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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2243 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2243

 To make college more affordable by expanding and enhancing financial 
    aid options for students and their families and providing loan 
 forgiveness opportunities for public service employees, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 2, 2006

 Mr. Menendez introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To make college more affordable by expanding and enhancing financial 
    aid options for students and their families and providing loan 
 forgiveness opportunities for public service employees, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Access and Affordability 
Act''.

SEC. 2. EXPANSION OF HOPE AND LIFETIME LEARNING CREDITS.

    (a) Hope Scholarship Credit and Lifetime Learning Credit Expanded 
To Cover Expenses for Other Educational Expenses.--
            (1) In general.--Sections 25A and 6050S of the Internal 
        Revenue Code of 1986 are each amended by striking ``qualified 
        tuition and related expenses'' each place it appears and 
        inserting ``qualified higher education expenses''.
            (2) Qualified higher education expenses.--Section 25A(f)(1) 
        of the Internal Revenue Code of 1986 is amended to read as 
        follows:
            ``(1) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' means the tuition, fees, books, 
                supplies, and equipment required for the enrollment or 
                attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                at an eligible educational institution for courses of 
                instruction of such individual at such institution.
                    ``(B) Special needs services.--In the case of an 
                individual described in subparagraph (A) with special 
                needs, such term includes expenses for special needs 
                services which are incurred in connection with such 
                enrollment or attendance.''.
            (3) Conforming amendment.--Paragraph (1) of section 222 of 
        the Internal Revenue Code of 1986 is amended to read as 
        follows:
            ``(1) Qualified tuition and related expenses.--
                    ``(A) In general.--The term `qualified tuition and 
                related expenses' means tuition and fees required for 
                the enrollment or attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                at an eligible educational institution for courses of 
                instruction of such individual at such institution.
                    ``(B) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the individual's degree program.
                    ``(C) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other expenses unrelated to an 
                individual's academic course of instruction.
                    ``(D) Reduction.--The qualified tuition and related 
                expenses shall be reduced in the same manner as under 
                section 25A(g)(2).''.
    (b) Increase in Per Student Limitation for Hope Scholarship 
Credit.--
            (1) In general.--Subparagraph (B) of section 25A(b)(1) of 
        the Internal Revenue Code of 1986 is amended by striking ``the 
        applicable limit'' and inserting ``$4,000''.
            (2) Inflation adjustment.--Paragraph (1) of section 25A(h) 
        of the Internal Revenue Code of 1986 is amended by 
        redesignating subparagraph (B) as subparagraph (C) and by 
        inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) $4,000 amount.--In the case of a taxable year 
                beginning after 2006, the $4,000 amount contained in 
                subsection (b)(1)(B) shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2005' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.''.
            (3) Conforming amendment.--Subsection (b) of section 25A of 
        the Internal Revenue Code of 1986 is amended by striking 
        paragraph (4).
    (c) Increase in Gross Income Limitation.--
            (1) In general.--Clause (ii) of section 25A(d)(2)(A) of the 
        Internal Revenue Code of 1986 is amended by striking ``$40,000 
        ($80,000'' and inserting ``$58,000 (twice such amount''.
            (2) Inflation adjustment.--Subparagraph (A) of section 
        25A(h)(2) of the Internal Revenue Code of 1986 is amended to 
        read as follows:
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2006, the $58,000 amount in subsection 
                (d)(2) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2005' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.''.
    (d) Hope Scholarship Credit Available for 4 Years.--Paragraph (2) 
of section 25A(b) of the Internal Revenue Code of 1986 is amended by 
striking ``2'' each place it appears in subparagraphs (A) and (C) and 
inserting ``4''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenses paid after December 31, 2005, (in taxable years 
ending after such date) for education furnished in academic periods 
beginning after such date.

SEC. 3. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    Section 428K of the Higher Education Act of 1965 (20 U.S.C. 1078-
11) is amended to read as follows:

``SEC. 428K. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to reduce the burden of student debt, particularly 
        for Americans who dedicate their careers to meeting certain 
        urgent national needs; and
            ``(2) to attract more excellent individuals into important 
        public service careers.
    ``(b) Loan Forgiveness.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay, pursuant to subsection (c), a loan made 
        under section 428 or 428H, a Federal Direct Stafford Loan or 
        Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Consolidation Loan, or a Federal Perkins Loan for any new 
        borrower after the date of enactment of the Higher Education 
        Amendments of 1998, who--
                    ``(A) is employed full time in a qualified public 
                service position described in paragraph (2); and
                    ``(B) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Qualified public service positions.--For purposes of 
        this section, an individual shall be treated as employed in a 
        qualified public service position if the individual is any of 
        the following:
                    ``(A) Highly qualified teachers of mathematics, 
                science, and bilingual and special education and in 
                low-income communities.--An individual who--
                            ``(i) is highly qualified as such term is 
                        defined in section 9101 of the Elementary and 
                        Secondary Education Act of 1965; and
                            ``(ii)(I) has obtained employment as a 
                        teacher for service in a public or nonprofit 
                        private elementary or secondary school that is 
                        in the school district of a local educational 
                        agency that is eligible in such year for 
                        assistance pursuant to title I of the 
                        Elementary and Secondary Education Act of 1965, 
                        and which for the purpose of this paragraph and 
                        for that year has been 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 section 1113(a)(5) of the 
                        Elementary and Secondary Education Act of 1965 
                        exceeds 40 percent of the total enrollment of 
                        that school; or
                            ``(II) has obtained employment as a full-
                        time teacher of mathematics, science, or 
                        bilingual or special education.
                    ``(B) First responders in low-income communities.--
                An individual who, as determined by the Secretary of 
                Education by regulation--
                            ``(i) has obtained employment as a 
                        firefighter, police officer, or emergency 
                        medical technician; and
                            ``(ii) serves a low-income community.
                    ``(C) Nurses in low income communities.--An 
                individual who is an eligible nurse and has obtained 
                employment--
                            ``(i)(I) in a clinical setting; or
                            ``(II) as a member of the nursing faculty 
                        at an accredited school of nursing (as those 
                        terms are defined in section 801 of the Public 
                        Health Service Act (42 U.S.C. 296)); and
                            ``(ii) serves a low-income or needy 
                        community.
                    ``(D) Child welfare workers.--An individual who--
                            ``(i) has completed a degree in social work 
                        or a related field with a focus on serving 
                        children and families (as determined in 
                        accordance with regulations prescribed by the 
                        Secretary); and
                            ``(ii) has obtained employment in public or 
                        private child welfare services.
    ``(c) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay a total of not more than $17,500 of 
        principal and interest as follows:
                    ``(A) after each of the first or second years of 
                service by an individual in a qualified public service 
                position, 15 percent of the total amount of principal 
                and interest of the loans described in subsection 
                (b)(1) to such individual that are outstanding 
                immediately preceding such first year of such service;
                    ``(B) after each of the third or fourth years of 
                such service, 20 percent of such total amount; and
                    ``(C) after the fifth year of such service, 30 
                percent of such total amount.
            ``(2) Treatment of consolidation loans.--A loan amount for 
        a loan made under section 428C or for a Federal Direct 
        Consolidation Loan may be a qualified loan amount for the 
        purposes of this subsection only to the extent that such loan 
        amount was used to repay a loan described in subsection (b)(1) 
        for a borrower who meets the requirements of subsection (b), as 
        determined in accordance with regulations prescribed by the 
        Secretary.
            ``(3) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repayment of a loan 
        made under section 428 or 428H, a Federal Direct Stafford Loan 
        or Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Consolidation Loan, or a Federal Perkins Loan.
            ``(4) Interest.--If a portion of a loan is repaid by the 
        Secretary under this section for any year, the proportionate 
        amount of interest on such loan that accrues for such year 
        shall be repaid by the Secretary.
            ``(5) Ineligibility of national service award recipients.--
        No student borrower may, for the same service, receive a 
        benefit under both this section and subtitle D of title I of 
        the National and Community Service Act of 1990 (42 U.S.C. 12601 
        et seq.).
            ``(6) Ineligibility for double benefits.--No borrower may 
        receive a reduction of loan obligations under both this section 
        and section 428J or 460.
            ``(7) Continued eligibility of teachers.--Any teacher who 
        performs service in a school that--
                    ``(A) meets the requirements of subsection 
                (b)(2)(A)(ii)(I) in any year during such service; and
                    ``(B) in a subsequent year fails to meet the 
                requirements of such subsection, may continue to teach 
                in such school and shall be eligible for loan 
                forgiveness pursuant to subsection (b).
    ``(d) Repayment to Eligible Lenders and Holders.--The Secretary 
shall pay to each eligible lender or holder for each fiscal year an 
amount equal to the aggregate amount of the lender's or holder's loans 
that are subject to repayment pursuant to this section for such year.
    ``(e) Application for Repayment.--
            ``(1) In general.--Each eligible individual desiring loan 
        repayment under this section shall submit a complete and 
        accurate application to the Secretary at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            ``(2) Conditions.--An eligible individual may apply for 
        loan repayment under this section after completing each of the 
        consecutive years of qualifying service described in subsection 
        (c)(1). The borrower may elect to receive forbearance while 
        engaged in qualifying service described in subsection (c)(1) 
        unless the borrower is in deferment while so engaged.
    ``(f) Regulations.--The Secretary is authorized to prescribe such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(g) Definitions.--In this section:
            ``(1) Child welfare services.--The term `child welfare 
        services' has the meaning given the term in section 425 of the 
        Social Security Act.
            ``(2) Degree.--The term `degree' means an associate or 
        baccalaureate degree awarded by an institution of higher 
        education.
            ``(3) Eligible nurse.--The term `eligible nurse' means a 
        nurse who meets all of the following:
                    ``(A) The nurse graduated from--
                            ``(i) an accredited school of nursing (as 
                        those terms are defined in section 801 of the 
                        Public Health Service Act (42 U.S.C. 296));
                            ``(ii) a nursing center; or
                            ``(iii) an academic health center that 
                        provides nurse training.
                    ``(B) The nurse holds a valid and unrestricted 
                license to practice nursing in the State in which the 
                nurse practices in a clinical setting.
                    ``(C) The nurse holds 1 or more of the following:
                            ``(i) A graduate degree in nursing, or an 
                        equivalent degree.
                            ``(ii) A nursing degree from a collegiate 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
                            ``(iii) A nursing degree from an associate 
                        degree school of nursing (as defined in section 
                        801 of the Public Health Service Act (42 U.S.C. 
                        296)).
                            ``(iv) A nursing degree from a diploma 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
            ``(4) Low-income community.--In this subsection, the term 
        `low-income community' means a community in which 70 percent of 
        households earn less than 85 percent of the State median 
        household income.
            ``(5) Year.--The term `year', where applied to service as a 
        teacher (or service as a member of the nursing faculty of an 
        accredited school of nursing (as those terms are defined in 
        section 801 of the Public Health Service Act (42 U.S.C. 296))), 
        means an academic year as defined by the Secretary.''.

SEC. 4. YEAR-ROUND PELL GRANTS.

    Section 401(b)(6) of the Higher Education Act of 1965 (20 U.S.C. 
1070a(b)(6)) is amended by striking ``may allow, on a case-by-case 
basis,'' and inserting ``shall allow''.

SEC. 5. SPECIAL TRANSITION ASSISTANCE PLANS FOR BORROWERS.

    (a) Plans Authorized.--Section 428(b)(9) of the Higher Education 
Act of 1965 (20 U.S.C. 1078(b)(9)) is amended by adding at the end the 
following:
                    ``(C) Special transition assistance plans.--In 
                addition to the plans required by subparagraph (A), the 
                lender shall provide a borrower who has not yet 
                completed 12 months in the repayment period with the 
                option to repay a loan made under this section in 
                accordance with a special transition assistance plan. 
                The interest rate on a loan for which the borrower 
                elected a special transition assistance plan shall be 
                determined in accordance with section 427A(k) or 
                427A(l), as applicable. If a borrower participates in a 
                special transition assistance plan for 24 or more 
                months, and then repays the outstanding balance of the 
                loan more than 24 months prior to the last scheduled 
                payment on the loan, the borrower shall repay the 
                Secretary the amount of interest that accrued on the 
                loan during the 24 months beginning on the effective 
                date of the plan.''.
    (b) Interest Rates.--
            (1) Pre-2006 loans.--Section 427A(k) of such Act (20 U.S.C. 
        1077a(k)) is amended--
                    (A) by redesignating paragraph (5) as paragraph 
                (6); and
                    (B) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) Special transition assistance plans interest rates.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                with respect to any loan for which the borrower elected 
                a special transition assistance plan as provided in 
                section 428(b)(9)(C)--
                            ``(i) for 24 months beginning on the 
                        effective date of the plan the applicable rate 
                        of interest shall be 3.4 percent; and
                            ``(ii) for the last 24 months of the 
                        scheduled repayment period the applicable rate 
                        of interest shall be computed for each calendar 
                        quarter beginning January 1, April 1, July 1, 
                        and October 1 of each year--
                                    ``(I) by determining 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;
                                    ``(II) by subtracting the 
                                applicable interest rates on such loans 
                                from such average bond equivalent rate;
                                    ``(III) by adding 2.34 percent to 
                                the resultant percent; and
                                    ``(IV) by dividing the resultant 
                                percent by 4.
                    ``(B) Exception.--The interest rate on a loan for 
                which the borrower elected a special transition 
                assistance plan for the period beginning the first day 
                of the last 24 months of the scheduled repayment period 
                until the beginning of the first calendar quarter 
                thereafter will be computed using the average of the 
                bond equivalent rates of the quotes of the 3-month 
                commercial paper (financial) rates in effect for the 
                quarter ending the previous March 31, June 30, 
                September 30, or December 31.''.
            (2) Post-2006 loans.--Section 427A(l) of such Act (20 
        U.S.C. 1077a(l)) is amended by adding at the end the following:
            ``(4) Special transition assistance plans interest rates.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                with respect to any loan for which the borrower elected 
                a special transition assistance plan as provided in 
                section 428(b)(9)(C)--
                            ``(i) for 24 months beginning on the 
                        effective date of the plan the applicable rate 
                        of interest shall be 3.4 percent; and
                            ``(ii) for the last 24 months of the 
                        scheduled repayment period the applicable rate 
                        of interest shall be computed for each calendar 
                        quarter beginning January 1, April 1, July 1, 
                        and October 1 of each year--
                                    ``(I) by determining 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;
                                    ``(II) by subtracting the 
                                applicable interest rates on such loans 
                                from such average bond equivalent rate;
                                    ``(III) by adding 2.34 percent to 
                                the resultant percent; and
                                    ``(IV) by dividing the resultant 
                                percent by 4.
                    ``(B) Exception.--The interest rate on a loan for 
                which the borrower elected a special transition 
                assistance plan for the period beginning the first day 
                of the last 24 months of the scheduled repayment period 
                until the beginning of the first calendar quarter 
                thereafter will be computed using the average of the 
                bond equivalent rates of the quotes of the 3-month 
                commercial paper (financial) rates in effect for the 
                quarter ending the previous March 31, June 30, 
                September 30, or December 31.''.
    (c) Additional Conforming Amendments.--
            (1) Section 427(a)(2)(H) of such Act (20 U.S.C. 
        1077(a)(2)(H)) is amended by inserting after ``regulations of 
        the Secretary'' the following: ``or in accordance with a 
        special transition assistance plan as provided in section 
        428(b)(9)(C)''.
            (2) Section 428(b)(1)(E)(i) of such Act (20 U.S.C. 
        1078(b)(1)(E)(i)) is amended by inserting after ``regulations 
        of the Secretary'' the following: ``or in accordance with a 
        special transition assistance plan as provided in section 
        428(b)(9)(C)''.
            (3) Section 428(b)(1)(L)(i) of such Act (20 U.S.C. 
        1078(b)(1)(L)(i)) is amended by inserting before ``, be less 
        than $600'' the following: ``or the borrower is in the first 24 
        months after the borrower elected a special transition 
        assistance plan as provided in section 428(b)(9)(C)''.
            (4) Section 428C(a)(4)(A) of such Act (20 U.S.C. 1078-
        3(a)(4)(A)) is amended by inserting before the semicolon the 
        following: ``except a loan for which the borrower elected a 
        special transition assistance plan as provided in section 
        428(b)(9)(C)''.
            (5) Section 428J(e) of such Act (20 U.S.C. 1078-10(e)) is 
        amended by adding at the end the following: ``A loan for which 
        the borrower elected a special transition assistance plan as 
        provided in section 428(b)(9)(C) is not eligible for repayment 
        under this section.''.

SEC. 6. SUPPORT FOR ACADEMIC CREDIT TRANSFERS.

    Subpart 2 of part A of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070a-11 et seq.) is amended--
            (1) by redesignating section 407E as section 406E; and
            (2) by adding at the end the following:

           ``CHAPTER 4--SUPPORT FOR ACADEMIC CREDIT TRANSFERS

``SEC. 407A. PURPOSE.

    ``It is the purpose of this chapter to enhance opportunities of 
students to transfer between institutions in order to complete 
baccalaureate degrees by supporting the development and implementation 
of articulation and guaranteed transfer agreements.

``SEC. 407B. ACTIVITIES.

    ``(a) Grants Authorized.--From the amounts appropriated under 
section 407C, the Secretary shall award grants to a partnership that 
includes 2 or more institutions of higher education, at least 1 of 
which offers a baccalaureate or postbaccalaureate degree.
    ``(b) Use of Funds.--Grants awarded under this part shall be used 
for--
            ``(1) the development of policies to promote the transfer 
        of academic credits between institutions and to expand 
        articulation and guaranteed transfer agreements;
            ``(2) support services to students participating in the 
        program, such as tutoring, mentoring, and academic and personal 
        counseling, as well as any service that facilitates the 
        transition of students between the partner institutions;
            ``(3) academic program enhancements at a community or 
        technical college that result in increasing the quality of the 
        program offered and the number of student participants in the 
        dual degree program offered in conjunction with a baccalaureate 
        degree-granting institution; and
            ``(4) programs to identify barriers that inhibit student 
        transfers.
    ``(c) Applications.--Any partnership that desires to obtain a grant 
under this section shall submit to the Secretary an application at such 
time, in such manner, and containing such information or assurances as 
the Secretary may require.
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this section.

``SEC. 407C. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $70,000,000 to carry out 
this chapter for fiscal year 2007 and such sums as may be necessary for 
each of the 3 succeeding fiscal years.''.

SEC. 7. FINANCIAL AID ADMINISTRATOR DISCRETION.

    Section 479A(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087tt(a)) is amended--
            (1) by inserting ``as described in paragraph (1)'' after 
        ``on the basis of adequate documentation''; and
            (2) by inserting ``on a case-by-case basis to'' after ``on 
        a case-by-case basis to the cost of attendance or''.

SEC. 8. PREVENTION OF EXCESSIVE DEBT.

    Section 479A(c) of the Higher Education Act of 1965 (20 U.S.C. 
1087tt(c)) is amended--
            (1) by inserting ``or on a program, class-year, or 
        institution-wide basis'' after ``On a case-by-case basis''; and
            (2) by adding at the end the following new sentences: ``An 
        institution may not refuse to certify, or reduce the amount 
        certified for, a loan under part B in order to require the 
        student to borrow a loan under part D if the student has 
        remaining loan eligibility under part B. An institution that 
        refuses or reduces a certification under this subsection may 
        subsequently certify or increase the amount certified, subject 
        to the remaining loan eligibility of the student borrower.''.
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