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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2669 Introduced in House (IH)]

110th CONGRESS
  1st Session
                                H. R. 2669

To provide for reconciliation pursuant to section 601 of the concurrent 
             resolution on the budget for fiscal year 2008.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 12, 2007

    Mr. George Miller of California (for himself and Mr. Hinojosa) 
 introduced the following bill; which was referred to the Committee on 
                          Education and Labor

_______________________________________________________________________

                                 A BILL

 
To provide for reconciliation pursuant to section 601 of the concurrent 
             resolution on the budget for fiscal year 2008.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be referred to as the ``College Cost 
Reduction Act of 2007''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. References; effective date.
                   TITLE I--INVESTING IN STUDENT AID

         Part A--Increasing the Purchasing Power of Pell Grants

Sec. 101. Mandatory Pell Grant Increases.
Sec. 102. Support for working students.
Sec. 103. Simplified needs test and automatic zero improvements.
Sec. 104. Definitions.
              Part B--Making Student Loans More Affordable

Sec. 111. Interest rate reductions.
Sec. 112. Increases in loan limits.
Sec. 113. Reduction of lender special allowance payments.
Sec. 114. Elimination of exceptional performer status for lenders.
Sec. 115. Reduction of lender insurance percentage.
Sec. 116. Guaranty agency collection retention.
Sec. 117. Unit costs for account maintenance fees.
Sec. 118. Increased loan fees from lenders.
Sec. 119. Student loan information.
                 Part C--Rewarding Service in Repayment

Sec. 141. Loan forgiveness for service in areas of national need.
        ``Sec. 428K. Loan forgiveness for service in areas of national 
                            need.
Sec. 142. Income contingent repayment for public sector employees.
Sec. 143. Income-based repayment.
        ``Sec. 493C. Income-based repayment.
Sec. 144. Definition of economic hardship.
Sec. 145. Deferrals.
Sec. 146. Maximum repayment period.
                 TITLE II--REDUCING THE COST OF COLLEGE

Sec. 201. State commitment to affordable college education.
        ``Sec. 132. State commitment to affordable college education.
Sec. 202. Consumer information and public accountability in higher 
                            education.
        ``Sec. 131. Consumer information and public accountability in 
                            higher education.
Sec. 203. Incentives and rewards for low tuition.
        ``Sec. 401B. Incentives and rewards for low tuition.
Sec. 204. Cooperative education rewards for institutions that restrain 
                            tuition increases.
   ``TITLE VIII--COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT 
                       RESTRAIN TUITION INCREASES

        ``Sec. 801. Eligible institutions.
        ``Sec. 802. Authorization of appropriations; reservations.
        ``Sec. 803. Grants for cooperative education.
        ``Sec. 804. Demonstration and innovation projects; training and 
                            resource centers; and research.
   TITLE III--ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM

                          Part A--TEACH Grants

Sec. 301. TEACH Grants.``subpart 9--teach grants
        ``Sec. 420L. Program established.
        ``Sec. 420M. Eligibility; applications; selection.
        ``Sec. 420N. Definitions.
        ``Sec. 420O. Program period and funding.
                     Part B--Centers of Excellence

Sec. 311. Centers of excellence.
                    ``Part C--Centers of Excellence

        ``Sec. 231. Definitions.
        ``Sec. 232. Centers of excellence.
        ``Sec. 233. Appropriations.
            TITLE IV--COLLEGE ACCESS CHALLENGE GRANT PROGRAM

Sec. 401. College Access Challenge grants.

SEC. 2. REFERENCES; EFFECTIVE DATE.

    (a) 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.).
    (b) Effective Date.--Except as otherwise expressly provided 
therein, the amendments made by this Act shall be effective on October 
1, 2007.

                   TITLE I--INVESTING IN STUDENT AID

         PART A--INCREASING THE PURCHASING POWER OF PELL GRANTS

SEC. 101. 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 
2013''.
    (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) $420,000,000 for fiscal year 2008;
                            ``(ii) $870,000,000 for fiscal year 2009;
                            ``(iii) $1,330,000,000 for fiscal year 
                        2010;
                            ``(iv) $1,820,000,000 for fiscal year 2011;
                            ``(v) $2,340,000,000 for fiscal year 2012;
                            ``(vi) $2,390,000,000 for fiscal year 2013;
                            ``(vii) $2,430,000,000 for fiscal year 
                        2014;
                            ``(viii) $2,470,000,000 for fiscal year 
                        2015;
                            ``(ix) $2,500,000,000 for fiscal year 2016; 
                        and
                            ``(x) $2,520,000,000 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 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) $100 for award year 2008-2009;
                            ``(ii) $200 for award year 2009-2010;
                            ``(iii) $300 for award year 2010-2011;
                            ``(iv) $400 for award year 2011-2012; and
                            ``(v) $500 for award year 2012-2013 and 
                        each subsequent award year.
                    ``(C) 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.''.
    (c)  Authorized Maximums.--Section 401(b)(2)(A) (20 U.S.C. 
1070a(b)(2)(A)) is amended to read as follows:
            ``(2)(A) The amount of the Federal Pell Grant for a student 
        eligible under this part shall be--
                    ``(i) $7,600 for academic year 2008-2009;
                    ``(ii) $8,600 for academic year 2009-2010;
                    ``(iii) $9,600 for academic year 2010-2011;
                    ``(iv) $10,600 for academic year 2011-2012;
                    ``(v) $11,600 for academic year 2012-2013,
                less an amount equal to the amount determined to be the 
                expected family contribution with respect to that 
                student for that year.''.
    (d) Tuition Sensitivity.--
            (1) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is 
        further amended--
                    (A) by striking paragraph (3); and
                    (B) by redesignating paragraphs (4) through (9) as 
                paragraphs (3) through (8), respectively.
            (2) Effective date.--The amendments made by paragraph (1) 
        of this subsection are effective on the date of enactment of 
        this Act.
    (e) Multiple Grants.--Paragraph (5) of section 401(b) (as 
redesignated by subsection (d)(2)) is amended to read as follows:
            ``(5) Year-round pell grants.--The Secretary is authorized, 
        for students enrolled full time in a baccalaureate or 
        associate's degree program of study at an eligible institution, 
        to award such students not more than two Pell grants during an 
        award year to permit such students to accelerate progress 
        toward their degree objectives by enrolling in academic 
        programs for 12 months rather than 9 months.''.
    (f) Academic Competitiveness Grants.--Section 401A (as amended by 
section 8003 of Public Law 109-171) is amended--
            (1) in subsection (c)(3)(A)(ii), by inserting ``, except as 
        part of a secondary school program of study'' before the 
        semicolon;
            (2) by redesignating subsection (g) as subsection (h); and
            (3) by inserting after subsection (f) the following new 
        subsection:
    ``(g) Determination of Academic Year.--Notwithstanding section 
481(a)(2), for the purpose of determining eligibility for a grant under 
this section, a student shall be considered to be enrolled or accepted 
for enrollment in the first, second, third, or fourth academic year of 
a program of undergraduate education based on the student's class 
standing, as determined by the institution of higher education at which 
the student is enrolled or accepted for enrollment.''.

SEC. 102. 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 the 2009-2010 academic year, 
                        $3,750;
                            ``(ii) for the 2010-2011 academic year, 
                        $4,500;
                            ``(iii) for the 2011-2012 academic year, 
                        $5,250; and
                            ``(iv) for the 2012-2013 academic year, 
                        $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)(iv)) 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 the 2009-2010 
                                        academic year, $6,690;
                                            ``(bb) for the 2010-2011 
                                        academic year, $7,160;
                                            ``(cc) for the 2011-2012 
                                        academic year, $7,630; and
                                            ``(dd) for the 2012-2013 
                                        academic year, $8,090; and
                                    ``(II) for married students where 1 
                                is enrolled pursuant to subsection 
                                (a)(2)--
                                            ``(aa) for the 2009-2010 
                                        academic year, $10,720;
                                            ``(bb) for the 2010-2011 
                                        academic year, $11,470;
                                            ``(cc) for the 2011-2012 
                                        academic year, $12,220; and
                                            ``(dd) for the 2012-2013 
                                        academic year, $12,960;''.
    (c) Updated Tables and Amounts.--Section 478(b) (20 U.S.C. 
1087rr(b)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``Revised tables.--For each'' and 
                inserting ``Revised tables.--
                    ``(A) In general.--For each'';
                    (B) in subparagraph (A) (as designated by 
                subparagraph (A)), in the third sentence--
                            (i) by striking ``preceding sentence'' and 
                        inserting ``subparagraph (A)''; and
                            (ii) by striking ``For the 2007-2008'' and 
                        inserting the following:
                    ``(B) Special rule for 2007-2008 academic year.--
                For the 2007-2008''; and
                    (C) by adding at the end the following:
                    ``(C) Special rule for 2009-2010 through 2012-2013 
                academic years.--For the 2009-2010 academic year, and 
                for each of the 3 succeeding academic years, the 
                Secretary shall revise the tables in accordance with 
                this paragraph, except that, for the table in section 
                477(b)(4), the Secretary shall revise such table by 
                increasing the amounts contained in such table for the 
                preceding academic year by 10 percent.''; 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--
                    ``(A) for academic year 2008-2009, by increasing 
                each of the dollar amounts contained in such section as 
                such section was in effect on the day before the date 
                of enactment of the College Cost Reduction Act of 2007 
                by a percentage equal to the estimated percentage 
                increase in the Consumer Price Index (as determined by 
                the Secretary) between December 2006 and the December 
                next preceding the beginning of such academic year, and 
                rounding the result to the nearest $10; and
                    ``(B) for each academic year after 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 2006 and the December next preceding 
                the beginning of such academic year, and rounding the 
                result to the nearest $10;''.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect on October 1, 2008, and the amendment made by 
subsection (c) shall take effect on July 1, 2008.

SEC. 103. 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 subparagraph (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'';
            (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) 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;
                    (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) Discretion of Student Financial Aid Administrators.--Section 
479A(a) (20 U.S.C. 1087tt(a)) is amended in the third sentence by 
inserting ``a family member who is a dislocated worker (as defined in 
section 101 of the Workforce Investment Act of 1998 (29 U.S.C. 
2801)),'' after ``recent unemployment of a family member,''.
    (c) Effective Date.--The amendments made by this section shall be 
effective on July 1, 2009.

SEC. 104. DEFINITIONS.

    (a) Total Income.--Section 480(a) (20 U.S.C. 1087vv(a)) is 
amended--
            (1) in paragraph (1), by inserting before the period at the 
        end the following: ``, except that the Secretary may, by 
        regulation, provide for the use of the previous tax year when 
        and to the extent necessary to carry out the sense of Congress 
        in section 133 of the College Cost Reduction Act of 2007''; and
            (2) in paragraph (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,''.
    (b) Untaxed Income and Benefits.--Section 480(b) (20 U.S.C. 
1087vv(b)) is amended to read as follows:
    ``(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, railroad 
                retirement benefits, or Job Training Partnership Act 
                noneducational benefits or benefits received through 
                participation in employment and training activities 
                under title I of the Workforce Investment Act of 1998.
            ``(2) The term `untaxed income and benefits' shall not 
        include the amount of additional child tax credit claimed for 
        Federal income tax purposes.''.
    (c) Assets.--Section 480(f) (20 U.S.C. 1087vv(f)) is amended--
            (1) in paragraph (3), by striking ``shall not be considered 
        an asset of a student for purposes of section 475'' and 
        inserting ``shall be considered an asset of the parent for 
        purposes of section 475'';
            (2) by redesignating paragraphs (4) and (5) as paragraphs 
        (5) and (6), respectively; and
            (3) by inserting after paragraph (3) the following:
            ``(4) A qualified education benefit shall be considered an 
        asset of the student for purposes of section 476 and 477.''.
    (d) Other Financial Assistance.--Section 480(j)(2) (20 U.S.C. 
1087vv(j)(2)) is amended 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''.
    (e) Effective Date.--The amendments made by this section shall be 
effective on July 1, 2009.

              PART B--MAKING STUDENT LOANS MORE AFFORDABLE

SEC. 111. 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, 2013, 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, 6.80 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, 6.12 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, 5.44 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, 4.76 percent on the unpaid principal balance of 
                the loan.
                    ``(E) For a loan for which the first disbursement 
                is made on or after July 1, 2011, and before July 1, 
                2012, 4.08 percent on the unpaid principal balance of 
                the loan.
                    ``(F) For a loan for which the first disbursement 
                is made on or after July 1, 2012 and before July 1, 
                2013, 3.40 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. 1086(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, 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, 
                2013, 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, 6.80 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, 6.12 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, 5.44 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, 4.76 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, 4.08 percent on the 
                        unpaid principal balance of the loan.
                            ``(vi) For a loan for which the first 
                        disbursement is made on or after July 1, 2012, 
                        and before July 1, 2013, 3.40 percent on the 
                        unpaid principal balance of the loan.''.

SEC. 112. INCREASES IN LOAN LIMITS.

    (a) Increase in Third and Subsequent Year Limits.--
            (1) Federal insurance limits.--Section 425(a)(1)(A)(iii) 
        (20 U.S.C. 1075(a)(1)(A)(iii)) is amended by striking 
        ``$5,500'' and inserting ``$7,500''.
            (2) Guaranty limits.--Section 428(b)(1)(A)(iii)(I) (20 
        U.S.C. 1078(b)(1)(A)(iii)(I)) is amended by striking ``$5,500'' 
        and inserting ``$7,500''.
    (b) Increase in Aggregate Limits.--
            (1) Federal insurance limits.--Section 425(a)(2)(A) (20 
        U.S.C. 1075(a)(2)(A)(i)) is amended--
                    (A) in clause (i), by striking ``$23,000'' and 
                inserting ``$30,500''; and
                    (B) in clause (ii), by striking ``$65,500'' and 
                inserting ``$73,000''.
            (2) Guaranty limits.--Section 428(b)(1)(B) (20 U.S.C. 
        1078(b)(1)(A)(iii)(I)) is amended--
                    (A) in clause (i), by striking ``$23,000'' and 
                inserting ``$30,500''; and
                    (B) in clause (ii), by striking ``$65,500'' and 
                inserting ``$73,000''.
    (c) Effective Date.--The amendments made by this section shall be 
effective July 1, 2008.

SEC. 113. 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''; and
            (2) by adding at the end the following new clause:
                            ``(vi) Reduction for loans on or after 
                        october 1, 2007.--With respect to a loan on 
                        which the applicable interest rate is 
                        determined under section 427A(l), the 
                        percentage to be added under clause (i)(III) in 
                        computing the special allowance payment 
                        pursuant to this subparagraph shall be the 
                        following:
                                    ``(I) In general and plus loans.--
                                1.79 percent in the case of a loan 
                                described in clause (i) or (iii) for 
                                which the first disbursement of 
                                principal is made on or after October 
                                1, 2007.
                                    ``(II) In school and grace 
                                period.--1.19 percent in the case of a 
                                loan described in clause (ii)(II) for 
                                which the first disbursement of 
                                principal is made on or after October 
                                1, 2007.
                                    ``(III) Consolidation loans.--2.09 
                                percent in the case of a loan described 
                                in clause (iv) for which the first 
                                disbursement of principal is made on or 
                                after October 1, 2007''.

SEC. 114. 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 amendments made by subsections (a) and (b) 
shall take effect on October 1, 2007.

SEC. 115. 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) Effective Date.--The amendment made by subsection (a) shall 
take effect with respect to loans made on or after October 1, 2007.

SEC. 116. 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) an amount equal to 23 percent of 
                        such payments for use in accordance with 
                        section 422B, except that beginning October 1, 
                        2007, this subparagraph shall be applied by 
                        substituting `16 percent' for `23 percent'.''.

SEC. 117. UNIT COSTS FOR ACCOUNT MAINTENANCE FEES.

    Section 458(b) (20 U.S.C. 1087h(b)) is amended--
            (1) by striking ``Account'' and inserting the following:
            ``(1) For fiscal years 2006 and 2007.--For fiscal years 
        2006 and 2007, account''; and
            (2) by adding at the end the following new paragraph:
            ``(2) For fiscal year 2008 and succeeding fiscal years.--
                    ``(A) Unit cost basis.--For fiscal year 2008 and 
                each succeeding fiscal year, the Secretary shall 
                calculate the account maintenance fees payable to 
                guaranty agencies under subsection (a)(3), on a per-
                loan cost basis in accordance with subparagraph (B) of 
                this paragraph.
                    ``(B) Determinations.--To determine the amount that 
                shall be paid under subsection (a)(3) per outstanding 
                loan guaranteed by a guaranty agency for fiscal year 
                2008 and succeeding fiscal years, the Secretary shall--
                            ``(i) establish the per-loan cost basis 
                        amount by--
                                    ``(I) dividing the total amount of 
                                account maintenance fees paid under 
                                subsection (a)(3) in fiscal year 2006, 
                                by
                                    ``(II) the number of loans under 
                                part B that were outstanding in that 
                                fiscal year; and
                            ``(ii) determine on October 1 of fiscal 
                        year 2008 and each subsequent fiscal year, and 
                        pay to each guaranty agency, an amount equal to 
                        the product of the number of loans under part B 
                        that are outstanding on October 1 of that 
                        fiscal year and insured by that guaranty agency 
                        multiplied by--
                                    ``(I) the amount determined under 
                                clause (i); increased by
                                    ``(II) a percentage equal to the 
                                percentage increase in the GDP price 
                                index (as determined by the Bureau of 
                                Labor Statistics of the Department of 
                                Labor) between the calendar quarter 
                                ending on June 30, 2006, and the 
                                calendar quarter ending on the June 30 
                                preceding such October 1 of such fiscal 
                                year.''.

SEC. 118. 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:
            ``(2) Amount of loan fees.--
                    ``(A) Amount.--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--
                            ``(i) except as provided in clauses (ii) 
                        and (iii), 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;
                            ``(ii) 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, that is held by 
                        any holder other than a holder designated by 
                        the Secretary as a small lender under 
                        subparagraph (B); and
                            ``(iii) 0.0 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, that is held by 
                        any holder that, together with its affiliated 
                        holders, is designated by the Secretary as a 
                        small lender under subparagraph (B).
                    ``(B) Designation of small lenders.--In determining 
                which holders of eligible loans qualify as small 
                lenders for purposes of subparagraph (A)(iii), the 
                Secretary shall, using the most recently available data 
                with respect to the total principal amount of eligible 
                loans held by holders--
                            ``(i) rank all holders (combined with their 
                        affiliated holders) of eligible loans in 
                        descending order by total principal amount of 
                        eligible loans held;
                            ``(ii) calculate the total principal amount 
                        of eligible loans held by all holders; and
                            ``(iii) identify the subset of 
                        consecutively ranked holders under clause (i), 
                        starting with the lowest ranked holder, that 
                        together hold a total principal amount of such 
                        loans equal to 15 percent of the total amount 
                        calculated under clause (ii), but excluding the 
                        holder, if any, whose holdings when added cause 
                        the total holdings of the subset to equal but 
                        not exceed such 15 percent of such total amount 
                        calculated; and
                            ``(iv) designate as small lenders any 
                        holder identified as a member of the subset 
                        under clause (iii).''.

SEC. 119. STUDENT LOAN INFORMATION.

    Section 428(k) (20 U.S.C. 1078(k)) is amended by adding at the end 
the following new paragraph:
            ``(4) Student loan information.--
                    ``(A) Notwithstanding any other provision of law or 
                regulation, a lender, secondary market, holder, or 
                guaranty agency shall provide, free of charge and in a 
                timely and effective manner, any student loan 
                information maintained by that entity that is requested 
                by an institution of higher education and any third-
                party servicer (as defined in section 481(c)) working 
                on behalf of that institution to prevent student loan 
                defaults.
                    ``(B) An institution and any third-party servicer 
                obtaining access to information under subparagraph (A) 
                shall safeguard that information in order to prevent 
                potential abuses of that information, including 
                identity theft.
                    ``(C) Any third party servicer that obtains 
                information under this subparagraph shall only use the 
                information in a manner directly related to the default 
                prevention work the servicer is performing on behalf of 
                the institution of higher education.
                    ``(D) Any third party servicer that obtains 
                information under this subparagraph shall be subject to 
                any regulations established by the Secretary pursuant 
                to section 432 concerning the misuse of such 
                information, including any penalties for such 
                misuse.''.

                 PART C--REWARDING SERVICE IN REPAYMENT

SEC. 141. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED.

    Section 428K (20 U.S.C. 1078-11) is amended to read as follows:

``SEC. 428K. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL NEED.

    ``(a) Program Authorized.--
            ``(1) Loan forgiveness authorized.--The Secretary shall 
        forgive, in accordance with this section, the student loan 
        obligation of a borrower in the amount specified in subsection 
        (c), for any new borrower after the date of enactment of the 
        College Cost Reduction Act of 2007, who--
                    ``(A) has been employed full-time for at least 5 
                consecutive complete school, academic, or calendar 
                years, as appropriate, in an area of national need 
                described in subsection (b); and
                    ``(B) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Method of loan forgiveness.--To provide loan 
        forgiveness under paragraph (1), the Secretary is authorized to 
        carry out a program--
                    ``(A) through the holder of the loan, to assume the 
                obligation to repay a qualified loan amount for a loan 
                made, insured, or guaranteed under this part; and
                    ``(B) to cancel a qualified loan amount for a loan 
                made under part D of this title.
            ``(3) Regulations.--The Secretary is authorized to issue 
        such regulations as may be necessary to carry out the 
        provisions of this section.
    ``(b) Areas of National Need.--For purposes of this section, an 
individual shall be treated as employed in an area of national need if 
the individual is employed full time as any of the following:
            ``(1) Early childhood educators.--An individual who is 
        employed as an early childhood educator in an eligible 
        preschool program or eligible early childhood education program 
        in a low-income community, and who is involved directly in the 
        care, development, and education of infants, toddlers, or young 
        children through age 5.
            ``(2) Nurses.--An individual who is employed--
                    ``(A) as a nurse in a clinical setting; or
                    ``(B) 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)).
            ``(3) Foreign language specialists.--An individual who has 
        obtained a baccalaureate degree in a critical foreign language 
        and is employed--
                    ``(A) in an elementary or secondary school as a 
                teacher of a critical foreign language; or
                    ``(B) in an agency of the United States Government 
                in a position that regularly requires the use of such 
                critical foreign language.
            ``(4) Librarians.--An individual who is employed as a 
        librarian in--
                    ``(A) a public library that serves a geographic 
                area within which the public schools have a combined 
                average of 30 percent or more of their total student 
                enrollments composed of children counted under section 
                1113(a)(5) of the Elementary and Secondary Education 
                Act of 1965; or
                    ``(B) an elementary or secondary school which is in 
                the school district of a local educational agency which 
                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 30 percent of the total enrollment of that 
                school.
            ``(5) Highly qualified teachers: bilingual education and 
        low-income communities.--An individual who--
                    ``(A) is highly qualified as such term is defined 
                in section 9101 of the Elementary and Secondary 
                Education Act of 1965; and
                    ``(B)(i) is employed as a full-time teacher of 
                bilingual education; or
                    ``(ii) is employed as a teacher for service in a 
                public or nonprofit private elementary or secondary 
                school which is in the school district of a local 
                educational agency which 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.
            ``(6) Child welfare workers.--An individual who--
                    ``(A) has obtained a degree in social work or a 
                related field with a focus on serving children and 
                families; and
                    ``(B) is employed in public or private child 
                welfare services.
            ``(7) Speech-language pathologists.--An individual who is a 
        speech-language pathologist, who is employed in an eligible 
        preschool program or an elementary or secondary school, and who 
        has, at a minimum, a graduate degree in speech-language 
        pathology, or communication sciences and disorders.
            ``(8) National service.--An individual who is engaged as a 
        participant in project under the National and Community Service 
        Act of 1990 (as such terms are defined in section 101 of such 
        Act (42 U.S.C. 12511)).
            ``(9) Public sector employees.--An individual who is 
        employed in government, public safety (including as a first 
        responder, firefighter, police officer, or other law 
        enforcement or public safety officer), emergency management 
        (including as an emergency medical technician), public health, 
        or public interest legal services (including prosecution or 
        public defense).
    ``(c) Qualified Loan Amount.--The Secretary shall forgive not more 
than $5,000 in the aggregate of the student loan obligation of a 
borrower that is outstanding after the completion of the fifth 
consecutive school, academic, or calendar year of employment, as 
appropriate, described in subsection (a)(1).
    ``(d) Construction.--Nothing in this section shall be construed to 
authorize the refunding of any repayment of a loan.
    ``(e) Segal Americorps Education Award Recipients.--A student 
borrower who qualifies for the maximum education award under subtitle D 
of title I of the National and Community Service Act of 1990 (42 U.S.C. 
12601 et seq.) shall not receive under this section more than the 
difference between the maximum benefit available under this section and 
the maximum award available under such subtitle.
    ``(f) National Service Award Recipients.--A student borrower who 
receives the maximum education award under subtitle D of title I of the 
National and Community Service Act of 1990 (42 U.S.C. 12601 et seq.) 
shall not receive under this section more than the difference between 
the maximum benefit available under this section and the award received 
under such subtitle.
    ``(g) Ineligibility for Double Benefits.--No borrower may receive a 
reduction of loan obligations under both this section and section 428J 
or 460.
    ``(h) Definitions.--In this section:
            ``(1) Critical foreign language.--The term `critical 
        foreign language' includes the languages of Arabic, Korean, 
        Japanese, Chinese, Pashto, Persian-Farsi, Serbian-Croatian, 
        Russian, Portuguese, and any other language identified by the 
        Secretary of Education, in consultation with the Defense 
        Language Institute, the Foreign Service Institute, and the 
        National Security Education Program, as a critical foreign 
        language need.
            ``(2) Early childhood educator.--The term `early childhood 
        educator' means an early childhood educator who works directly 
        with children in an eligible preschool program or eligible 
        early childhood education program who has completed a 
        baccalaureate or advanced degree in early childhood 
        development, early childhood education, or in a field related 
        to early childhood education.
            ``(3) Eligible preschool program.--The term `eligible 
        preschool program' means a program that provides for the care, 
        development, and education of infants, toddlers, or young 
        children through age 5, meets any applicable State or local 
        government licensing, certification, approval, and registration 
        requirements, and is operated by--
                    ``(A) a public or private school that may be 
                supported, sponsored, supervised, or administered by a 
                local educational agency;
                    ``(B) a Head Start agency serving as a grantee 
                designated under the Head Start Act (42 U.S.C. 9831 et 
                seq.);
                    ``(C) a nonprofit or community based organization; 
                or
                    ``(D) a child care program, including a home.
            ``(4) Eligible early childhood education program.--The term 
        `eligible early childhood education program' means--
                    ``(A) a family child care program, center-based 
                child care program, State prekindergarten program, 
                school program, or other out-of-home early childhood 
                development care program, that--
                            ``(i) is licensed or regulated by the 
                        State; and
                            ``(ii) serves 2 or more unrelated children 
                        who are not old enough to attend kindergarten;
                    ``(B) a Head Start Program carried out under the 
                Head Start Act (42 U.S.C. 9831 et seq.); or
                    ``(C) an Early Head Start Program carried out under 
                section 645A of the Head Start Act (42 U.S.C. 9840a).
            ``(5) 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.
            ``(6) Nurse.--The term `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 one 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)).
            ``(7) Speech-language pathologist.--The term `speech-
        language pathologist' means a speech-language pathologist who 
        meets all of the following:
                    ``(A) the speech-language pathologist has received, 
                at a minimum, a graduate degree in speech-language 
                pathology or communication sciences and disorders from 
                an institution of higher education accredited by an 
                agency or association recognized by the Secretary 
                pursuant to section 496(a) of this Act; and
                    ``(B) the speech-language pathologist meets or 
                exceeds the qualifications as defined in section 
                1861(ll) of the Social Security Act (42 U.S.C. 1395x).
    ``(i) Program Funding.--There shall be available to the Secretary 
to carry out this section, from funds not otherwise appropriated, such 
sums as may be necessary to provide loan forgiveness in accordance with 
this section to each eligible individual.''.

SEC. 142. INCOME CONTINGENT REPAYMENT FOR PUBLIC SECTOR EMPLOYEES.

    Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at the end 
the following:
            ``(7) Repayment plan for public sector employees.--
                    ``(A) In general.--The Secretary shall forgive the 
                balance due on any loan made under this part or section 
                428C(b)(5) for a borrower--
                            ``(i) who has made 120 payments on such 
                        loan pursuant to income contingent repayment; 
                        and
                            ``(ii) who is employed, and was employed 
                        for the 10-year period in which the borrower 
                        made the 120 payments described in clause (i), 
                        in a public sector job.
                    ``(B) Public sector job.--In this paragraph, the 
                term `public sector job' means a full-time job in 
                emergency management, government, public safety, law 
                enforcement, public health, education (including early 
                childhood education), social work in a public child or 
                family service agency, or public interest legal 
                services (including prosecution or public defense).
            ``(8) Return to standard repayment.--A borrower who is 
        repaying a loan made under this part pursuant to income 
        contingent repayment may choose, at any time, to terminate 
        repayment pursuant to income contingent repayment and repay 
        such loan under the standard repayment plan.''.

SEC. 143. INCOME-BASED REPAYMENT.

    (a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.) is 
further amended by adding at the end the following:

``SEC. 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) Partial financial hardship.--The term `partial 
        financial hardship' means the amount by which--
                    ``(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) to a borrower as 
                calculated under the standard repayment plan under 
                section 428(b)(9)(A)(i) or 455(d)(1)(A); exceeds
                    ``(B) 15 percent of the result obtained by 
                calculating 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) who has a 
        partial financial hardship may elect, during any period the 
        borrower has the partial financial hardship, to have the 
        borrower's aggregate monthly payment for all such loans not 
        exceed the result described in subsection (a)(2)(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 and then toward the principal of the loan;
            ``(3) any interest due and not paid under paragraph (2) 
        shall be capitalized;
            ``(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) shall not exceed 
                the monthly amount calculated under section 
                428(b)(9)(A)(i) or 455(d)(1)(A) 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) is in deferment due to an economic hardship 
                described in section 435(o) for a period of time 
                prescribed by the Secretary, not to exceed 20 years; or
                    ``(B)(i) makes the election under this subsection; 
                and
                    ``(ii) for a period of time prescribed by the 
                Secretary, not to exceed 20 years (including any period 
                during which the borrower is in deferment due to an 
                economic hardship described in section 435(o)), meets 1 
                or more of the following requirements:
                            ``(I) Has made reduced monthly payments 
                        under paragraph (1).
                            ``(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) when 
                        the borrower first made the election described 
                        in this subsection.
                            ``(III) Has made payments under a standard 
                        repayment plan under section 428(b)(9)(A)(i) or 
                        455(d)(1)(A).
                            ``(IV) Has made payments under an income 
                        contingent repayment plan under section 
                        455(d)(1)(D); and
            ``(8) a borrower who is repaying a loan made under this 
        part 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.''.
    (b) Conforming ICR Amendment.--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''.

SEC. 144. DEFINITION OF ECONOMIC HARDSHIP.

    Section 435(o) (20 U.S.C. 1085(o)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)(ii), 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'';
                    (B) by striking subparagraph (B); and
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B); and
            (2) in paragraph (2), by striking ``(1)(C)'' and inserting 
        ``(1)(B)''.

SEC. 145. DEFERRALS.

    (a) FISL.--Section 427(a)(2)(C)(iii) (20 U.S.C. 1077(a)(2)(C)(iii)) 
is amended by striking ``not in excess of 3 years''.
    (b) Interest Subsidies.--Section 428(b)(1)(M)(iv) (20 U.S.C. 
1078(b)(1)(M)(iv)) is amended by striking ``not in excess of 3 years''.
    (c) Direct Loans.--Section 455(f)(2)(D) (20 U.S.C. 1087e(f)(2)(D)) 
is amended by striking ``not in excess of 3 years''.
    (d) Perkins.--Section 464(c)(2)(A)(iv) (20 U.S.C. 
1087dd(c)(2)(A)(iv)) is amended by striking ``not in excess of 3 
years''.

SEC. 146. MAXIMUM REPAYMENT PERIOD.

    (a) In General.--Section 455(e) (20 U.S.C. 1087e(e)) is amended by 
adding at the end the following:
            ``(9) 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); or
                    ``(iii) makes payments under a standard repayment 
                plan described in section 428(b)(9)(A)(i) or subsection 
                (d)(1)(A).''.
    (b) Technical Correction.--Section 455(d)(1)(C) (20 U.S.C. 
1087e(d)(1)(C)) is amended by striking ``428(b)(9)(A)(v)'' and 
inserting ``428(b)(9)(A)(iv)''.

                 TITLE II--REDUCING THE COST OF COLLEGE

SEC. 201. STATE COMMITMENT TO AFFORDABLE COLLEGE EDUCATION.

    Title I is amended by inserting after section 131 (20 U.S.C. 1015) 
the following new section:

``SEC. 132. STATE COMMITMENT TO AFFORDABLE COLLEGE EDUCATION.

    ``(a) Maintenance of Effort Required.--No State shall reduce the 
total amount provided by the State for public institutions of higher 
education in such State for any academic year beginning on or after 
July 1, 2008, to an amount which is less than the average amount 
provided by such State to such institutions of higher education during 
the 5 most recent preceeding academic years for which satisfactory data 
is available.
    ``(b) Withholding of All LEAP Funds for Violations.--
Notwithstanding any other provision of law, the Secretary of Education 
shall withhold from any State that violates subsection (a) any amount 
that would otherwise be available to the State under the Leveraging 
Educational Assistance Partnership Program under subpart 4 of part A of 
title IV until such State has corrected such violation.''.

SEC. 202. CONSUMER INFORMATION AND PUBLIC ACCOUNTABILITY IN HIGHER 
              EDUCATION.

    Section 131 of the Higher Education Act of 1965 (20 U.S.C. 1015) is 
amended to read as follows:

``SEC. 131. CONSUMER INFORMATION AND PUBLIC ACCOUNTABILITY IN HIGHER 
              EDUCATION.

    ``(a) College Opportunity On-Line (COOL) Website Re-Design 
Process.--In carrying out this section, the Commissioner of Education 
Statistics--
            ``(1) shall identify the data elements that are of greatest 
        importance to prospective students, enrolled students, and 
        their families, paying particular attention to low-income, non-
        traditional student populations, and first-generation college 
        students;
            ``(2) shall convene a group of individuals with expertise 
        in the collection and reporting of data related to institutions 
        of higher education, the use of consumer data, and consumer 
        marketing in general to--
                    ``(A) determine the relevance of particular data 
                elements to prospective students, enrolled students, 
                and families;
                    ``(B) assess the cost-effectiveness of various ways 
                in which institutions of higher education might produce 
                relevant data;
                    ``(C) determine the general comparability of the 
                data across institutions of higher education;
                    ``(D) make recommendations regarding the inclusion 
                of specific data items and the most effective and least 
                burdensome methods of collecting and reporting useful 
                data from institutions of higher education; and
            ``(3) shall ensure that the redesigned COOL website--
                    ``(A) uses, to the extent practicable, data 
                elements currently provided by institutions of higher 
                education to the Secretary;
                    ``(B) includes clear and uniform information 
                determined to be relevant to prospective students, 
                enrolled students, and families;
                    ``(C) provides comparable information, by ensuring 
                that data are based on accepted criteria and common 
                definitions;
                    ``(D) includes a sorting function that permits 
                users to customize their search for and comparison of 
                institutions of higher education based on the 
                information identified through the process as 
                prescribed in paragraph (1) as being of greatest 
                relevance to choosing an institution of higher 
                education.
    ``(b) Data Collection.--
            ``(1) Data system.--The Commissioner of Education 
        Statistics shall continue to redesign the relevant parts of the 
        Integrated Postsecondary Education Data System to include 
        additional data as required by this section and to continue to 
        improve the usefulness and timeliness of data collected by such 
        systems in order to inform consumers about institutions of 
        higher education.
            ``(2) College consumer profile.--The Secretary shall 
        continue to publish on the COOL website, for each academic year 
        and in accordance with standard definitions developed by the 
        Commissioner of Education Statistics (including definitions 
        developed under section 131(a)(3)(A) as in effect on the day 
        before the date of enactment of the College Cost Reduction Act 
        of 2007), from at least all institutions of higher education 
        participating in programs under title IV the following 
        information:
                    ``(A) The tuition and fees charged for a first-
                time, full-time, full-year undergraduate student.
                    ``(B) The room and board charges for a first-time, 
                full-time, full-year undergraduate student.
                    ``(C) The price of attendance for a first-time, 
                full-time, full-year undergraduate student, consistent 
                with the provisions of section 472.
                    ``(D) The average amount of financial assistance 
                received by a first-year, full-time, full-year 
                undergraduate student, including--
                            ``(i) each type of assistance or benefits 
                        described in 428(a)(2)(C)(ii);
                            ``(ii) institutional and other assistance; 
                        and
                            ``(iii) Federal loans under parts B, D, and 
                        E of title IV.
                    ``(E) The number of first-time, full-time, full-
                year undergraduate students receiving financial 
                assistance described in each clause of subparagraph 
                (D).
                    ``(F) The institutional instructional expenditure 
                per full-time equivalent student.
                    ``(G) Student enrollment information, including 
                information on the number and percentage of full-time 
                and part-time students, the number and percentage of 
                resident and non-resident students.
                    ``(H) Faculty-to-student ratios.
                    ``(I) Faculty information, including the total 
                number of faculty and the percentage of faculty who are 
                full-time employees of the institution and the 
                percentage who are part-time.
                    ``(J) Completion and graduation rates of 
                undergraduate students, identifying whether the 
                completion or graduation rates are from a 2-year or 4-
                year program of instruction and, in the case of a 2-
                year program of instruction, the percentage of students 
                who transfer to 4-year institutions prior or subsequent 
                to completion or graduation.
                    ``(K) A link to the institution of higher education 
                with information of interest to students including 
                mission, accreditation, student services (including 
                services for students with disabilities), transfer of 
                credit policies, any articulation agreements entered 
                into by the institution, and, if appropriate, placement 
                rates and other measures of success in preparing 
                students for entry into or advancement in the 
                workforce.
                    ``(L) The college affordability information 
                elements specified in subsection (c).
                    ``(M) Any additional information that the Secretary 
                may require.
    ``(c) College Affordability Information Elements.--The college 
affordability information elements required by subsection (b)(2)(L) 
shall include, for each institution submitting data--
            ``(1) the sticker price of the institution for the 3 most 
        recent academic years;
            ``(2) the net tuition price of the institution for the 3 
        most recent academic years;
            ``(3) the percentage change in both the sticker price and 
        the net tuition price over the 3-year time period that is being 
        reported;
            ``(4) the percentage change in the CPI over the same 3-year 
        time period; and
            ``(5) whether the institution has been placed on 
        affordability alert status as required by subsection (d)(3).
    ``(d) Outcomes and Actions.--
            ``(1) Response from institution.--Effective on June 30, 
        2008, an institution that increases its sticker price at a 
        percentage rate for any 3-year interval ending on or after that 
        date that exceeds two times the rate of change in the CPI over 
        the same time period shall provide a report to the Secretary, 
        in such a form, at such time, and containing such information 
        as the Secretary may require. Such report shall be published by 
        the Secretary on the COOL website, and shall include--
                    ``(A) a description of the factors contributing to 
                the increase in the institution's costs and in the 
                tuition and fees charged to students; and
                    ``(B) if determinations of tuition and fee 
                increases are not within the exclusive control of the 
                institution, a description of the agency or 
                instrumentality of State government or other entity 
                that participates in such determinations and the 
                authority exercised by such agency, instrumentality, or 
                entity.
            ``(2) Quality-efficiency task forces.--
                    ``(A) Required.--Each institution subject to 
                paragraph (1) that has a percentage change in its 
                sticker price that is in the highest 5 percent of all 
                institutions subject to paragraph (1) shall establish a 
                quality-efficiency task force to review the operations 
                of such institution.
                    ``(B) Membership.--Such task force shall include 
                administrators, business and civic leaders, and 
                faculty, and may include students, trustees, parents of 
                students, and alumni of such institution.
                    ``(C) Functions.--Such task force shall analyze 
                institutional operating costs in comparison with such 
                costs at other institutions within the class of 
                institutions. Such analysis should identify areas 
                where, in comparison with other institutions in such 
                class, the institution operates more expensively to 
                produce a similar result. Any identified areas should 
                then be targeted for in-depth analysis for cost 
                reduction opportunities.
                    ``(D) Report.--Not later than one year after a 
                quality-efficiency task force is established pursuant 
                to subparagraph (A), the results of the analysis by a 
                such task force shall be submitted to the Secretary and 
                shall be made available to the public on the COOL 
                website.
            ``(3) Consequences for 2-year continuation of failure.--If 
        the Secretary determines that an institution that is subject to 
        paragraph (1)) has failed to reduce the subsequent increase in 
        sticker price to equal to or below two times the rate of change 
        in the CPI for 2 consecutive academic years subsequent to the 
        3-year interval used under paragraph (1), the Secretary shall 
        place the institution on affordability alert status.
            ``(4) Exemptions.--Notwithstanding paragraph (3), an 
        institution shall not be placed on affordability alert status 
        if, for any 3-year interval for which sticker prices are 
        computed under paragraph (1)--
                    ``(A) with respect to the class of institutions 
                described in paragraph (6) to which the institution 
                belongs, the sticker price of the institution is in the 
                lowest quartile of institutions within such class, as 
                determined by the Secretary, during the last year of 
                such 3-year interval; or
                    ``(B) the institution has a percentage change in 
                its sticker price computed under paragraph (1) that 
                exceeds two times the rate of change in the CPI over 
                the same time period, but the dollar amount of the 
                sticker price increase is less than $500.
            ``(5) Information to state agencies.--Any institution that 
        reports under paragraph (1)(B) that an agency or 
        instrumentality of State government or other entity 
        participates in the determinations of tuition and fee increases 
        shall, prior to submitting any information to the Secretary 
        under this subsection, submit such information to, and request 
        the comments and input of, such agency, instrumentality, or 
        entity. With respect to any such institution, the Secretary 
        shall provide a copy of any communication by the Secretary with 
        that institution to such agency, instrumentality, or entity.
            ``(6) Classes of institutions.--For purposes of this 
        subsection, the classes of institutions shall be those sectors 
        used by the Integrated Postsecondary Education Data System, 
        based on whether the institution is public, nonprofit private, 
        or for-profit private, and whether the institution has a 4-
        year, 2-year, or less than 2-year program of instruction.
            ``(7) Data rejection.--Nothing in this subsection shall be 
        construed as allowing the Secretary to reject the data 
        submitted by an individual institution of higher education.
    ``(e) Information to the Public.--The Secretary shall work with 
public and private entities to promote broad public awareness, 
particularly among middle and high school students and their families, 
of the information made available under this section, including by 
distribution to students who participate in or receive benefits from 
means-tested federally funded education programs and other Federal 
programs determined by the Secretary.
    ``(f) Fines.--In addition to actions authorized in section 487(c), 
the Secretary may impose a fine in an amount not to exceed $25,000 on 
an institution of higher education for failing to provide the 
information required by this section in a timely and accurate manner, 
or for failing to otherwise cooperate with the National Center for 
Education Statistics regarding efforts to obtain data under subsections 
(c) and (i) and pursuant to the program participation agreement entered 
into under section 487.
    ``(g) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(h) Definitions.--For the purposes of this section:
            ``(1) Net tuition price.--The term `net tuition price' 
        means the average tuition and fees charged to a first-time, 
        full-time, full-year undergraduate student, minus the average 
        grants provided to such students, for any academic year.
            ``(2) Sticker price.--The term `sticker price' means the 
        average tuition and fees charged to a first-time, full-time, 
        full-year undergraduate student by an institution of higher 
        education for any academic year.
            ``(3) CPI.--The term `CPI' means the Consumer Price Index-
        All Urban Consumers (Current Series).''.

SEC. 203. INCENTIVES AND REWARDS FOR LOW TUITION.

    Subpart 1 of part A of title IV is amended by inserting after 
section 401A (20 U.S.C. 1070a-1) the following new section:

``SEC. 401B. INCENTIVES AND REWARDS FOR LOW TUITION.

    ``(a) Rewards for Low Tuition.--For any institution of higher 
education that, for academic year 2008-2009 or any succeeding academic 
year, such institution's annual net tuition price increase (expressed 
as a percentage) for the most recent academic year for which 
satisfactory data is available is equal to or less than the percentage 
change in the higher education price index for such academic year, the 
Secretary shall, notwithstanding any other provision of the law, 
provide such institution an amount sufficient to provide a 25 percent 
increase under subpart 1 of part A of title IV to each Pell Grant 
recipient attending such institution for the next award year beginning 
after the date of such determination. Each such institution shall 
distribute any amounts received under this subsection among such Pell 
Grant recipients by increasing the amount of their Pell Grant awards by 
25 percent.
    ``(b) Rewards for Guaranteed Tuition.--
            ``(1) Bonus.--For each institution of higher education that 
        the Secretary of Education determines complies with the 
        requirements of paragraph (2) or paragraph (3) of this 
        subsection, the Secretary shall, notwithstanding any other 
        provision of the law, provide such institution an amount 
        sufficient to provide a 10 percent increase under subpart 1 of 
        part A of title IV to each Pell Grant recipient attending such 
        institution for the next award year beginning after the date of 
        such determination. Each such institution shall distribute any 
        amounts received under this subsection among such Pell Grant 
        recipients by increasing the amount of their Pell Grant awards 
        by 10 percent.
            ``(2) 4-year institutions.--An institution of higher 
        education that provides a program of instruction for which it 
        awards a bachelor's degree complies with the requirements of 
        this paragraph if such institution guarantees that for any 
        academic year beginning on or after July 1, 2008, and for each 
        of the 4 succeeding continuous academic years, the net tuition 
        price charged to an undergraduate student will not exceed--
                    ``(A) the amount that the student was charged for 
                an academic year at the time he or she first enrolled 
                in the institution of higher education, plus
                    ``(B) the product of the percentage increase in the 
                higher education price index for the prior academic 
                year, or the most recent prior academic year for which 
                data is available, multiplied by the amount determined 
                under subparagraph (A).
            ``(3) Less-than 4-year institutions.--An institution of 
        higher education that does not provide a program of instruction 
        for which it awards a bachelor's degree complies with the 
        requirements of this paragraph if such institution guarantees 
        that for any academic year (or the equivalent) beginning on or 
        after July 1, 2008, and for each of the 1.5 succeeding 
        continuous academic years, the net tuition price charged to an 
        undergraduate student will not exceed--
                    ``(A) the amount that the student was charged for 
                an academic year at the time he or she first enrolled 
                in the institution of higher education, plus
                    ``(B) the product of the percentage increase in the 
                higher education price index for the prior academic 
                year, or the most recent prior academic year for which 
                data is available, multiplied by the amount determined 
                under subparagraph (A).
    ``(c) Maintaining Affordable Tuition.--For any institution of 
higher education whose increase in the annual net tuition price 
(expressed as a percentage), for the most recent academic year for 
which satisfactory data is available, is greater than the percentage 
increase in the higher education price index for such academic year, 
the Secretary shall require such institution to submit to the Secretary 
the following information, within 6 months of such determination:
            ``(1) a detailed report on the exact causes for the net 
        tuition price increase that outlines revenues and expenditures; 
        and
            ``(2) cost containment strategies to lower net tuition 
        prices.
    ``(d) Definitions.--
            ``(1) Net tuition price.--The term `net tuition price' has 
        the same meaning as provided in section 131(k).
            ``(2) Higher education price index.--The term `higher 
        education price index' means a statistical measure of change 
        over time in the prices of a fixed market basket of goods and 
        services purchased by colleges and universities through current 
        fund educational and general expenditures (excluding 
        expenditures for research), as developed by the Bureau of Labor 
        Statistics.
    ``(e) Funding.--There shall be available to the Secretary to carry 
out this section, from funds not otherwise appropriated, $15,000,000 
for each of the fiscal years 2008 through 2012.
    ``(f) Sunset.--The authority to carry out this section shall expire 
at the end of fiscal year 2012.''.

SEC. 204. COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT RESTRAIN 
              TUITION INCREASES.

    The Higher Education Act of 1965 (20 U.S.C. 1101 et seq.) is 
amended by adding at the end the following title:

   ``TITLE VIII--COOPERATIVE EDUCATION REWARDS FOR INSTITUTIONS THAT 
                       RESTRAIN TUITION INCREASES

``SEC. 801. ELIGIBLE INSTITUTIONS.

    ``(a) Eligible Institutions.--An institution of higher education 
shall be eligible to apply for a grant under this title if such 
institution, and a combination of such institutions shall be eligible 
to apply for such a grant if each institution in such combination--
            ``(1) for the academic year for which the institution is 
        applying, keeps such institution's annual net tuition price 
        increase (expressed as a percentage) for the most recent 
        academic year for which satisfactory data is available equal to 
        or less than the percentage change in the higher education 
        price index for such year; and
            ``(2) for such academic year, provides the guarantee 
        required by paragraph (2) or (3) of section 401A(b).
    ``(b) Definitions.--
            ``(1) Cooperative education.--For the purpose of this title 
        the term `cooperative education' means the provision of 
        alternating or parallel periods of academic study and public or 
        private employment in order to give students work experiences 
        related to their academic or occupational objectives and an 
        opportunity to earn the funds necessary for continuing and 
        completing their education.
            ``(2) Calculation of index.--The net tuition price index 
        shall be equal to the percentage increase in the net tuition 
        price charged for a first-time, full-time, full-year 
        undergraduate student between a preceding academic year and the 
        most recent academic year for which satisfactory data are 
        available.
            ``(3) Net tuition price.--The term `net tuition price' 
        means the average tuition and fees charged to first-time, full-
        year, full-time undergraduate students, minus the average 
        grants provided to such students, for any academic year.
            ``(4) Tuition.--The term `tuition' means the average price 
        of or payment for actual instruction of first-time, full-year, 
        full-time undergraduate students at an institution of higher 
        education, for any academic year.

``SEC. 802. AUTHORIZATION OF APPROPRIATIONS; RESERVATIONS.

    ``(a) Appropriations.--There shall be available to the Secretary to 
carry out this title from funds not otherwise appropriated $15,000,000 
for each of the fiscal years 2008 through 2012.
    ``(b) Reservations.--Of the amount appropriated for each such 
fiscal year--
            ``(1) not less than 50 percent shall be available for 
        carrying out grants to institutions of higher education and 
        combinations of such institutions described in section 
        803(a)(1)(A) for cooperative education under section 803;
            ``(2) not less than 25 percent shall be available for 
        carrying out grants to institutions of higher education 
        described in section 803(a)(1)(B) for cooperative education 
        under section 803;
            ``(3) not to exceed 11 percent shall be available for 
        demonstration projects under paragraph (1) of section 804(a);
            ``(4) not to exceed 11 percent shall be available for 
        training and resource centers under paragraph (2) of section 
        804(a); and
            ``(5) not to exceed 3 percent shall be available for 
        research under paragraph (3) of section 804(a).
    ``(c) Availability of Appropriations.--Appropriations under this 
title shall not be available for the payment of compensation of 
students for employment by employers under arrangements pursuant to 
this title.
    ``(d) Sunset.--The authority to carry out this title shall expire 
at the end of fiscal year 2012.

``SEC. 803. GRANTS FOR COOPERATIVE EDUCATION.

    ``(a) Grants Authorized.--
            ``(1) In general.--The Secretary is authorized--
                    ``(A) from the amount available under section 
                802(b)(1) in each fiscal year and in accordance with 
                the provisions of this title, to make grants to 
                institutions of higher education or combinations of 
                such institutions that have not received a grant under 
                this paragraph in the 10-year period preceding the date 
                for which a grant under this section is requested to 
                pay the Federal share of the cost of planning, 
                establishing, expanding, or carrying out programs of 
                cooperative education by such institutions or 
                combinations of institutions; and
                    ``(B) from the amount available under section 
                802(b)(2) in each fiscal year and in accordance with 
                the provisions of this title, to make grants to 
                institutions of higher education that are operating an 
                existing cooperative education program as determined by 
                the Secretary to pay the cost of planning, 
                establishing, expanding, or carrying out programs of 
                cooperative education by such institutions.
            ``(2) Program requirement.--Cooperative education programs 
        assisted under this section shall provide alternating or 
        parallel periods of academic study and of public or private 
        employment, giving students work experience related to their 
        academic or occupational objectives and the opportunity to earn 
        the funds necessary for continuing and completing their 
        education.
            ``(3) Amount of grants.--
                    ``(A) The amount of each grant awarded pursuant to 
                paragraph (1)(A) to any institution of higher education 
                or combination of such institutions in any fiscal year 
                shall not exceed $500,000.
                    ``(B)(i) Except as provided in clauses (ii) and 
                (iii), the Secretary shall award grants in each fiscal 
                year to each institution of higher education described 
                in paragraph (1)(B) that has an application approved 
                under subsection (b) in an amount which bears the same 
                ratio to the amount reserved pursuant to section 
                802(b)(2) for such fiscal year as the number of 
                unduplicated students placed in cooperative education 
                jobs during the preceding fiscal year (other than 
                cooperative education jobs under section 804 and as 
                determined by the Secretary) by such institution of 
                higher education bears to the total number of all such 
                students placed in such jobs during the preceding 
                fiscal year by all such institutions.
                    ``(ii) No institution of higher education shall 
                receive a grant pursuant to paragraph (1)(B) in any 
                fiscal year in an amount which exceeds 25 percent of 
                such institution's cooperative education program's 
                personnel and operating budget for the preceding fiscal 
                year.
                    ``(iii) The minimum annual grant amount which an 
                institution of higher education is eligible to receive 
                under paragraph (1)(B) is $1,000 and the maximum annual 
                grant amount is $75,000.
            ``(4) Limitation.--The Secretary shall not award grants 
        pursuant to paragraphs (1)(A) and (1)(B) to the same 
        institution of higher education or combination of such 
        institution in any one fiscal year.
            ``(5) Uses.--Grants under paragraph (1)(B) shall be used 
        exclusively--
                    ``(A) to expand the quality and participation of a 
                cooperative education program;
                    ``(B) for outreach in new curricular areas; and
                    ``(C) for outreach to potential participants 
                including underrepresented and nontraditional 
                populations.
    ``(b) Applications.--Each institution of higher education or 
combination of such institutions desiring to receive a grant under this 
section shall submit an application to the Secretary at such time and 
in such manner as the Secretary shall prescribe. Each such application 
shall--
            ``(1) set forth the program or activities for which a grant 
        is authorized under this section;
            ``(2) specify each portion of such program or activities 
        which will be performed by a nonprofit organization or 
        institution other than the applicant and the compensation to be 
        paid for such performance;
            ``(3) provide that the applicant will expend during such 
        fiscal year for the purpose of such program or activities not 
        less than the amount expended for such purpose during the 
        previous fiscal year;
            ``(4) describe the plans which the applicant will carry out 
        to assure, and contain a formal statement of the institution's 
        commitment which assures, that the applicant will continue the 
        cooperative education program beyond the 5-year period of 
        Federal assistance described in subsection (c)(1) at a level 
        which is not less than the total amount expended for such 
        program during the first year such program was assisted under 
        this section;
            ``(5) provide that, in the case of an institution of higher 
        education that provides a 2-year program which is acceptable 
        for full credit toward a bachelor's degree, the cooperative 
        education program will be available to students who are 
        certificate or associate degree candidates and who carry at 
        least one-half the normal full-time academic workload;
            ``(6) provide that the applicant will--
                    ``(A) for each fiscal year for which the applicant 
                receives a grant, make such reports with respect to the 
                impact of the cooperative education program in the 
                previous fiscal year as may be essential to ensure that 
                the applicant is complying with the provisions of this 
                section, including--
                            ``(i) the number of unduplicated student 
                        applicants in the cooperative education 
                        program;
                            ``(ii) the number of unduplicated students 
                        placed in cooperative education jobs;
                            ``(iii) the number of employers who have 
                        hired cooperative education students;
                            ``(iv) the average income for students 
                        derived from working in cooperative education 
                        jobs; and
                            ``(v) the increase or decrease in the 
                        number of unduplicated students placed in 
                        cooperative education jobs in each fiscal year 
                        compared to the previous fiscal year; and
                    ``(B) keep such records as are essential to ensure 
                that the applicant is complying with the provisions of 
                this title, including the notation of cooperative 
                education employment on the student's transcript;
            ``(7) describe the extent to which programs in the academic 
        discipline for which the application is made have had a 
        favorable reception by public and private sector employers;
            ``(8) describe the extent to which the institution is 
        committed to extending cooperative education on an institution-
        wide basis for all students who can benefit;
            ``(9) describe the plans that the applicant will carry out 
        to evaluate the applicant's cooperative education program at 
        the end of the grant period;
            ``(10) provide for such fiscal control and fund accounting 
        procedures as may be necessary to assure proper disbursement 
        of, and accounting for, Federal funds paid to the applicant 
        under this title;
            ``(11) demonstrate a commitment to serving all underserved 
        populations; and
            ``(12) include such other information as is essential to 
        carry out the provisions of this title.
    ``(c) Duration of Grants; Federal Share.--
            ``(1) Duration of grants.--No individual institution of 
        higher education may receive, individually or as a participant 
        in a combination of such institutions--
                    ``(A) a grant pursuant to subsection (a)(1)(A) for 
                more than 5 fiscal years; or
                    ``(B) a grant pursuant to subsection (a)(1)(B) for 
                more than 5 fiscal years.
            ``(2) Federal share.--The Federal share of a grant under 
        section 803(a)(1)(A) may not exceed--
                    ``(A) 85 percent of the cost of carrying out the 
                program or activities described in the application in 
                the first year the applicant receives a grant under 
                this section;
                    ``(B) 70 percent of such cost in the second such 
                year;
                    ``(C) 55 percent of such cost in the third such 
                year;
                    ``(D) 40 percent of such cost in the fourth such 
                year; and
                    ``(E) 25 percent of such cost in the fifth such 
                year.
            ``(3) Special rule.--Any provision of law to the contrary 
        notwithstanding, the Secretary shall not waive the provisions 
        of this subsection.
    ``(d) Maintenance of Effort.--If the Secretary determines that a 
recipient of funds under this section has failed to maintain the fiscal 
effort described in subsection (b)(3), then the Secretary may elect not 
to make grant payments under this section to such recipient.

``SEC. 804. DEMONSTRATION AND INNOVATION PROJECTS; TRAINING AND 
              RESOURCE CENTERS; AND RESEARCH.

    ``(a) Authorization.--The Secretary is authorized, in accordance 
with the provisions of this section, to make grants and enter into 
contracts for--
            ``(1) the conduct of demonstration projects designed to 
        demonstrate or determine the feasibility or value of innovative 
        methods of cooperative education from the amounts available in 
        each fiscal year under section 802(b)(3);
            ``(2) the conduct of training and resource centers designed 
        to--
                    ``(A) train personnel in the field of cooperative 
                education;
                    ``(B) improve materials used in cooperative 
                education programs if such improvement is conducted in 
                conjunction with other activities described in this 
                paragraph;
                    ``(C) furnish technical assistance to institutions 
                of higher education to increase the potential of the 
                institution to continue to conduct a cooperative 
                education program without Federal assistance;
                    ``(D) encourage model cooperative education 
                programs which furnish education and training in 
                occupations in which there is a national need;
                    ``(E) support partnerships under which an 
                institution carrying out a comprehensive cooperative 
                education program joins with one or more institutions 
                of higher education in order to (i) assist the 
                institutions other than the comprehensive cooperative 
                education institution to develop and expand an existing 
                program of cooperative education, or (ii) establish and 
                improve or expand comprehensive cooperative education 
                programs; and
                    ``(F) encourage model cooperative education 
                programs in the fields of science and mathematics for 
                women and minorities who are underrepresented in such 
                fields
        from the amounts available in each fiscal year under section 
        802(b)(4); and
            ``(3) the conduct of research relating to cooperative 
        education, from the amounts available in each fiscal year under 
        section 802(b)(5).
    ``(b) Administrative Provision.--
            ``(1) In general.--To carry out this section, the Secretary 
        may--
                    ``(A) make grants to or contracts with institutions 
                of higher education, or combinations of such 
                institutions; and
                    ``(B) make grants to or contracts with other public 
                or private nonprofit agencies or organizations, 
                whenever such grants or contracts will make an 
                especially significant contribution to attaining the 
                objectives of this section.
            ``(2) Limitation.--
                    ``(A) The Secretary may not use more than 3 percent 
                of the amount appropriated to carry out this section in 
                each fiscal year to enter into contracts described in 
                paragraph (1)(A).
                    ``(B) The Secretary may use not more than 3 percent 
                of the amount appropriated to carry out this section in 
                each fiscal year to enter into contracts described in 
                paragraph (1)(B).
    ``(c) Supplement Not Supplant.--A recipient of a grant or contract 
under this section may use the funds provided only so as to supplement 
and, to the extent possible, increase the level of funds that would, in 
the absence of such funds, be made available from non-Federal sources 
to carry out the activities supported by such grant or contract, and in 
no case to supplant such funds from non-Federal sources.''.

   TITLE III--ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM

                          PART A--TEACH GRANTS

SEC. 301. TEACH GRANTS.

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

                       ``Subpart 9--TEACH Grants

``SEC. 420L. 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 eligible student (defined in accordance with section 484) 
        who files an application and agreement in accordance with 
        section 420M, and who qualifies--
                    ``(A) under paragraph (2) of section 420M(a), a 
                TEACH Grant in the amount of $4,000 for each academic 
                year during which that student is in attendance at the 
                institution; and
                    ``(B) under paragraphs (2) and (3) of section 
                420M(a), a Bonus TEACH Grant in the amount of $500 (in 
                addition to the amount of the TEACH Grant under 
                subparagraph (A)) for each academic year during which 
                that student so qualifies.
            ``(2) Reference.--Grants made under--
                    ``(A) paragraph (1)(A) shall be known as `Teacher 
                Education Assistance for College and Higher Education 
                Grants' or `TEACH Grants'; and
                    ``(B) paragraph (1)(B) shall be known as Bonus 
                TEACH Grants.
    ``(b) Payment Methodology.--
            ``(1) Prepayment.--Not less than 85 percent of any funds 
        provided to an institution under subsection (a) shall be 
        advanced to eligible institutions prior to the start of each 
        payment period and shall be based upon an amount requested by 
        the institution as needed to pay eligible students 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 
        students, in advance of the beginning of the academic term, an 
        amount for which they 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 students.--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 student's 
        account shall be limited to tuition and fees and, in the case 
        of institutionally-owned housing, room and board. The student 
        may elect to have the institution provide other such goods and 
        services by crediting the student's account.
    ``(c) Reductions in Amount.--
            ``(1) Part-time students.--In any case where a student 
        attends an institution of higher education on less than a full-
        time basis (including a student who attends an institution of 
        higher education on less than a half-time basis) during any 
        academic year, the amount of a grant under this subpart for 
        which that student is eligible shall be reduced in proportion 
        to the degree to which that student 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 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 and 
        other student assistance, shall not exceed the cost of 
        attendance (as defined in section 472) at the institution at 
        which that student is in attendance. If, with respect to any 
        student, it is determined that the amount of a TEACH Grant or a 
        Bonus TEACH Grant exceeds the cost of attendance for that year, 
        the amount of the TEACH Grant or Bonus TEACH Grant, 
        respectively, shall be reduced until such grant does not exceed 
        the cost of attendance at such institution.
    ``(d) Period of Eligibility for Grants.--
            ``(1) Undergraduate students.--The period during which an 
        undergraduate student may receive grants under this subpart 
        shall be the period required for the completion of the first 
        undergraduate baccalaureate course of study being pursued by 
        that student at the institution at which the student is in 
        attendance except that--
                    ``(A) any period during which the student is 
                enrolled in a noncredit or remedial course of study as 
                defined in paragraph (3) shall not be counted for the 
                purpose of this paragraph; and
                    ``(B) the total amount that a student may receive 
                under this subpart for undergraduate study shall not 
                exceed $16,000 with respect to a student who receives 
                only TEACH Grants, and $18,000 with respect to a 
                student who receives TEACH Grants and Bonus TEACH 
                Grants.
            ``(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 being pursued by that student at the 
        institution at which the student is in attendance, except that 
        the total amount that a student may receive under this subpart 
        for graduate study shall not exceed $8,000 with respect to a 
        student who receives only TEACH Grants, and $10,000 with 
        respect to a student who receives TEACH Grants and Bonus TEACH 
        Grants.
            ``(3) Remedial course; study abroad.--Nothing in this 
        section shall exclude from eligibility courses of study which 
        are noncredit or remedial in nature (including courses in 
        English language acquisition) which are determined by the 
        institution to be necessary to help the student be prepared for 
        the pursuit of a first undergraduate baccalaureate degree or 
        certificate or, in the case of courses in English language 
        instruction, to be necessary to enable the student to utilize 
        already existing knowledge, training, or skills. Nothing in 
        this section shall exclude from eligibility programs of study 
        abroad that are approved for credit by the home institution at 
        which the student is enrolled.

``SEC. 420M. ELIGIBILITY; APPLICATIONS; SELECTION.

    ``(a) Applications; Demonstration of Eligibility.--
            ``(1) Filing required.--The Secretary shall from time to 
        time set dates by which students shall file applications for 
        grants under this subpart. Each student desiring a grant under 
        this subpart for any year shall file an application containing 
        such information and assurances as the Secretary may deem 
        necessary to enable the Secretary to carry out the functions 
        and responsibilities of this subpart.
            ``(2) Demonstration of teach grant eligibility.--Each 
        application submitted under paragraph (1) for a TEACH Grant 
        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 high 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 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 math, 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.
            ``(3) Demonstration of bonus teach grant eligibility.--Each 
        application submitted under paragraph (1) for a Bonus TEACH 
        Grant shall contain such information as is necessary to 
        demonstrate that--
                    ``(A) the applicant is eligible for, and has 
                applied for, a TEACH Grant; and
                    ``(B) the applicant is--
                            ``(i) a student pursuing an undergraduate 
                        degree in mathematics, science, or a science-
                        related field; and
                            ``(ii) a student enrolled in a qualified 
                        teacher preparation program, as defined in 
                        section 420N.
    ``(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) with respect to an applicant for--
                            ``(i) TEACH Grants, teach in any of the 
                        following fields: mathematics, science, a 
                        foreign language, bilingual education, or 
                        special education, or as a reading specialist, 
                        or another field documented as high-need by the 
                        Federal Government, State government, or local 
                        education agency and approved by the Secretary; 
                        or
                            ``(ii) TEACH Grants and Bonus TEACH Grants, 
                        teach mathematics, science, or a science-
                        related field;
                    ``(D) 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
                    ``(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 and Bonus 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 and Bonus TEACH Grants received 
by such recipient shall be treated as a Direct Loan under part D of 
title IV, and shall be subject to repayment, together with interest 
thereon accruing after the period of service, in accordance with terms 
and conditions specified by the Secretary in regulations under this 
subpart.

``SEC. 420N. 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, except that such term does not include 
        an institution described in subsection (a)(1)(A) of that 
        section.
            ``(2) Qualified teacher preparation program.--The term 
        `qualified teacher preparation program' means a program for 
        students described in subsection (a)(2)(A) of section 420M or 
        teachers described in subsection (a)(2)(B) of such section 
        (referred to jointly in this paragraph as `teacher candidates') 
        that--
                    ``(A) recruits and prepares teacher candidates who 
                major in science, technology fields, engineering, or 
                mathematics disciplines to become certified as 
                elementary and secondary teachers in those disciplines, 
                with the goals of improving teacher knowledge and 
                effectiveness and increasing elementary and secondary 
                student academic achievement;
                    ``(B) is implemented by an institution of higher 
                education in partnership with high-need local 
                educational agencies;
                    ``(C) offers a baccalaureate degree with a 
                concurrent teacher certification to teacher candidates;
                    ``(D) is implemented in coordination with the 
                faculty of the education, sciences, and mathematics 
                departments of the institution of higher education;
                    ``(E) utilizes experienced teachers who have a 
                demonstrated record of success in teaching underserved 
                students to instruct teacher candidates in science, 
                technology fields, engineering, or mathematics 
                disciplines;
                    ``(F) provides teacher candidates with--
                            ``(i) support services, including mentoring 
                        by experienced teachers who have a demonstrated 
                        record of success in teaching underserved 
                        students;
                            ``(ii) exposure to, and field experience 
                        in, the classroom within the first year of 
                        entering the qualified teacher preparation 
                        program; and
                            ``(iii) other related support practices 
                        while the teacher candidates are participating 
                        in the program, and after such candidates 
                        graduate from the isntitution of higher 
                        education and are employed as teachers;
                    ``(G) participates in partnerships which include 
                the institution of higher education and local 
                educational agencies and charter districts to provide 
                opportunities for teacher candidate field work;
                    ``(H) focuses on increasing the number of teachers 
                in the science, technology fields, engineering, or 
                mathematics disciplines; and
                    ``(I) encourages individuals from underrepresented 
                populations to enter into the teaching profession.

``SEC. 420O. PROGRAM PERIOD AND FUNDING.

    ``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 and Bonus TEACH Grants in accordance 
with this subpart to each eligible student.''.

                     PART B--CENTERS OF EXCELLENCE

SEC. 311. CENTERS OF EXCELLENCE.

    Title II (20 U.S.C. 1021 et seq.) is amended by adding at the end 
the following:

                    ``PART C--CENTERS OF EXCELLENCE

``SEC. 231. DEFINITIONS.

    ``As used in this part:
            ``(1) Eligible institution.--The term `eligible 
        institution' means--
                    ``(A) an institution of higher education that has a 
                teacher preparation program that meets the requirements 
                of section 203(b)(2) and that is--
                            ``(i) a part B institution (as defined in 
                        section 322);
                            ``(ii) a Hispanic-serving institution (as 
                        defined in section 502);
                            ``(iii) a Tribal College or University (as 
                        defined in section 316);
                            ``(iv) an Alaska Native-serving institution 
                        (as defined in section 317(b)); or
                            ``(v) a Native Hawaiian-serving institution 
                        (as defined in section 317(b));
                    ``(B) a consortium of institutions described in 
                subparagraph (A); or
                    ``(C) an institution described in subparagraph (A), 
                or a consortium described in subparagraph (B), in 
                partnership with any other institution of higher 
                education, but only if the center of excellence 
                established under section 232 is located at an 
                institution described in subparagraph (A).
            ``(2) Highly qualified.--The term `highly qualified' when 
        used with respect to an individual means that the individual is 
        highly qualified as determined under section 9101 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801) 
        or section 602 of the Individuals with Disabilities Education 
        Act (20 U.S.C. 1401).
            ``(3) Scientifically based reading research.--The term 
        `scientifically based reading research' has the meaning given 
        such term in section 1208 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6368).
            ``(4) Scientifically based research.--The term 
        `scientifically based research' has the meaning given such term 
        in section 9101 of the Elementary and Secondary Education Act 
        of 1965 (20 U.S.C. 7801).

``SEC. 232. CENTERS OF EXCELLENCE.

    ``(a) Program Authorized.--From the amounts appropriated to carry 
out this part, the Secretary is authorized to award competitive grants 
to eligible institutions to establish centers of excellence.
    ``(b) Use of Funds.--Grants provided by the Secretary under this 
part shall be used to ensure that current and future teachers are 
highly qualified, by carrying out one or more of the following 
activities:
            ``(1) Implementing reforms within teacher preparation 
        programs to ensure that such programs are preparing teachers 
        who are highly qualified, are able to understand scientifically 
        based research, and are able to use advanced technology 
        effectively in the classroom, including use for instructional 
        techniques to improve student academic achievement, by--
                    ``(A) retraining faculty; and
                    ``(B) designing (or redesigning) teacher 
                preparation programs that--
                            ``(i) prepare teachers to close student 
                        achievement gaps, are based on rigorous 
                        academic content, scientifically based research 
                        (including scientifically based reading 
                        research), and challenging State student 
                        academic content standards; and
                            ``(ii) promote strong teaching skills.
            ``(2) Providing sustained and high-quality preservice 
        clinical experience, including the mentoring of prospective 
        teachers by exemplary teachers, substantially increasing 
        interaction between faculty at institutions of higher education 
        and new and experienced teachers, principals, and other 
        administrators at elementary schools or secondary schools, and 
        providing support, including preparation time, for such 
        interaction.
            ``(3) Developing and implementing initiatives to promote 
        retention of highly qualified teachers and principals, 
        including minority teachers and principals, including programs 
        that provide--
                    ``(A) teacher or principal mentoring from exemplary 
                teachers or principals; or
                    ``(B) induction and support for teachers and 
                principals during their first 3 years of employment as 
                teachers or principals, respectively.
            ``(4) Awarding scholarships based on financial need to help 
        students pay the costs of tuition, room, board, and other 
        expenses of completing a teacher preparation program.
            ``(5) Disseminating information on effective practices for 
        teacher preparation and successful teacher certification and 
        licensure assessment preparation strategies.
            ``(6) Activities authorized under sections 202, 203, and 
        204.
    ``(c) Application.--Any eligible institution desiring a grant under 
this section shall submit an application to the Secretary at such a 
time, in such a manner, and accompanied by such information the 
Secretary may require.
    ``(d) Minimum Grant Amount.--The minimum amount of each grant under 
this part shall be $500,000.
    ``(e) Limitation on Administrative Expenses.--An eligible 
institution that receives a grant under this part may not use more than 
2 percent of the grant funds for purposes of administering the grant.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this part.

``SEC. 233. APPROPRIATIONS.

    ``There shall be available to the Secretary, from funds not 
otherwise appropriated, $50,000,000 for the period beginning with 
fiscal year 2008 and ending with fiscal year 2012, to carry out this 
part beginning with academic year 2008-2009, which shall remain 
available until expended. The authority to carry out this part shall 
expire at the end of fiscal year 2012.''.

            TITLE IV--COLLEGE ACCESS CHALLENGE GRANT PROGRAM

SEC. 401. COLLEGE ACCESS CHALLENGE GRANTS.

    (a) Challenge Grant Program Established.--
            (1) Program established.--The Secretary shall establish a 
        program to award matching grants to philanthropic organizations 
        to increase the number of eligible students from underserved 
        populations who enter and complete college by providing grants 
        to philanthropic organizations who are members of eligible 
        consortia to carry out the activities of the consortia to 
        achieve this purpose, including--
                    (A) providing need-based grants to eligible 
                students;
                    (B) providing support to eligible students through 
                school- or institution-based mentoring programs; and
                    (C) conducting outreach programs to encourage 
                eligible students to pursue higher education.
            (2) Grant period; renewability.--Grants under this section 
        shall be awarded for one 5-year period, and may not be renewed.
            (3) Grant amounts.--
                    (A) In general.--A grant awarded under this part 
                for a given fiscal year to a philanthropic organization 
                shall be in an amount equal to lesser of--
                            (i) 200 percent of the amount of charitable 
                        gifts received in the preceding fiscal year by 
                        the eligible consortia, including charitable 
                        gifts received by the individual members of the 
                        consortia; or
                            (ii) the maximum grant amount established 
                        by the Secretary by regulation, pursuant to 
                        subsection (f).
                    (B) Gifts provided in cash or in-kind.--For the 
                purposes of subparagraph (A), the charitable gifts 
                received by an eligible consortia and its members may 
                be provided in cash or in-kind, including physical non-
                cash contributions of monetary value such as property, 
                facilities, and equipment, but excluding services.
    (b) Uses of Grant.--
            (1) In general.--A philanthropic organization receiving a 
        grant under this section shall--
                    (A) provide grants to eligible students; and
                    (B) distribute grants to members of the consortia 
                with which the philanthropic organization is 
                affiliated, in accordance with the plan described in 
                subsection (c)(2)(A), to fund the activities of such 
                consortia in accordance with the application under 
                subsection (c).
            (2) Limitation.--Not more than 15 percent of the funds made 
        available annually through a grant under this section may be 
        used for administrative purposes.
    (c) Applications.--A philanthropic organization desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may require. Such application shall include the following:
            (1) A description of an eligible consortia that meets the 
        requirements of subsection (d), with which the philanthropic 
        organization is affiliated, in accordance with subsection (g).
            (2) A detailed description of--
                    (A) the philanthropic organization's plans for 
                distributing the matching grant funds among the members 
                of the eligible consortia; and
                    (B) the eligible consortia's plans for using the 
                matching grant funds, including how the funds will be 
                used to provide financial aid, mentoring, and outreach 
                programs to eligible students.
            (3) A plan to ensure the viability of the eligible 
        consortia and the work of the consortia beyond the grant 
        period.
            (4) A detailed description of the activities that carry out 
        this section that are conducted by the eligible consortia at 
        the time of the application, and how the matching grant funds 
        will assist the eligible consortia with expanding and enhancing 
        such activities.
            (5) A description of the organizational structure that will 
        be used to administer the activities carried out under the 
        plan, including a description of the system used to track the 
        participation of students who receive grants to degree 
        completion.
            (6) A description of the strategies that will be used to 
        identify eligible students who are enrolled in secondary school 
        and who may benefit from the activities of the eligible 
        consortia.
    (d) Eligible Consortia.--An eligible consortia with which a 
philanthropic organization is affiliated for the program under this 
section shall--
            (1) be a partnership of mulitple entities that have agreed 
        to work together carry out this section, including--
                    (A) such philanthropic organization, which shall 
                serve as the manager of the consortia;
                    (B) 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
                    (C) at the discretion of the philanthropic 
                organization described in subparagraph (A), 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
            (2) conducts activites to assist eligible students with 
        entering and remaining in college, which include--
                    (A) providing need-based grants to eligible 
                students;
                    (B) providing early notification to low-income 
                students of their potential eligibility for Federal 
                financial aid, as well as financial aid and other 
                support available from the eligible consortia;
                    (C) encouraging increased eligible student 
                participation in higher education through mentoring or 
                outreach programs; and
                    (D) conducting marketing and outreach efforts that 
                are designed to--
                            (i) encourage full participation of 
                        eligible students in the activities of the 
                        consortia that carry out the purposes of this 
                        section; and
                            (ii) provide the communities impacted by 
                        the activities of the consortia with a general 
                        knowledge about the efforts of the consortia.
    (e) Annual Report.--A philanthropic organization receiving a grant 
under this section shall prepare and submit an annual report to the 
Secretary on the activities carried out with such grant. The report 
shall include--
            (1) each activity that was provided to eligible students 
        over the course of the year;
            (2) the cost of providing each such activity;
            (3) the number and percentage of eligible students who 
        received grants, mentoring, and outreach services; and
            (4) the total amount of charitable gifts received by the 
        eligible consortia (including its members) with which the 
        philanthropic organization is affiliated for the fiscal year.
    (f) Regulations.--The Secretary shall promulgate regulations to 
carry out this section. Such regulations shall include--
            (1) the maximum grant amount that may be awarded to a 
        philanthropic organization under this section;
            (2) the minimum amount of chartable gifts an eligible 
        consortia (including its members) shall receive in a fiscal 
        year for the philanthropic organization affiliated with such 
        consortia to be eligible for a grant under this section.
    (g) Definitions.--For the purposes of this section:
            (1) Eligible student.--The term ``eligible student'' means 
        an individual who--
                    (A) is a member of an underserved population;
                    (B) is enrolled--
                            (i) in a secondary school pursuing a high 
                        school diploma; or
                            (ii) in an institution of higher education 
                        or is planning to attend an institution of 
                        higher education; and
                    (C) either--
                            (i) is receiving, or has received, 
                        financial assistance or support services from 
                        the consortium; or
                            (ii) meets 2 or more of the following 
                        criteria:
                                    (I) Has an expected family 
                                contribution equal to zero (as 
                                described in section 479) or a 
                                comparable alternative based upon the 
                                State's approved criteria in section 
                                415C(b)(4).
                                    (II) Has qualified for a free 
                                lunch, or at the State's discretion a 
                                reduced price lunch, under the school 
                                lunch program established under the 
                                Richard B. Russell National School 
                                Lunch Act.
                                    (III) Qualifies for the State's 
                                maximum need-based undergraduate award.
                                    (IV) Is participating in, or has 
                                participated in, a Federal, State, 
                                institutional, or community mentoring 
                                or outreach program, as recognized by 
                                the eligible consortia carrying out 
                                activities under this section.
            (2) 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 
                insitution 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 subsection (e)) 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.
            (3) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, and 
        Puerto Rico.
            (4) Underserved population.--The term ``underserved 
        population'' means a group of individuals who traditionally 
        have not been well represented in the general population of 
        students who pursue and successfully complete a higher 
        education degree.
    (h) Program Funding.--
            (1) In general.--There shall be available to the Secretary 
        to carry out this section, from funds not otherwise 
        appropriated, $300,000,000 for the period beginning with fiscal 
        year 2008 and ending with fiscal year 2012.
            (2) Use of excess funds.--If, at the end of a fiscal year, 
        the funds available for awarding grants under this section 
        exceed the amount necessary to make such grants, then all of 
        the excess funds shall remain available for the subsequent 
        fiscal year, and shall be used to award grants under section 
        401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) for 
        such subsequent fiscal year.
    (i) Sunset.--The authority to carry out this section shall expire 
at the end of fiscal year 2012.
                                 <all>
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