    ``(J) Guarantee against losses.--The Secretary 
                guarantees the eligible Federal PLUS Loans made under 
                this paragraph against losses resulting from the default 
                of a parent borrower in an amount equal to 99 percent of 
                the unpaid principal and interest due on the loan.
                    ``(K) Loan fees.--The Secretary shall not collect a 
                loan fee under section 438(d) with respect to an 
                eligible Federal Plus Loan originated under this 
                paragraph.
                    ``(L) Consolidation.--
                          ``(i) In general.--An eligible lender who is 
                      permitted to originate eligible Federal PLUS Loans 
                      for a borrower under this paragraph shall have the 
                      option to consolidate such loans into 1 loan.
                          ``(ii) Notification.--In the event a borrower 
                      with eligible Federal PLUS Loans made under this 
                      paragraph wishes to consolidate the loans, the 
                      borrower shall notify the eligible lender who 
                      originated the loans under this paragraph.
                          ``(iii) Limitation on eligible lender option 
                      to consolidate.--The option described in clause 
                      (i) shall not apply if--
                                    ``(I) the borrower includes in the 
                                notification in clause (ii) verification 
                                of consolidation terms and conditions 
                                offered by an eligible lender other

[[Page 121 STAT. 811]]

                                than the eligible lender described in 
                                clause (i); and
                                    ``(II) <<NOTE: Deadline.>> not later 
                                than 10 days after receiving such 
                                notification from the borrower, the 
                                eligible lender described in clause (i) 
                                does not agree to match such terms and 
                                conditions, or provide more favorable 
                                terms and conditions to such borrower 
                                than the offered terms and conditions 
                                described in subclause (I).
                          ``(iv) Consolidation of additional loans.--If 
                      a borrower has a Federal Direct PLUS Loan or a 
                      loan made on behalf of a dependent student under 
                      section 428B and seeks to consolidate such loan 
                      with an eligible Federal PLUS Loan made under this 
                      paragraph, then the eligible lender that 
                      originated the borrower's loan under this 
                      paragraph may include in the consolidation under 
                      this subparagraph a Federal Direct PLUS Loan or a 
                      loan made on behalf of a dependent student under 
                      section 428B, but only if--
                                    ``(I) <<NOTE: Deadline.>> in the 
                                case of a Federal Direct PLUS Loan, the 
                                eligible lender agrees, not later than 
                                10 days after the borrower requests such 
                                consolidation from the lender, to match 
                                the consolidation terms and conditions 
                                that would otherwise be available to the 
                                borrower if the borrower consolidated 
                                such loans in the loan program under 
                                part D; or
                                    ``(II) <<NOTE: Deadline.>> in the 
                                case of a loan made on behalf of a 
                                dependent student under section 428B, 
                                the eligible lender agrees, not later 
                                than 10 days after the borrower requests 
                                such consolidation from the lender, to 
                                match the consolidation terms and 
                                conditions offered by an eligible lender 
                                other than the eligible lender that 
                                originated the borrower's loans under 
                                this paragraph.
                          ``(v) Special allowance on consolidation loans 
                      that include loans made under this paragraph.--The 
                      applicable special allowance payment for loans 
                      consolidated under this paragraph shall be equal 
                      to the lesser of--
                                    ``(I) the weighted average of the 
                                special allowance payment on such loans, 
                                except that in calculating such weighted 
                                average the Secretary shall exclude any 
                                Federal Direct PLUS Loan included in the 
                                consolidation; or
                                    ``(II) the result of--
                                            ``(aa) the average of the 
                                        bond equivalent rates of the 
                                        quotes of the 3-month commercial 
                                        paper (financial) rates in 
                                        effect for each of the days in 
                                        such quarter as reported by the 
                                        Federal Reserve in Publication 
                                        H-15 (or its successor) for such 
                                        3-month period; plus
                                            ``(bb) 1.59 percent.
                          ``(vi) Interest payment rebate fee.--Any loan 
                      under section 428C consolidated under this 
                      paragraph shall not be subject to the interest 
                      payment rebate fee under section 428C(f).''.

[[Page 121 STAT. 812]]

                     TITLE VIII--PARTNERSHIP GRANTS

SEC. 801. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

    Title VII (20 U.S.C. 1133 et seq.) is amended by adding at the end 
the following new part:

            ``PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM

``SEC. <<NOTE: 20 USC 1141.>> 771. COLLEGE ACCESS CHALLENGE GRANT 
                        PROGRAM.

    ``(a) Authorization and Appropriation.--There are authorized to be 
appropriated, and there are appropriated, to carry out this section 
$66,000,000 for each of the fiscal years 2008 and 2009. 
The <<NOTE: Expiration date.>> authority to award grants under this 
section shall expire at the end of fiscal year 2009.

    ``(b) Program Authorized.--
            ``(1) Grants authorized.--From amounts appropriated under 
        subsection (a), the Secretary shall award grants, from 
        allotments under subsection (c), to States (and to philanthropic 
        organization, as appropriate under paragraph (3)) having 
        applications approved under subsection (d), to enable the State 
        (or philanthropic organization) to pay the Federal share of the 
        costs of carrying out the activities and services described in 
        subsection (f).
            ``(2) Federal share; non-federal share.--
                    ``(A) Federal share.--The amount of the Federal 
                share under this section for a fiscal year shall be 
                equal to \2/3\ of the costs of the activities and 
                services described in subsection (f) that are carried 
                out under the grant.
                    ``(B) Non-federal share.--The amount of the non-
                Federal share under this section shall be equal to \1/3\ 
                of the costs of the activities and services described in 
                subsection (f). The non-Federal share may be in cash or 
                in-kind, and may be provided from State resources, 
                contributions from private organizations, or both.
            ``(3) Reduction for failure to pay non-federal share.--If a 
        State fails to provide the full non-Federal share required under 
        this subsection, the Secretary shall reduce the amount of the 
        grant payment under this section proportionately, and may award 
        the proportionate reduction amount of the grant directly to a 
        philanthropic organization, as defined in subsection (i), to 
        carry out this section.
            ``(4) Temporary ineligibility for subsequent payments.--
                    ``(A) In general.--The Secretary shall determine a 
                grantee to be temporarily ineligible to receive a grant 
                payment under this section for a fiscal year if--
                          ``(i) the grantee fails to submit an annual 
                      report pursuant to subsection (h) for the 
                      preceding fiscal year; or
                          ``(ii) the Secretary determines, based on 
                      information in such annual report, that the 
                      grantee is not effectively meeting the conditions 
                      described under subsection (g) and the goals of 
                      the application under subsection (d).

[[Page 121 STAT. 813]]

                    ``(B) Reinstatement.--If the Secretary determines 
                that a grantee is ineligible under subparagraph (A), the 
                Secretary may enter into an agreement with the grantee 
                setting forth the terms and conditions under which the 
                grantee may regain eligibility to receive payments under 
                this section.

    ``(c) Determination of Allotment.--
            ``(1) Amount of allotment.--Subject to paragraph (2), in 
        making grant payments to grantees under this section, the 
        allotment to each grantee for a fiscal year shall be equal to 
        the sum of--
                    ``(A) the amount that bears the same relation to 50 
                percent of the amount appropriated under subsection (a) 
                for such fiscal year as the number of residents in the 
                State aged 5 through 17 who are living below the poverty 
                line applicable to the resident's family size (as 
                determined under section 673(2) of the Community Service 
                Block Grant Act) bears to the total number of such 
                residents in all States; and
                    ``(B) the amount that bears the same relation to 50 
                percent of the amount appropriated under subsection (a) 
                for such fiscal year as the number of residents in the 
                State aged 15 through 44 who are living below the 
                poverty line applicable to the individual's family size 
                (as determined under section 673(2) of the Community 
                Service Block Grant Act) bears to the total number of 
                such residents in all States.
            ``(2) Minimum amount.--The allotment for each State under 
        this section for a fiscal year shall not be an amount that is 
        less than 0.5 percent of the total amount appropriated under 
        subsection (a) for such fiscal year.

    ``(d) Submission and Contents of Application.--
            ``(1) In general.--For each fiscal year for which a grantee 
        desires a grant payment under subsection (b), the State agency 
        with jurisdiction over higher education, or another agency 
        designated by the Governor or chief executive of the State to 
        administer the program under this section, or a philanthropic 
        organization, in accordance with subsection (b)(3), shall submit 
        an application to the Secretary at such time, in such manner, 
        and containing the information described in paragraph (2).
            ``(2) Application.--An application submitted under paragraph 
        (1) shall include the following:
                    ``(A) A description of the grantee's capacity to 
                administer the grant under this section and report 
                annually to the Secretary on the activities and services 
                described in subsection (f).
                    ``(B) A description of the grantee's plan for using 
                the grant funds to meet the requirements of subsections 
                (f) and (g), including plans for how the grantee will 
                make special efforts to--
                          ``(i) provide such benefits to students in the 
                      State that are underrepresented in postsecondary 
                      education; or
                          ``(ii) in the case of a philanthropic 
                      organization that operates in more than one State, 
                      provide benefits to such students in each such 
                      State for which the

[[Page 121 STAT. 814]]

                      philanthropic organization is receiving grant 
                      funds under this section.
                    ``(C) A description of how the grantee will provide 
                or coordinate the provision of the non-Federal share 
                from State resources or private contributions.
                    ``(D) A description of--
                          ``(i) the structure that the grantee has in 
                      place to administer the activities and services 
                      described in subsection (f); or
                          ``(ii) the plan to develop such administrative 
                      capacity.

    ``(e) Subgrants to Nonprofit Organizations.--A State receiving a 
payment under this section may elect to make a subgrant to one or more 
nonprofit organizations in the State, including an eligible not-for-
profit holder (as defined in section 435(p) of the Higher Education Act 
of 1965, as amended by section 303 of this Act), or a partnership of 
such organizations, to carry out activities or services described in 
subsection (f), if the nonprofit organization or partnership--
            ``(1) was in existence on the day before the date of the 
        enactment of this Act; and
            ``(2) as of such day, was participating in activities and 
        services related to increasing access to higher education, such 
        as those activities and services described in subsection (f).

    ``(f) Allowable Uses.--
            ``(1) In general.--Subject to paragraph (3), a grantee may 
        use a grant payment under this section only for the following 
        activities and services, pursuant to the conditions under 
        subsection (g):
                    ``(A) Information for students and families 
                regarding--
                          ``(i) the benefits of a postsecondary 
                      education;
                          ``(ii) postsecondary education opportunities;
                          ``(iii) planning for postsecondary education; 
                      and
                          ``(iv) career preparation.
                    ``(B) Information on financing options for 
                postsecondary education and activities that promote 
                financial literacy and debt management among students 
                and families.
                    ``(C) Outreach activities for students who may be at 
                risk of not enrolling in or completing postsecondary 
                education.
                    ``(D) Assistance in completion of the Free 
                Application for Federal Student Aid or other common 
                financial reporting form under section 483(a) of the 
                Higher Education Act of 1965.
                    ``(E) Need-based grant aid for students.
                    ``(F) Professional development for guidance 
                counselors at middle schools and secondary schools, and 
                financial aid administrators and college admissions 
                counselors at institutions of higher education, to 
                improve such individuals' capacity to assist students 
                and parents with--
                          ``(i) understanding--
                                    ``(I) entrance requirements for 
                                admission to institutions of higher 
                                education; and
                                    ``(II) State eligibility 
                                requirements for Academic 
                                Competitiveness Grants or National SMART 
                                Grants under section 401A, and other 
                                financial

[[Page 121 STAT. 815]]

                                assistance that is dependent upon a 
                                student's coursework;
                          ``(ii) applying to institutions of higher 
                      education;
                          ``(iii) applying for Federal student financial 
                      assistance and other State, local, and private 
                      student financial assistance and scholarships;
                          ``(iv) activities that increase students' 
                      ability to successfully complete the coursework 
                      required for a postsecondary degree, including 
                      activities such as tutoring or mentoring; and
                          ``(v) activities to improve secondary school 
                      students' preparedness for postsecondary entrance 
                      examinations.
                    ``(G) Student loan cancellation or repayment (as 
                applicable), or interest rate reductions, for borrowers 
                who are employed in a high-need geographical area or a 
                high-need profession in the State, as determined by the 
                State.
            ``(2) Prohibited uses.--Funds made available under this 
        section shall not be used to promote any lender's loans.
            ``(3) Use of funds for administrative purposes.--A grantee 
        may use not more than 6 percent of the total amount of the sum 
        of the Federal share provided under this section and the non-
        Federal share required under this section for administrative 
        purposes relating to the grant under this section.

    ``(g) Special Conditions.--
            ``(1) Availability to students and families.--A grantee 
        receiving a grant payment under this section shall--
                    ``(A) make the activities and services described in 
                subparagraphs (A) through (F) of subsection (f)(1) that 
                are funded under the payment available to all qualifying 
                students and families in the State;
                    ``(B) allow students and families to participate in 
                the activities and services without regard to--
                          ``(i) the postsecondary institution in which 
                      the student enrolls;
                          ``(ii) the type of student loan the student 
                      receives;
                          ``(iii) the servicer of such loan; or
                          ``(iv) the student's academic performance;
                    ``(C) not charge any student or parent a fee or 
                additional charge to participate in the activities or 
                services; and
                    ``(D) in the case of an activity providing grant 
                aid, not require a student to meet any condition other 
                than eligibility for Federal financial assistance under 
                title IV of the Higher Education Act of 1965, except as 
                provided for in the loan cancellation or repayment or 
                interest rate reductions described in subsection 
                (f)(1)(G).
            ``(2) Priority.--A grantee receiving a grant payment under 
        this section shall, in carrying out any activity or service 
        described in subsection (f)(1) with the grant funds, prioritize 
        students and families who are living below the poverty line 
        applicable to the individual's family size (as determined under 
        section 673(2) of the Community Service Block Grant Act).
            ``(3) Disclosures.--
                    ``(A) Organizational disclosures.--In the case of a 
                State that has chosen to make a payment to an eligible 
                not-for-profit holder in the State in accordance with 
                subsection (e), the holder shall clearly and prominently 
                indicate

[[Page 121 STAT. 816]]

                the name of the holder and the nature of the holder's 
                work in connection with any of the activities carried 
                out, or any information or services provided, with such 
                funds.
                    ``(B) Informational disclosures.--Any information 
                about financing options for higher education provided 
                through an activity or service funded under this section 
                shall--
                          ``(i) include information to students and the 
                      students' parents of the availability of Federal, 
                      State, local, institutional, and other grants and 
                      loans for postsecondary education; and
                          ``(ii) present information on financial 
                      assistance for postsecondary education that is not 
                      provided under title IV of the Higher Education 
                      Act of 1965 in a manner that is clearly distinct 
                      from information on student financial assistance 
                      under such title.
            ``(4) Coordination.--A grantee receiving a grant payment 
        under this section shall attempt to coordinate the activities 
        carried out with the grant payment with any existing activities 
        that are similar to such activities, and with any other entities 
        that support the existing activities in the State.

    ``(h) Report.--A grantee receiving a payment under this section 
shall prepare and submit an annual report to the Secretary on the 
activities and services carried out under this section, and on the 
implementation of such activities and services. The report shall 
include--
            ``(1) each activity or service that was provided to students 
        and families over the course of the year;
            ``(2) the cost of providing each activity or service;
            ``(3) the number, and percentage, if feasible and 
        applicable, of students who received each activity or service; 
        and
            ``(4) the total contributions from private organizations 
        included in the grantee's non-Federal share for the fiscal year.

    ``(i) Definitions.--In this section:
            ``(1) Philanthropic organization.--The term `philanthropic 
        organization' means a non-profit organization--
                    ``(A) that does not receive funds under title IV of 
                the Higher Education Act of 1965 or under the Elementary 
                and Secondary Education Act of 1965;
                    ``(B) that is not a local educational agency or an 
                institution of higher education;
                    ``(C) that has a demonstrated record of dispersing 
                grant aid to underserved populations to ensure access 
                to, and participation in, higher education;
                    ``(D) that is affiliated with an eligible consortia 
                (as defined in paragraph (2)) to carry out this section; 
                and
                    ``(E) the primary purpose of which is to provide 
                financial aid and support services to students from 
                underrepresented populations to increase the number of 
                such students who enter and remain in college.
            ``(2) Eligible consortia.--The term `eligible consortia' 
        means a partnership of 2 or more entities that have agreed to 
        work together to carry out this section that--
                    ``(A) includes--
                          ``(i) a philanthropic organization, which 
                      serves as the manager of the consortia;

[[Page 121 STAT. 817]]

                          ``(ii) a State that demonstrates a commitment 
                      to ensuring the creation of a Statewide system to 
                      address the issues of early intervention and 
                      financial support for eligible students to enter 
                      and remain in college; and
                          ``(iii) at the discretion of the philanthropic 
                      organization described in clause (i), additional 
                      partners, including other non-profit 
                      organizations, government entities (including 
                      local municipalities, school districts, cities, 
                      and counties), institutions of higher education, 
                      and other public or private programs that provide 
                      mentoring or outreach programs; and
                    ``(B) conducts activities to assist students with 
                entering and remaining in college, which may include--
                          ``(i) providing need-based grants to students;
                          ``(ii) providing early notification to low-
                      income students of their potential eligibility for 
                      Federal financial aid (which may include assisting 
                      students and families with filling out FAFSA 
                      forms), as well as other financial aid and other 
                      support available from the eligible consortia;
                          ``(iii) encouraging increased student 
                      participation in higher education through 
                      mentoring or outreach programs; and
                          ``(iv) conducting marketing and outreach 
                      efforts that are designed to--
                                    ``(I) encourage full participation 
                                of students in the activities of the 
                                consortia that carry out this section; 
                                and
                                    ``(II) provide the communities 
                                impacted by the activities of the 
                                consortia with a general knowledge about 
                                the efforts of the consortia.
            ``(3) Grantee.--The term `grantee' means--
                    ``(A) a State awarded a grant under this section; or
                    ``(B) with respect to such a State that has failed 
                to meet the non-Federal share requirement of subsection 
                (b), a philanthropic organization awarded the 
                proportionate reduction amount of such a grant under 
                subsection (b)(3).''.
SEC. 802. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND 
                        UNIVERSITIES AND MINORITY-SERVING 
                        INSTITUTIONS.

    Title IV (20 U.S.C. 1070 et seq.) is further amended by adding after 
part I (as added by section 701 of this Act) the following new part:

``PART J--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND 
                   OTHER MINORITY-SERVING INSTITUTIONS

``SEC. <<NOTE: 20 USC 1099e.>> 499A. INVESTMENT IN HISTORICALLY 
                          BLACK COLLEGES AND UNIVERSITIES AND 
                          OTHER MINORITY-SERVING INSTITUTIONS.

    ``(a) Eligible Institution.--An institution of higher education is 
eligible to receive funds from the amounts made available under this 
section if such institution is--

[[Page 121 STAT. 818]]

            ``(1) a part B institution (as defined in section 322 (20 
        U.S.C. 1061));
            ``(2) a Hispanic-serving institution (as defined in section 
        502 (20 U.S.C. 1101a));
            ``(3) a Tribal College or University (as defined in section 
        316 (20 U.S.C. 1059c));
            ``(4) an Alaska Native-serving institution or a Native 
        Hawaiian-serving institution (as defined in section 317(b) (20 
        U.S.C. 1059d(b)));
            ``(5) a Predominantly Black Institution (as defined in 
        subsection (c));
            ``(6) an Asian American and Native American Pacific 
        Islander-serving institution (as defined in subsection (c)); or
            ``(7) a Native American-serving nontribal institution (as 
        defined in subsection (c)).

    ``(b) New Investment of Funds.--
            ``(1) In general.--There shall be available to the Secretary 
        to carry out this section, from funds not otherwise 
        appropriated, $255,000,000 for each of the fiscal years 2008 and 
        2009. <<NOTE: Expiration date.>> The authority to award grants 
        under this section shall expire at the end of fiscal year 2009.
            ``(2) Allocation and allotment.--
                    ``(A) In general.--Of the amounts made available 
                under paragraph (1) for each fiscal year--
                          ``(i) $100,000,000 shall be available for 
                      allocation under subparagraph (B);
                          ``(ii) $100,000,000 shall be available for 
                      allocation under subparagraph (C); and
                          ``(iii) $55,000,000 shall be available for 
                      allocation under subparagraph (D).
                    ``(B) HSI stem and articulation programs.--The 
                amount made available for allocation under this 
                subparagraph by subparagraph (A)(i) for any fiscal year 
                shall be available for Hispanic-serving Institutions for 
                activities described in section 503, with a priority 
                given to applications that propose--
                          ``(i) to increase the number of Hispanic and 
                      other low income students attaining degrees in the 
                      fields of science, technology, engineering, or 
                      mathematics; and
                          ``(ii) to develop model transfer and 
                      articulation agreements between 2-year Hispanic-
                      serving institutions and 4-year institutions in 
                      such fields.
                    ``(C) Allocation and allotment hbcus and pbis.--From 
                the amount made available for allocation under this 
                subparagraph by subparagraph (A)(ii) for any fiscal 
                year--
                          ``(i) 85 percent shall be available to 
                      eligible institutions described in subsection 
                      (a)(1) and shall be made available as grants under 
                      section 323 and allotted among such institutions 
                      under section 324, treating such amount, plus the 
                      amount appropriated for such fiscal year in a 
                      regular or supplemental appropriation Act to carry 
                      out part B of title III, as the amount 
                      appropriated to carry out part B of title III for 
                      purposes of allotments under section 324, for use 
                      by such institutions with a priority for--

[[Page 121 STAT. 819]]

                                    ``(I) activities described in 
                                paragraphs (1), (2), (4), (5), and (10) 
                                of section 323(a); and
                                    ``(II) other activities, consistent 
                                with the institution's comprehensive 
                                plan and designed to increase the 
                                institution's capacity to prepare 
                                students for careers in the physical or 
                                natural sciences, mathematics, computer 
                                science or information technology or 
                                sciences, engineering, language 
                                instruction in the less-commonly taught 
                                languages or international affairs, or 
                                nursing or allied health professions; 
                                and
                          ``(ii) 15 percent shall be available to 
                      eligible institutions described in subsection 
                      (a)(5) and shall be available for a competitive 
                      grant program to award 25 grants of $600,000 
                      annually for programs in any of the following 
                      areas:
                                    ``(I) science, technology, 
                                engineering, or mathematics (STEM);
                                    ``(II) health education;
                                    ``(III) internationalization or 
                                globalization;
                                    ``(IV) teacher preparation; or
                                    ``(V) improving educational outcomes 
                                of African American males.
                    ``(D) Allocation and allotment to other minority-
                serving institutions.--From the amount made available 
                for allocation under this subparagraph by subparagraph 
                (A)(iii) for any fiscal year--
                          ``(i) $30,000,000 for such fiscal year shall 
                      be available to eligible institutions described in 
                      subsection (a)(3) and shall be made available as 
                      grants under section 316, treating such 
                      $30,000,000 as part of the amount appropriated for 
                      such fiscal year in a regular or supplemental 
                      appropriation Act to carry out such section, and 
                      using such $30,000,000 for purposes described in 
                      subsection (c) of such section;
                          ``(ii) $15,000,000 for such fiscal year shall 
                      be available to eligible institutions described in 
                      subsection (a)(4) and shall be made available as 
                      grants under section 317, treating such 
                      $15,000,000 as part of the amount appropriated for 
                      such fiscal year in a regular or supplemental 
                      appropriation Act to carry out such section and 
                      using such $15,000,000 for purposes described in 
                      subsection (c) of such section;
                          ``(iii) $5,000,000 for such fiscal year shall 
                      be available to eligible institutions described in 
                      subsection (a)(6) for activities described in 
                      section 311(c); and
                          ``(iv) $5,000,000 for such fiscal year shall 
                      be available to eligible institutions described in 
                      subsection (a)(7)--
                                    ``(I) to plan, develop, undertake, 
                                and carry out activities to improve and 
                                expand such institutions' capacity to 
                                serve Native Americans, which may 
                                include--
                                            ``(aa) the purchase, rental, 
                                        or lease of scientific or 
                                        laboratory equipment for 
                                        educational purposes, including 
                                        instructional and research 
                                        purposes;

[[Page 121 STAT. 820]]

                                            ``(bb) renovation and 
                                        improvement in classroom, 
                                        library, laboratory, and other 
                                        instructional facilities;
                                            ``(cc) support of faculty 
                                        exchanges, faculty development, 
                                        and faculty fellowships to 
                                        assist faculty in attaining 
                                        advanced degrees in the 
                                        faculty's field of instruction;
                                            ``(dd) curriculum 
                                        development and academic 
                                        instruction;
                                            ``(ee) the purchase of 
                                        library books, periodicals, 
                                        microfilm, and other educational 
                                        materials;
                                            ``(ff) funds and 
                                        administrative management, and 
                                        acquisition of equipment for use 
                                        in strengthening funds 
                                        management;
                                            ``(gg) the joint use of 
                                        facilities such as laboratories 
                                        and libraries; and
                                            ``(hh) academic tutoring and 
                                        counseling programs and student 
                                        support services; and
                                    ``(II) to which the Secretary, to 
                                the extent possible and consistent with 
                                a competitive process under which such 
                                grants are awarded, allocates funds 
                                under this clause to ensure maximum and 
                                equitable distribution among all such 
                                eligible institutions.

    ``(c) Definitions.--
            ``(1) Asian american.--The term `Asian American' has the 
        meaning given the term `Asian' in the Office of Management and 
        Budget's Standards for Maintaining, Collecting, and Presenting 
        Federal Data on Race and Ethnicity as published on October 30, 
        1997 (62 Fed. Reg. 58789).
            ``(2) Asian american and native american pacific islander-
        serving institution.--The term `Asian American and Native 
        American Pacific Islander-serving institution' means an 
        institution of higher education that--
                    ``(A) is an eligible institution under section 
                312(b); and
                    ``(B) at the time of application, has an enrollment 
                of undergraduate students that is at least 10 percent 
                Asian American and Native American Pacific Islander 
                students.
            ``(3) Enrollment of needy students.--The term `enrollment of 
        needy students' means the enrollment at an institution of higher 
        education with respect to which not less than 50 percent of the 
        undergraduate students enrolled in an academic program leading 
        to a degree--
                    ``(A) in the second fiscal year preceding the fiscal 
                year for which the determination is made, were Federal 
                Pell Grant recipients for such year;
                    ``(B) come from families that receive benefits under 
                a means-tested Federal benefit program (as defined in 
                paragraph (5));
                    ``(C) attended a public or nonprofit private 
                secondary school--
                          ``(i) that is in the school district of a 
                      local educational agency that was eligible for 
                      assistance under part A of title I of the 
                      Elementary and Secondary Education Act of 1965 for 
                      any year during which the student attended such 
                      secondary school; and

[[Page 121 STAT. 821]]

                          ``(ii) which for the purpose of this paragraph 
                      and for that year was determined by the Secretary 
                      (pursuant to regulations and after consultation 
                      with the State educational agency of the State in 
                      which the school is located) to be a school in 
                      which the enrollment of children counted under a 
                      measure of poverty described in section 1113(a)(5) 
                      of such Act exceeds 30 percent of the total 
                      enrollment of such school; or
                    ``(D) are first-generation college students (as that 
                term is defined in section 402A(g)), and a majority of 
                such first-generation college students are low-income 
                individuals.
            ``(4) Low-income individual.--The term `low-income 
        individual' has the meaning given such term in section 402A(g).
            ``(5) Means-tested federal benefit program.--The term 
        `means-tested Federal benefit program' means a program of the 
        Federal Government, other than a program under title IV, in 
        which eligibility for the programs' benefits or the amount of 
        such benefits are determined on the basis of income or resources 
        of the individual or family seeking the benefit.
            ``(6) Native american.--The term `Native American' means an 
        individual who is of a tribe, people, or culture that is 
        indigenous to the United States.
            ``(7) Native american pacific islander.--The term `Native 
        American Pacific Islander' means any descendant of the 
        aboriginal people of any island in the Pacific Ocean that is a 
        territory or possession of the United States.
            ``(8) Native american-serving nontribal institution.--The 
        term `Native American-serving nontribal institution' means an 
        institution of higher education that--
                    ``(A) at the time of application--
                          ``(i) has an enrollment of undergraduate 
                      students that is not less than 10 percent Native 
                      American students; and
                          ``(ii) is not a Tribal College or University 
                      (as defined in section 316); and
                    ``(B) submits to the Secretary such enrollment data 
                as may be necessary to demonstrate that the institution 
                is described in subparagraph (A), along with such other 
                information and data as the Secretary may by regulation 
                require.
            ``(9) Predominantly black institution.--The term 
        `Predominantly Black institution' means an institution of higher 
        education that--
                    ``(A) has an enrollment of needy students as defined 
                by paragraph (3);
                    ``(B) has an average educational and general 
                expenditure which is low, per full-time equivalent 
                undergraduate student in comparison with the average 
                educational and general expenditure per full-time 
                equivalent undergraduate student of institutions of 
                higher education that offer similar instruction, except 
                that the Secretary may apply the waiver requirements 
                described in section 392(b) to this subparagraph in the 
                same manner as the Secretary applies the waiver 
                requirements to section 312(b)(1)(B);
                    ``(C) has an enrollment of undergraduate students--
                          ``(i) that is at least 40 percent Black 
                      American students;

[[Page 121 STAT. 822]]

                          ``(ii) that is at least 1,000 undergraduate 
                      students;
                          ``(iii) of which not less than 50 percent of 
                      the undergraduate students enrolled at the 
                      institution are low-income individuals or first-
                      generation college students (as that term is 
                      defined in section 402A(g)); and
                          ``(iv) of which not less than 50 percent of 
                      the undergraduate students are enrolled in an 
                      educational program leading to a bachelor's or 
                      associate's degree that the institution is 
                      licensed to award by the State in which the 
                      institution is located;
                    ``(D) is legally authorized to provide, and provides 
                within the State, an educational program for which the 
                institution of higher education awards a bachelor's 
                degree, or in the case of a junior or community college, 
                an associate's degree;
                    ``(E) is accredited by a nationally recognized 
                accrediting agency or association determined by the 
                Secretary to be a reliable authority as to the quality 
                of training offered, or is, according to such an agency 
                or association, making reasonable progress toward 
                accreditation; and
                    ``(F) is not receiving assistance under part B of 
                title III.''.

    Approved September 27, 2007.

LEGISLATIVE HISTORY--H.R. 2669:
---------------------------------------------------------------------------

HOUSE REPORTS: Nos. 110-210 (Comm. on Education and Labor) and 110-317 
(Comm. of Conference).
CONGRESSIONAL RECORD, Vol. 153 (2007):
            July 11, considered and passed House.
            July 17, 19, considered and passed Senate, amended.
            Sept. 6, Senate considered conference report.
            Sept. 7, Senate and House agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 43 (2007):
            Sept. 27, Presidential remarks.

                                  <all>
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