59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–210 

COLLEGE COST REDUCTION ACT OF 2007 

JUNE 25, 2007.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. GEORGE MILLER of California, from the Committee on 

Education and Labor, submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 2669] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Education and Labor, to whom was referred 

the bill (H.R. 2669) to provide for reconciliation pursuant to section 

601 of the concurrent resolution on the budget for fiscal year 2008, 

having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited 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. 


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Sec. 117. Unit costs for account maintenance fees. 

Sec. 118. Increased loan fees from lenders. 

Sec. 119. Student loan information. 

Sec. 120. Market-based determination of lender returns. 

PART C—REWARDING SERVICE IN REPAYMENT

Sec. 131. Loan forgiveness for service in areas of national need. 

‘‘Sec. 428K. Loan forgiveness for service in areas of national need. 

Sec. 132. Income-contingent repayment for public sector employees. 

Sec. 133. Income-based repayment. 

‘‘Sec. 493C. Income-based repayment. 

Sec. 134. Definition of economic hardship. 

Sec. 135. Deferrals. 

Sec. 136. Maximum repayment period. 

Sec. 137. Deferral of loan repayment following active duty. 

‘‘Sec. 484C. Deferral of loan repayment following active duty. 

Sec. 138. Sense of the Congress; report. 

PART D—SUSTAINING THE PERKINS LOAN PROGRAM

Sec. 141. Federal Perkins Loans. 

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. Definition of cooperative education. 

‘‘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. 

‘‘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—LEVERAGING FUNDS TO INCREASE COLLEGE ACCESS 

PART A—STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND MINORITY-SERVING

INSTITUTIONS

Sec. 401. Investment in Historically Black Colleges and Universities and Minority-Serving Institution. 

‘‘PART I—STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND OTHER MINORITY-SERVING

INSTITUTIONS

‘‘Sec. 499A. Investment in Historically Black Colleges and Universities and Other Minority-Serving Institu- tion. 

PART B—COLLEGE ACCESS CHALLENGE GRANTS

Sec. 411. College Access Challenge grants. 

PART C—UPWARD BOUND

Sec. 412. Upward Bound. 

TITLE V—ADDITIONAL PROVISIONS 

Sec. 501. Independent evaluation of distance education programs. 

Sec. 502. Encouraging colleges and universities to ‘‘go green’’. 

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.). 


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(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) $840,000,000 for fiscal year 2008; 

‘‘(ii) $870,000,000 for fiscal year 2009; 

‘‘(iii) $1,340,000,000 for fiscal year 2010; 

‘‘(iv) $2,280,000,000 for fiscal year 2011; 

‘‘(v) $2,350,000,000 for fiscal year 2012; 

‘‘(vi) $2,400,000,000 for fiscal year 2013; 

‘‘(vii) $2,450,000,000 for fiscal year 2014; 

‘‘(viii) $2,510,000,000 for fiscal year 2015; 

‘‘(ix) $2,550,000,000 for fiscal year 2016; and 

‘‘(x) $2,570,000,000 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) $200 for each of the award years 2008–2009 and 2009–2010; 

‘‘(ii) $300 for award year 2010–2011; and 

‘‘(iii) $500 for award year 2011–2012 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; and 

‘‘(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.— 

(1) AMENDMENT.—Paragraph (5) of section 401(b) (as redesignated by subsection (d)(1)(B)) is amended to read as follows: 

‘‘(5) YEAR-ROUND PELL GRANTS.—The Secretary is authorized, for students enrolled in a baccalaureate degree, associate’s degree, or certificate 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 toVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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ward their degree or certificate objectives by enrolling in courses for more than 

2 semesters, or 3 quarters, or the equivalent, in a given academic year.’’. 

(2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall be effective July 1, 2009. 

(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.’’. 

(g) ELIGIBILITY FOR ACADEMIC COMPETITIVENESS GRANTS.—Section 401A is further amended— 

(1) in subsection (c)— 

(A) by striking ‘‘full–time’’; and 

(B) by amending paragraph (1) to read as follows: 

‘‘(1) is an eligible student under section 484, including being enrolled or accepted for enrollment in a degree, certificate, or other eligible program leading 

to a recognized educational credential at an institution of higher education;’’; 

and 

(2) in subsection (d), by adding at the end the following new paragraph: 

‘‘(3) ADJUSTMENT FOR LESS THAN FULL-TIME ENROLLMENT.—A grant awarded 

under this section to an eligible student who attends an eligible institution on 

a less than full-time (but at least half-time or more) basis shall be reduced in 

the same proportion as would a Federal Pell Grant pursuant to section 

401(b)(2)(B).’’. 

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: 


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‘‘(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 defined in section 478(f)) 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 defined in section 478(f)) between December 2011 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 paragraph (1)(B)(i)— 

(i) in subclause (II), by striking ‘‘or’’ after the semicolon; 

(ii) by redesignating subclause (III) as subclause (IV); 

(iii) by inserting after subclause (II) the following: 

‘‘(III) 1 of whom is a dislocated worker; or’’; and 

(iv) in subclause (IV) (as redesignated by clause (ii)), by striking ‘‘12- 

month’’ and inserting ‘‘24-month’’; 

(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 


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income level shall be adjusted according to increases in the Consumer Price 

Index, as defined in section 478(f).’’; and 

(3) in subsection (d)— 

(A) by redesignating paragraphs (1) through (6) as subparagraphs (A) 

through (F), respectively and moving the margins of such subparagraphs 2 

ems to the right; 

(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)(2) (20 U.S.C. 1087vv(a)(2)) is amended— 

(1) by striking ‘‘and no portion’’ and inserting ‘‘no portion’’; and 

(2) 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 lowincome 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 (29 U.S.C. 2801 et seq.). 

‘‘(2) The term ‘untaxed income and benefits’ shall not include the amount of 

additional child tax credit claimed for Federal income tax purposes.’’. 

(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. 


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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 


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(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’’; 

(2) in clause (v)(III), by striking ‘‘clauses (ii), (iii), and (iv)’’ and inserting 

‘‘clauses (ii), (iii), (iv), and (vi)’’; and 

(3) by adding at the end the following 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). 

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.— 


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‘‘(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 

described in subclause (I) or (II) of clause (iii); 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— 

‘‘(I) any holder that, together with its affiliated holders, is designated by the Secretary as a small lender under subparagraph 

(B); or 

‘‘(II) any holder that— 

‘‘(aa) is a unit of State or local government or a nonprofit private entity; and 

‘‘(bb) is not owned in whole or in part by, or controlled or operated by, or otherwise affiliated with, a for-profit entity. 

‘‘(B) DESIGNATION OF SMALL LENDERS.—In determining which holders of 

eligible loans qualify as small lenders for purposes of subparagraph 

(A)(iii)(I), 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 of eligible loans (combined with their affiliated 

holders) 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).’’. 


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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 

or 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 paragraph— 

‘‘(i) 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; and 

‘‘(ii) 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.’’. 

SEC. 120. MARKET-BASED DETERMINATION OF LENDER RETURNS. 

(a) JOINT PLANNING STUDY TO SELECT AUCTION MECHANISMS FOR TESTING.— 

(1) PLANNING STUDY.—The Secretaries of Education and Treasury jointly shall 

conduct a planning study, in consultation with the Office of Management and 

Budget, the Congressional Budget Office, the General Accounting Office, and 

other individuals and entities the Secretaries determines appropriate, to— 

(A) examine the matters described in paragraph (2) in order to determine 

which market-based mechanisms for determining lender returns on loans 

made, insured, or guaranteed under part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.) shall be tested under the pilot 

programs described in subsection (c); and 

(B) determine what related administrative and other changes will be required in order to ensure that high-quality services are provided under a 

successful implementation of market-based determinations of lender returns for all loans made, insured, or guaranteed under such part. 

(2) MATTERS EXAMINED.—The planning study under this subsection shall examine— 

(A) whether it is most appropriate to auction existing loans under part 

B of title IV of such Act, to auction the rights to originate loans under such 

part, or whether the sale of securities backed by federally-owned student 

loan assets originated by banks acting as agents of the Federal Government 

would provide the most efficient market-based alternative; 

(B) matters related to efficient financial organization of any auctions or 

sales of loans under such part, including how loans and origination rights 

are bundled, the capital structure of any securitization plan, and issues related to servicing; and 

(C) how to ensure that statutory, regulatory, and administrative requirements do not impede separate management and ownership of loans or assets backed by loans under part B of title IV of such Act. 

(3) MECHANISMS.—In determining which market-based mechanisms are the 

most promising models to test the pilot programs under subsection (b), the planning study shall take into account whether a particular market-based mechanism will— 

(A) ensure loan availability under part B of title IV of such Act to all eligible students at all participating institutions; 

(B) minimize administrative complexity for borrowers, institutions, lenders, and the Federal Government; and 

(C) reduce Federal costs if used on a program-wide basis. 

(4) REPORT.—A report on the results of the planning study, together with a 

plan for implementation of one or more pilot programs using promising marketbased approaches for determining lender returns, shall be transmitted to Congress not later than 6 months after the date of enactment of this Act. 

(b) PILOT PROGRAMS TO BE TESTED.— 

(1) AUTHORIZATION.— 

(A) IN GENERAL.—Notwithstanding any other provision of law, after the 

report described in subsection (a)(4) is transmitted to Congress, the Secretary of Education shall, in consultation with the Secretary of the TreasVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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ury, begin preparations necessary to carry out pilot programs meeting the 

requirements of this subsection in accordance with the implementation plan 

included in such report. 

(B) IMPLEMENTATION DATE.—The Secretary of Education shall commence 

implementation of the pilot programs under this subsection not earlier than 

July 1, 2008. 

(C) DURATION AND LOAN VOLUME.—The pilot programs under this subsection shall be not more than two academic years in duration, and the Secretary of Education may use the pilot programs to determining the lender 

returns for not more than— 

(i) 10 percent of the annual loan volume under part B of title IV of 

the Higher Education Act of 1965 during the first year of the pilot programs under this subsection; and 

(ii) 20 percent of the annual loan volume under part B of title IV of 

such Act during the second year of the pilot programs under this subsection. 

(2) VOLUNTARY PARTICIPATION.— 

(A) Participation in any auction-based pilot program under this subsection shall be voluntary for eligible institutions and eligible lenders participating under part B of title IV of such Act prior to July 1, 2006. 

(B) All savings to the United States Treasury generated by such auctions 

shall be distributed to institutions participating under this subsection on a 

basis proportionate to loan volume under such part for supplemental, needbased financial aid, except that an institution that is operating as an eligible lender under section 435(d)(2) of such Act shall not be eligible for any 

such distribution. 

(3) INDEPENDENT EVALUATION.—The Government Accountability Office shall 

conduct an independent evaluation of the pilot programs under this subsection, 

which evaluation shall be completed, and the results of such submitted to the 

Secretary of Education, the Secretary of the Treasury, and Congress, not later 

than 120 days after the termination of such pilot programs. 

(c) PROGRAM-WIDE IMPLEMENTATION.—Notwithstanding any other provision of 

part B of title IV of the Higher Education Act of 1965, for the first academic year 

beginning not less than 120 days after the independent evaluation described in subsection (b)(3) has been transmitted to Congress, and succeeding academic years, the 

Secretary of Education is authorized to implement for all loans made under such 

part, a program-wide, market-based system to determine returns to all lenders as 

the Secretary of Education determines appropriate, provided that— 

(1) the Secretary of Education, in consultation with the Secretary of the 

Treasury, has certified that the auction-based system that the Secretary of Education intends to implement on a program-wide basis would— 

(A) ensure loan availability under such part to all eligible students at all 

participating institutions; 

(B) minimize administrative complexity for borrowers, institutions, lenders, and the Federal Government, including the enhancement of the modernization of the student financial aid system; and 

(C) reduce Federal costs when used on a program-wide basis; and 

(2) the Secretary of Education has notified Congress of the Secretary’s intent 

to implement a program-wide auction based system, and has provided a description of the structure of such auction-based system, at least 120 days before implementing such system. 

(d) CONSULTATION.— 

(1) IN GENERAL.—As part of the planning study, pilot programs, and programwide implementation phases described in this section, the Secretary of Education shall consult with representatives of investment banks, ratings agencies, 

lenders, institutions of higher education, and students, as well as individuals 

or other entities with pertinent technical expertise. The Secretary of Education 

shall engage in such consultations using such methods as, and to the extent 

that, the Secretary determines appropriate to the time constraints associated 

with the study, programs, and implementation. 

(2) SERVICES OF OTHER FEDERAL AGENCIES.—In carrying out the planning 

study and pilot programs described in this section, the Secretary of Education 

may use, on a reimbursable basis, the services (including procurement authorities and services), equipment, personnel, and facilities of other agencies and instrumentalities of the Federal Government. 


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PART C—REWARDING SERVICE IN REPAYMENT 

SEC. 131. 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) is employed full-time 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 age 5 and under. 

‘‘(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 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 


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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 a 

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 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.—At the end of each school, academic, or calendar 

year of full-time employment in an area of national need described in subsection (b), 

not to exceed 5 years, the Secretary shall forgive not more than $1,000 of the student loan obligation of a borrower that is outstanding after the completion of each 

such school, academic, or calendar year of employment, as appropriate, not to exceed 

$5,000 in the aggregate for any borrower. 

‘‘(d) CONSTRUCTION.—Nothing in this section shall be construed to authorize the 

refunding of any repayment of a loan. 

‘‘(e) SEGAL AMERICORPS EDUCATION AWARD AND NATIONAL SERVICE 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 receive under this section the amount, if any, by which 

the maximum benefit available under this section exceeds the maximum education 

award available under such subtitle. 

‘‘(f) INELIGIBILITY FOR DOUBLE BENEFITS.—No borrower may receive a reduction 

of loan obligations under both this section and section 428J or 460. 

‘‘(g) DEFINITIONS.—In this section: 

‘‘(1) CRITICAL FOREIGN LANGUAGE.—The term ‘critical foreign language’ includes the languages of Arabic, Korean, Japanese, Chinese, Pashto, PersianFarsi, 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 age 5 and under, meets any applicable State 

or local government licensing, certification, approval, and registration requirements, and is operated by— 

‘‘(A) a public or private school that is 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). 


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‘‘(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— 

‘‘(A) 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) provides speech-language pathology services under section 1861(ll)(1) 

of the Social Security Act (42 U.S.C. 1395x(ll)(1), or meets or exceeds the 

qualifications for a qualified speech-language pathologist under subsection 

(ll)(3) of such section (42 U.S.C. 1395x(ll)(3)). 

‘‘(h) 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. 132. 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 incomecontingent 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. 133. 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’, 

when used with respect to a borrower, means that for such borrower— 

‘‘(A) the annual amount due on the total amount of loans made, insured, 

or guaranteed under part B or D (other than an excepted PLUS loan) to 

a borrower as calculated under the standard repayment plan under section 

428(b)(9)(A)(i) or 455(d)(1)(A); exceeds 


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‘‘(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 to participate in income-based repayment under 

paragraph (1); 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. 134. DEFINITION OF ECONOMIC HARDSHIP. 

Section 435(o) (20 U.S.C. 1085(o)) is amended— 

(1) in paragraph (1)— 

(A) in subparagraph (A)(ii)— 

(i) by striking ‘‘100 percent of the poverty line for a family of 2’’ and 

inserting ‘‘150 percent of the poverty line applicable to the borrower’s 

family size’’; and 

(ii) by inserting ‘‘or’’ after the semicolon; 

(B) by striking subparagraph (B); and 

(C) by redesignating subparagraph (C) as subparagraph (B); and 

(2) in paragraph (2), by striking ‘‘(1)(C)’’ and inserting ‘‘(1)(B)’’. 


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SEC. 135. 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. 136. 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)’’. 

SEC. 137. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY. 

Part G of title IV is amended by inserting after section 484B (20 U.S.C. 1091b) 

the following new section: 

‘‘SEC. 484C. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY. 

‘‘(a) DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.—In addition to 

any deferral of repayment of a loan made under this title pursuant to section 

428(b)(1)(M)(iii), 455(f)(2)(C), or 464(c)(2)(A)(ii), a borrower of a loan under this title 

who is a member of the National Guard or other reserve component of the Armed 

Forces of the United States, or a member of such Armed Forces in a retired status, 

is called or ordered to active duty, and is currently enrolled, or was enrolled within 

six months prior to the activation, in a program of instruction at an eligible institution, shall be eligible for a deferment during the 13 months following the conclusion 

of such service, except that a deferment under this subsection shall expire upon the 

borrower’s return to enrolled student status. 

‘‘(b) ACTIVE DUTY.—Notwithstanding section 481(d), in this section, the term ‘active duty’ has the meaning given such term in section 101(d)(1) of title 10, United 

States Code, except that such term— 

‘‘(1) does not include active duty for training or attendance at a service school; 

but 

‘‘(2) includes, in the case of members of the National Guard, active State 

duty.’’. 

SEC. 138. SENSE OF THE CONGRESS; REPORT. 

(a) SENSE OF CONGRESS.—It is the sense of the Congress that— 

(1) in order to provide the borrowers of Federal student loans with the option 

of converting their loans to income-contingent repayment by providing direct 

loans for the discharge of such loans (in this section referred to as ‘‘direct IDEA 

loans’’), the Secretary of Education and the Secretary of the Treasury will work 

together with the Government Accountability Office to develop a process by 

which the borrower will make payments on such loan using the income tax 

withholding system and will make appropriate adjustments to his or her withholding or estimated tax payments for such purposes; 

(2) the Secretaries shall determine— 

(A) whether such a repayment option would be beneficial to borrowers 

and taxpayers; and 

(B) how such program would be implemented by the Departments of Education and Treasury; and 

(3) this process would— 

(A) streamline the repayment process and provide greater flexibility for 

borrowers electing to use the direct IDEA loan; 

(B) significantly reduce the number of loan defaults by borrowers; and 


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(C) significantly reduce the redundancy in reporting information pertaining to income-contingent repayment to the Department of Education, 

institutions, and applicants. 

(b) REPORT.—The Secretaries of Education and the Treasury shall, within one 

year after the date of enactment of this Act— 

(1) provide the Congress with information on the progress in devising the direct IDEA loan with income-contingent repayment using the income tax withholding system; 

(2) inform the Congress of any necessary statutory changes for the purpose 

of establishing a direct IDEA loan with income-contingent repayment using the 

income tax withholding system; and 

(3) consider international programs demonstrating implementation of incomecontingent repayment collected through revenue services, such as programs in 

England, Australia, and New Zealand. 

PART D—SUSTAINING THE PERKINS LOAN PROGRAM 

SEC. 141. FEDERAL PERKINS LOANS. 

Section 461(b) (20 U.S.C. 1087aa(b)) is amended by adding at the end the following new paragraphs: 

‘‘(3) In addition to any amounts appropriated pursuant to paragraph (1) or (2) 

of this subsection, there shall be available to the Secretary for contributions to 

student loan funds established under part E, from funds not otherwise appropriated, $100,000,000 for each of the fiscal years 2008 through 2012. The sum 

of the amount made available under this subsection for any such fiscal year, 

plus the amount so appropriated for such fiscal year, shall, for purposes of allocations under section 462, be treated as the amount appropriated pursuant to 

section 461(b) for such fiscal year. 

‘‘(4) The authority to make contributions to student loan funds under this 

part shall expire at the end of fiscal year 2012.’’. 

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) WAIVER.—The Secretary may waive the requirements of this section, if the 

Secretary determines that such a waiver would be equitable due to exceptional or 

uncontrollable circumstances, such as a natural disaster or a precipitous and unforeseen decline in the financial resources of the State educational agency. 

‘‘(c) 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) (except a State that receives a waiver under subsection 

(b)) 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 related to college costs 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; 


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‘‘(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; and 

‘‘(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 System 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 undergraduate 

student. 

‘‘(B) The room and board charges for a first-time, full-time undergraduate 

student. 

‘‘(C) The price of attendance for a first-time, full-time undergraduate student, consistent with the provisions of section 472. 

‘‘(D) The average amount of financial assistance received by a first-year, 

full-time 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 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, and 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. 


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‘‘(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 higher education price index (as defined in 

section 401B(d)) over the same 3-year time period; and 

‘‘(5) whether the institution has been placed on affordability alert status as 

required by subsection (d)(2). 

‘‘(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 higher 

education price index (as defined in section 401B(d)) 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) 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 higher education price index (as defined in section 

401B(d)) 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. 

‘‘(3) EXEMPTIONS.—Notwithstanding paragraph (2), 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 the the class of institutions described in paragraph (5) 

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 higher 

education price index (as defined in section 401B(d)) over the same time period, but the dollar amount of the sticker price increase is less than $500. 

‘‘(4) 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. 

‘‘(5) 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. 

‘‘(6) 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 beneVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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fits 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 subsection (c) 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 sticker price, 

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.’’. 

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 an institution of higher education that, for 

academic year 2008–2009 or any succeeding academic year, has an annual net tuition price increase (expressed as a percentage) for the most recent academic year 

for which satisfactory data is available that is equal to or less than the percentage 

change in the higher education price index for such academic year, the Secretary 

shall 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 (3) of 

this subsection, the Secretary shall provide to such institution a bonus amount 

equal to 25 percent of the aggregate amount of aid received by students at the 

institution under section 401(a). Such institution shall award the bonus amount 

to the Pell Grant recipients who were in attendance at the institution during 

the award year that such institution satisfied the eligibility criteria for maintaining low tuition and fees. Each such student shall receive an amount that 

equals 25 percent of their total Pell Grant award for such award year, except 

that no student shall recieve an amount under this section that would cause 

the amount of total financial aid received by such student to exceed the cost 

of attendance of the institution. If there are additional funds remaining after 

all eligible students have been paid from the bonus amount, the institution 

shall award all excess funds first to remaining Pell Grant recipients who were 

not in attendance at the institution during such award year, and then to other 

eligible students under this title in attendance at such institution in the form 

of need-based aid. 

‘‘(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— 


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‘‘(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) PRIORITY.—In awarding incentives and rewards under this section, the Secretary shall give priority to institutions of higher education with the lowest annual 

net tuition price increase (expressed as a percentage) for the most recent academic 

year for which satisfactory data is available, when compared with other institutions 

of higher education with annual net tuition price increases that are equal to or less 

than the percentage change in the higher education price index for such academic 

year. 

‘‘(e) 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. 

‘‘(f) 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. 

‘‘(g) 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. 1001 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. DEFINITION OF 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. 

‘‘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 more than 11 percent shall be available for demonstration projects 

under paragraph (1) of section 804(a); 

‘‘(4) not more than 11 percent shall be available for training and resource centers under paragraph (2) of section 804(a); and 


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‘‘(5) not more than 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 previously received a grant under this paragraph 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; 


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‘‘(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. 


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‘‘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— 

‘‘(1) from the amounts available in each fiscal year under section 802(b)(3), 

for the conduct of demonstration projects designed to demonstrate or determine 

the feasibility or value of innovative methods of cooperative education ; 

‘‘(2) from the amounts available in each fiscal year under section 802(b)(4), 

for 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; and 

‘‘(3) from the amounts available in each fiscal year under section 802(b)(5), 

for the conduct of research relating to cooperative education. 

‘‘(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 make grants or 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 make grants or 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 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 acVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00024 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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cordance 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 compleVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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tion 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. 

‘‘(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 the applicant is— 

‘‘(A) eligible for, and has applied for, a TEACH Grant; and 

‘‘(B) 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 


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‘‘(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. 

‘‘(2) QUALIFIED TEACHER PREPARATION PROGRAM.—The term ‘qualified teacher 

preparation program’ means a program for students and teachers described in 

subparagraph (A) or (B) of section 420M(a)(2) (referred to jointly in this paragraph as ‘teacher candidates’) that— 

‘‘(A) recruits and prepares teacher candidates who major in science, technology fields, special education, foreign language, engineering, or mathematics disciplines to become certified as elementary and secondary teachers 

in those disciplines, special education teachers, or teachers of English Language Learners, 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 relevant 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 the 

disciplines described in subparagraph (A); 

‘‘(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 institution 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 disciplines described in subparagraph (A); 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 

applicant.’’. 


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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. 


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‘‘(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 as 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—LEVERAGING FUNDS TO INCREASE 

COLLEGE ACCESS 

PART A—STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND MINORITY-SERVING 

INSTITUTIONS 

SEC. 401. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND MINORITY-SERVING INSTITUTION. 

Title IV is amended by adding at the end the following new part: 

‘‘PART I—STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND OTHER MINORITYSERVING INSTITUTIONS 

‘‘SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND 

OTHER MINORITY-SERVING INSTITUTION. 

‘‘(a) ELIGIBLE INSTITUTION.—An institution of higher education is eligible to receive funds from the amounts made available under this section if such institution 

is— 

‘‘(1) a part B institution (as defined in section 322 (20 U.S.C. 1061)); 

‘‘(2) a Hispanic-serving institution (as defined in section 502 (20 U.S.C. 

1101a)); 

‘‘(3) a Tribal College or University (as defined in section 316 (20 U.S.C. 

1059c)); 

‘‘(4) an Alaska Native-serving institution or a Native Hawaiian-serving institution (as defined in section 317(b) (20 U.S.C. 1059d(b))); 

‘‘(5) a Predominantly Black Institution (as defined in subsection (c)); or 

‘‘(6) an Asian and Pacific Islander-serving institution (as defined in subsection 

(c)). 

‘‘(b) NEW INVESTMENT OF FUNDS.— 

‘‘(1) IN GENERAL.—There shall be available to the Secretary to carry out this 

section, from funds not otherwise appropriated, $100,000,000 for each of the fiscal years 2008 through 2012. The authority to carry out this section shall expire 

at the end of fiscal year 2012. 

‘‘(2) ALLOCATION AND ALLOTMENT.— 

‘‘(A) IN GENERAL.—Of the amounts made available under paragraph (1) 

for any fiscal year— 

‘‘(i) 40 percent shall be available for allocation under subparagraph 

(B); 


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‘‘(ii) 40 percent shall be available for allocation under subparagraph 

(C); and 

‘‘(iii) 20 percent shall be available for allocation under subparagraph 

(D). 

‘‘(B) HSI STEM AND ARTICULATION PROGRAMS.—The amount made available for allocation under this subparagraph by subparagraph (A)(i) for any 

fiscal year shall be available for Hispanic-serving Institutions for activities 

described in section 503, with a priority given to applications that propose— 

‘‘(i) to increase the number of Hispanic and other low income students attaining degrees in the fields of science, technology, engineering 

and mathematics; and 

‘‘(ii) to develop model transfer and articulation agreements between 

2-year Hispanic-serving institutions and 4-year institutions in such 

fields. 

‘‘(C) ALLOCATION AND ALLOTMENT HBCUS AND PBIS.—From the amount 

made available for allocation under this subparagraph by subparagraph 

(A)(ii) for any fiscal year— ‘‘(i) $34,000,000 shall be available to eligible institutions described in 

subsection (a)(1) and shall be made available as grants under section 

323 and allotted among such institutions under section 324, treating 

such amount, plus the amount appropriated for such fiscal year in a 

regular or supplemental appropriation Act to carry out part B of title 

III, as the amount appropriated to carry out part B of title III for purposes of allotments under section 324, for use by such institutions with 

a priority for— 

‘‘(I) activities described in paragraphs (1), (2), (4), (5), and (10) 

of section 323(a); and 

‘‘(II) other activities, consistent with the institution’s comprehensive plan and designed to increase the institution’s capacity to prepare students for careers in the physical and natural sciences, 

mathematics, computer science and information technology and 

sciences, engineering, language instruction in the less-commonly 

taught languages and international affairs, and nursing and allied 

health professions; and 

‘‘(ii) $6,000,000 shall be available to eligible institutions described in 

subsection (a)(5) and shall be available for a competitive grant program 

to award 10 grants of $600,000 annually for programs in the following 

areas: science, technology, engineering, or mathematics (STEM); health 

education; internationalization or globalization; teacher preparation; or 

improving educational outcomes of African American males. 

‘‘(D) ALLOCATION AND ALLOTMENT TO OTHER MINORITY-SERVING INSTITUTIONS.—From the amount made available for allocation under this subparagraph by subparagraph (A)(iii) for any fiscal year (in this subparagraph referred to as the ‘allocable amount’)— 

‘‘(i) 60 percent of the allocable amount for such fiscal year shall be 

available to eligible institutions described in subsection (a)(3) and shall 

be made available as grants under section 316, treating such 60 percent of the allocable amount as part of the amount appropriated for 

such fiscal year in a regular or supplemental appropriation Act to carry 

out such section, and using such 60 percent for purposes described in 

subsection (c) of such section; 

‘‘(ii) 30 percent of the allocable amount for such fiscal year shall be 

available to eligible institutions described in subsection (a)(4) and shall 

be made available as grants under section 317, treating such 30 percent of the allocable amount as part of the amount appropriated for 

such fiscal year in a regular or supplemental appropriation Act to carry 

out such section and using such 60 percent for purposes described in 

subsection (a) of such section; and 

‘‘(iii) 10 percent of the allocable amount for such fiscal year shall be 

available to eligible institutions described in subsection (a)(6) for activities described in section 311(c). 

‘‘(c) DEFINITIONS.— 

‘‘(1) PREDOMINANTLY BLACK INSTITUTION.—The term ‘Predominantly Black institution’ means an institution of higher education that— 

‘‘(A) has an enrollment of needy undergraduate students as required and 

defined by paragraph (2); 

‘‘(B) has an average educational and general expenditure which is low, 

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erage educational and general expenditure per full-time equivalent undergraduate student of institutions that offer similar instruction, except that 

the Secretary may apply the waiver requirements described in section 

392(b) to this subparagraph in the same manner as the Secretary applies 

the waiver requirements to section 312(b)(1)(B); 

‘‘(C) has an enrollment of undergraduate students— 

‘‘(i) that is at least 40 percent Black American students; 

‘‘(ii) that is at least 1,000 undergraduate students; 

‘‘(iii) of which not less than 50 percent of the undergraduate students 

enrolled at the institution are low-income individuals or first-generation college students (as that term is defined in section 402A(g)); and 

‘‘(iv) of which not less than 50 percent of the undergraduate students 

are enrolled in an educational program leading to a bachelor’s or associate’s degree that the institution is licensed to award by the State in 

which it is located; 

‘‘(D) is legally authorized to provide, and provides within the State, an 

educational program for which the institution of higher education awards 

a bachelors degree, or in the case of a junior or community college, an associate’s degree; 

‘‘(E) is accredited by a nationally recognized accrediting agency or association determined by the Secretary to be a reliable authority as to the 

quality of training offered, or is, according to such an agency or association, 

making reasonable progress toward accreditation; and 

‘‘(F) is not receiving assistance under part B of title III. 

‘‘(2) ENROLLMENT OF NEEDY STUDENTS.—The term ‘enrollment of needy students’ means the enrollment at an eligible institution with respect to which not 

less than 50 percent of the undergraduate students enrolled in an academic program leading to a degree— 

‘‘(A) in the second fiscal year preceding the fiscal year for which the determination is made, were Federal Pell Grant recipients for such year; 

‘‘(B) come from families that receive benefits under a means-tested Federal benefits program (as defined in paragraph (4)); 

‘‘(C) attended a public or nonprofit private secondary school— 

‘‘(i) that is in the school district of a local educational agency that 

was eligible for assistance under part A of title I of the Elementary and 

Secondary Education Act of 1965 for any year during which the student 

attended such secondary school; and 

‘‘(ii) which for the purpose of this paragraph and for that year was 

determined by the Secretary (pursuant to regulations and after consultation with the State educational agency of the State in which the 

school is located) to be a school in which the enrollment of children 

counted under section 1113(a)(5) of such Act exceeds 30 percent of the 

total enrollment of such school; or 

‘‘(D) are first-generation college students (as that term is defined in section 402A(g)), and a majority of such first-generation college students are 

low-income individuals. 

‘‘(3) LOW-INCOME INDIVIDUAL.—The term ‘low-income individual’ has the 

meaning given such term in section 402A(g). 

‘‘(4) MEANS-TESTED FEDERAL BENEFIT PROGRAM.—The term ‘means-tested Federal benefit program’ means a program of the Federal Government, other than 

a program under title IV, in which eligibility for the programs’ benefits, or the 

amount of such benefits, or both, are determined on the basis of income or resources of the individual or family seeking the benefit. 

‘‘(5) ASIAN AMERICAN AND PACIFIC ISLANDER-SERVING INSTITUTION.—The term 

‘Asian American and Pacific Islander-serving institution’ means an institution 

of higher education that— 

‘‘(A) is an eligible institution under section 312(b); and 

‘‘(B) at the time of application, has an enrollment of undergraduate students that is at least 10 percent Asian American and Pacific Islander students from subgroups with low levels of college degree attainment. 

‘‘(6) ASIAN AMERICAN.—The term ‘Asian American’ has the meaning given the 

term ‘Asian’ in the Office of Management and Budget’s Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity as published on October 30, 1997 (62 Fed. Reg. 58789). 

‘‘(7) PACIFIC ISLANDER.—The term ‘Pacific Islander’ has the meaning given the 

term ‘Native Hawaiian’ or ‘Other Pacific Islander’ in such Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity. 

‘‘(8) LOW LEVELS OF COLLEGE DEGREE ATTAINMENT.—The term ‘low levels of 

college degree attainment’ mean college degree attainment that is less than 20 


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percent for adults ages 25 through 29 as reported by the National Center for 

Educational Statistics. 

‘‘(d) TERMINATION OF AUTHORITY.—The authority to carry out this section expires 

at the end of fiscal year 2012.’’. 

PART B—COLLEGE ACCESS CHALLENGE GRANTS 

SEC. 411. COLLEGE ACCESS CHALLENGE GRANTS. 

(a) CHALLENGE GRANT PROGRAM ESTABLISHED.— (1) PROGRAM ESTABLISHED.—The Secretary shall establish a program to 

award matching grants 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 institutionbased 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 the 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 with which the philanthropic organization is associated; 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 sysVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00032 Fmt 6659 Sfmt 6621 E:\HR\OC\HR210.XXX HR210

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tem 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 

to 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) conduct 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 (which may include assisting students 

and families with filling out FAFSA forms), 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 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 or service that was provided to eligible students over the 

course of the year; 

(2) the cost of providing each such activity or service; 

(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 of the Higher Education Act of 1965) or a 

comparable alternative based upon the State’s approved criteria in 

section 415C(b)(4) of such Act. 


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(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 

(d)) 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. 

PART C—UPWARD BOUND 

SEC. 412. UPWARD BOUND. 

(a) ABSOLUTE PRIORITY PROHIBITED IN UPWARD BOUND PROGRAM.—Section 402C 

(20 U.S.C. 1070a-13) is amended by adding at the end the following new subsection: 

‘‘(f) ABSOLUTE PRIORITY PROHIBITED IN UPWARD BOUND PROGRAM.—Except as otherwise expressly provided by amendment to this section, the Secretary shall not implement or enforce, and shall rescind, the absolute priority for Upward Bound Program participant selection and evaluation published by the Department of Education in the Federal Register on September 22, 2006 (71 Fed. Reg. 55447 et seq.).’’. 

(b) ADDITIONAL FUNDS.—Section 402C is further amended by adding after subsection (f) (as added by subsection (a)) the following new subsection: 

‘‘(g) ADDITIONAL FUNDS.— 

‘‘(1) AUTHORIZATION AND APPROPRIATION.—There are authorized to be appropriated, and there are appropriated to the Secretary, from funds not otherwise 

appropriated, $30,000,000 for each of the fiscal years 2008 through 2011 to 

carry out paragraph (2), except that any amounts that remain unexpended for 

such purpose for each of such fiscal years may be available for technical assistance and administration costs for the Upward Bound program. 

‘‘(2) USE OF FUNDS.—The amounts made available by paragraph (1) shall be 

available to provide assistance to all Upward Bound projects that received assistance in fiscal year 2006 but that did not receive assistance in fiscal year 

2007 (other than new applicants) with a grant score above 70. Such assistance 

shall be made available in the form of 4-year grants.’’. 


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TITLE V—ADDITIONAL PROVISIONS 

SEC. 501. INDEPENDENT EVALUATION OF DISTANCE EDUCATION PROGRAMS. 

(a) INDEPENDENT EVALUATION.—The Secretary of Education shall enter into an 

agreement with the National Academy of Sciences to conduct a scientifically correct 

and statistically valid evaluation of the quality of distance education programs, as 

compared to campus-based education programs, at institutions of higher education. 

Such evaluation shall include— 

(1) identification of the elements by which the quality of distance education, 

as compared to campus-based education, can be assessed, including elements 

such as subject matter, interactivity, and student outcomes; 

(2) identification of distance and campus-based education program success, 

with respect to student achievement, in relation to the mission of the institution 

of higher education; and 

(3) identification of the types of students (including classification of types of 

students based on student age) who most benefit from distance education programs, the types of students who most benefit from campus-based education 

programs, and the types of students who do not benefit from distance education 

programs, by assessing elements including access to higher education, job placement rates, undergraduate graduation rates, and graduate and professional degree attainment rates. 

(b) SCOPE.—The National Academy of Sciences shall select for participation in the 

evaluation under subsection (a) a diverse group of institutions of higher education 

with respect to size, mission, and geographic distribution. 

(c) INTERIM AND FINAL REPORTS.—The agreement under subsection (a) shall require that the National Academy of Sciences submit to the Secretary of Education, 

the Committee on Health, Education, Labor and Pensions of the Senate, and the 

Committee on Education and Labor of the House of Representatives— 

(1) an interim report regarding the evaluation under subsection (a) not later 

than December 31, 2007; and 

(2) a final report regarding such evaluation not later than December 31, 2009. 

(d) APPROPRIATIONS.—There shall be available to the Secretary, from funds not 

otherwise appropriated, $100,000 to carry out this section. 

SEC. 502. ENCOURAGING COLLEGES AND UNIVERSITIES TO ‘‘GO GREEN’’. 

(a) FINDINGS.—The Committee on Education and Labor of the House of Representatives makes the following findings: 

(1) A commitment to and academic programs for environmental and economic 

sustainability are essential for our Nation’s future prosperity. 

(2) The more than 4,200 higher education institutions in the United States 

have the capacity to innovatively leverage spending and change consumption 

patterns by incorporating concepts of sustainability into their academic programs and by modeling sustainable economic and environmental practices for 

their communities. 

(3) Many colleges and universities have interdisciplinary programs or centers 

focusing on equipping students with the academic content knowledge needed to 

understand concepts of sustainability and ‘‘going green’’. 

(4) Many colleges and universities have programs related to the research of 

sustainability and sustainable systems. 

(5) Academic programs related to sustainability vary in rigor because no national education content standards for academic sustainability programs currently exist. 

(6) Colleges and universities may partner with businesses to encourage students and faculty to translate academic learning and research into practical solutions that promote sustainability. 

(7) Colleges and universities that make an effort to reduce energy consumption and promote environmental sustainability not only reduce their own emissions, but also motivate the leaders of the next generation to action and create 

technical skills and resources to develop innovative solutions. 

(8) Many colleges and universities have undertaken detailed, campus-wide assessments of their progress toward ‘‘going green’’ and sustainability or have 

measured their progress in specific sectors, such as operations, or specific parameters, such as recycling, energy, and water consumption. 

(9) No system that evaluates and compares college and university campuses 

in terms of overall sustainability-related academic programs and practices currently exists. 

(b) SENSE OF THE COMMITTEE ON EDUCATION AND LABOR.—It is the sense of the 

Committee on Education and Labor that in order to encourage increased public 


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awareness of the need to ‘‘go green’’ by using sustainable economic and environmental practices and rigorous sustainability academic programs on college and university campuses, the following should be encouraged: 

(1) The development of educational standards by institutions of higher education to determine the necessary rigor and effectiveness of academic sustainability programs. 

(2) Public awareness of the need for ‘‘going green’’ by using sustainable economic and environmental practices. 

(3) Non-governmental efforts to improve economic and environmental sustainability efforts on college and university campuses, including holding national 

summits to share best practices. 

(4) Collaborative partnerships between Federal agencies, businesses, universities and communities to broaden sustainability practices. 

I. PURPOSE

The purpose of H.R. 2669, the ‘‘College Cost Reduction Act of 

2007,’’ is to provide for reconciliation pursuant to section 601 of the 

concurrent resolution on the budget for fiscal year 2008. 

II. COMMITTEE ACTION

110TH CONGRESS

Introduction of the College Cost Reduction Act 

On Tuesday, June 12, 2007, Representatives George Miller (D– 

CA) and Rube ́n Hinojosa (D–TX) introduced H.R. 2669, the College 

Cost Reduction Act of 2007, a bill to provide for reconciliation pursuant to section 601 of the concurrent resolution on the budget for 

fiscal year 2008. 

Full Committee markup of H.R. 2669 

On Wednesday, June 13, 2007, the Committee on Education and 

Labor considered H.R. 2669 in legislative session, and reported the 

bill favorably, as amended, to the House of Representatives. The 

rollcall vote was 30–16. Chairman Miller offered an amendment in 

the nature of a substitute. 

The amendment in the nature of a substitute contained minor 

technical changes and the following additions to H.R. 2669: 

• Extends a fee elimination provided for small lenders in H.R. 

2669 to non-profit lenders, in support of their unique mission, by 

eliminating the current lender-paid origination fee of 0.5%. 

• Provides mandatory financial support of $500 million, to Historically Black Colleges and Universities (HBCUs), and HispanicServing Institutions (HSIs), Tribal Colleges and Universities 

(TCUs), Alaska/Hawaiian Native Institutions and newly defined 

Predominately Black Institutions (PBIs) and institutions serving 

Asian American and Pacific Islanders. 

• Clarifies that students attending institutions that measure 

academic years by quarters or the equivalent are able to participate in the Year Round Pell Grant program on the same basis as 

students attending institutions that measure academic years by semesters. 

• Makes students attending either a non-profit or a for-profit institution eligible to receive TEACH grants. 

• Allows the Secretary of Education to issue waivers to states 

that experience a fiscal crisis exempting them from certain requirements with respect to demonstrating their commitment to higher 

education funding. 


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• Replaces the Consumer Price Index in Section 202, with the 

Higher Education Price Index referenced in Section 203 of the bill. 

• Strikes the Quality Efficiency Task Forces in Section 202 of 

the bill. 

• Narrows the definition of a ‘‘public sector’’ employee in Section 

131 by targeting resources to those serving in areas of national 

need by deleting ‘‘government’’ while keeping the remainder of the 

listed categories: public safety (including first responders, firefighters, police officers, or other law enforcement or public safety 

officers), emergency management (including emergency medical 

technicians), public health and public interest legal services (including prosecutors and public defenders). 

The Committee adopted the following amendments: 

1. An amendment offered by Mr. Bishop (NY) and Mr. Altmire 

(PA), adopted by voice vote. The amendment provides $500 million 

in Federal capital contributions for the Perkins Loan Program for 

fiscal years 2008–2012. 

2. An amendment offered by Mr. Yarmuth (KY) and Mr. Tierney 

(MA) adopted by voice vote. The amendment changes the $5,000 

loan-forgiveness program to provide $1,000 per year of loan forgiveness for up to 5 years, rather than $5,000 of loan forgiveness after 

5 years of service. 

3. Amendments offered en bloc by Mr. Ehlers (MI) adopted by 

voice vote. The amendments call for a study by the National Academy of Sciences of the quality of distance education programs and 

encourage institutions to adopt and promote sustainable economic 

and environmental practices and rigorous sustainability academic 

programs. 

4. An amendment by Mrs. Susan Davis (CA) adopted by voice 

vote. The amendment allows veterans who were enrolled in or left 

college within six months of deployment, to receive extended repayment on loan terms of up to 13 months upon return from active 

duty. 

5. Amendments offered en bloc by Mr. Petri (WI) adopted by 

voice vote. One amendment proposes a study for the purpose of designing an income contingent repayment plan using the IRS’ income tax withholding system. The second amendment proposes a 

study to identify and select an auction-based mechanism of setting 

student loan lender yields under the FFEL program and to pilot 

and evaluate the use of such a mechanism. 

6. An amendment offered by Mr. Scott (VA) adopted by voice 

vote. The amendment restores Upward Bound funding to unfunded 

programs from the FY07 competition. 

7. An amendment offered by Mr. Loebsack (IA) adopted by voice 

vote. The amendment allows part-time students and students in 

certificate programs to participate in the Year Round Pell Grant 

program. 

8. An amendment offered by Mr. Grijalva (AZ) adopted by voice 

vote. The amendment expands the definition of an eligible student 

for Academic Competitiveness grants to include legal permanent 

residents, part-time students, and students in certificate programs. 

9. An amendment offered by Mr. Scott (VA) adopted by voice 

vote. The amendment restricts the Secretary’s use of funds for the 

purpose of evaluating the Upward Bound program and applying a 


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new ‘‘absolute priority’’ for student eligibility to future competitions. 

10. An amendment offered by Mr. Courtney (CT), Ms. Shea-Porter (NH), and Mr. Danny Davis (IL) adopted by voice vote. The 

amendment provides an additional increase of $100 for Pell Grants 

to the first year, bringing the total available in the 2008–2009 academic year to $200, and bringing the total available in the 2011– 

2012 academic year to $500. 

The Committee rejected four amendments by rollcall vote. 

III. SUMMARY OF THE BILL

PURPOSE

The purpose of H.R. 2669, the College Cost Reduction Act of 

2007, is to provide for reconciliation pursuant to section 601 of the 

concurrent resolution on the budget for fiscal year 2008, and to ensure access to and success in higher education by making college 

more affordable. 

FUNDING

Under the Concurrent Resolution on the Budget for Fiscal Year 

2008, the Committee on Education and Labor was instructed to report reconciliation provisions sufficient to reduce the deficit by 

$750 million for the period of fiscal years 2007 through 2012. The 

College Cost Reduction Act of 2007achieves nearly $19 billion in 

savings by cutting excess subsidies paid by the federal government 

to lenders in the student loan industry. The bill invests approximately $18.25 billion in students and families to assist them in accessing, attending, and financing college. Moreover, the bill provides $750 million in deficit reduction to meet the obligation under 

the instructions by the Budget Committee. 

INCREASED FUNDING AND SUPPORT FOR PELL GRANT SCHOLARSHIPS

The College Cost Reduction Act of 2007 provides an extra $500 

Pell Grant, using mandatory funds, phased in over four years that 

would be added to the appropriated amount. With the current appropriated amount of $4,700, announced by Chairman Obey on 

June 7, 2007, students are guaranteed at least $4,900 and up to 

$5,200 by 2011. 

This legislation also eliminates the tuition sensitivity provisions 

that unfairly penalize students attending low-cost tuition institutions. 

H.R. 2669 establishes a year-round Pell Grant program, and increases the Income Protection Allowance for dependent and independent students. 

In addition to changing the Income Protection Allowance, the legislation also amends the needs analysis formula to increase the 

‘‘auto-zero’’ family contribution from the current $20,000 level to 

$30,000. 

INTEREST RATE CUTS FOR SUBSIDIZED STUDENT LOANS

The legislation includes the provision from H.R. 5, the College 

Student Relief Act, to cut interest rates in half for undergraduate 

students with subsidized student loans—those in most financial 


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need—over the next five years. This provision alone will save a student with $13,800 in subsidized loan debt approximately $4,400 

over the life of her loan. 

INCREASED LOAN LIMITS AND PROGRAMS TO MANAGE STUDENT LOAN

DEBT

In addition to cutting interest rates in half, the College Cost Reduction Act will also increase the borrowing limits for third and 

fourth year students to $7,500, and increase the aggregate borrowing limit for undergraduates to $30,500 and for graduates to 

$65,500. 

Included in this legislation is an Income-Based Repayment proposal, which builds on the tenets of the Federal Direct Loan Program’s Income Contingent Repayment program by guaranteeing 

that borrowers will not have to pay more than 15% of their discretionary adjusted gross income in student loan repayments. 

PROMOTING PUBLIC SERVICE THROUGH LOAN FORGIVENESS

This bill includes language to provide complete loan forgiveness 

for public sector employees after 10 years of service. 

In keeping with alleviating student loan debt, the College Cost 

Reduction Act also includes $5,000 in loan forgiveness for those 

serving the country in critical areas including first responders, law 

enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, nurses, librarians and other public 

sector employees. For each year of service, $1,000 of the borrowers’ 

loans will be forgiven, up to a total of $5,000. 

CONTAINING COLLEGE COSTS

With college tuition skyrocketing, the bill includes several provisions to address college costs. Specifically, the legislation includes 

a provision to ensure that states maintain their commitments to 

helping students and families pay for college. States are discouraged from reducing funding for higher education as family and federal support increases. 

This legislation offers incentives, in the form of additional mandatory Pell Grant funds for schools that keep their annual net tuition increases at a rate equal to, or below, the increases in the 

Higher Education Price Index (HEPI) for a given academic year. 

The bill also includes provisions that will ensure the redesign of 

the existing U.S. Department of Education College Opportunity 

Online Locator (COOL) website, making it easier to use for parents 

and students while not adding burdensome reporting requirements 

for colleges and universities. 

Additionally, the bill establishes grants called ‘‘Cooperative Education Rewards’’ for institutions or consortia of institutions that 

provide students with both academic and work experiences in order 

to prepare them for their future careers and to help students support themselves financially while in school. 

ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM

H.R. 2669 makes historic investments to ensure that we place a 

highly qualified teacher in every classroom through the creation of 

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ance of $4,000/year (with a maximum of $16,000) for high-achieving graduate and undergraduate students who commit to teaching 

a high-need subject in a high-need school for four years. 

This provision meets one of the goals outlined in the House 

Democrats Innovation Agenda introduced in the last Congress to 

ensure highly qualified teachers are well trained and prepared to 

teach in the fields of math, science, and technology. 

The bill also establishes Centers of Excellence to provide funds 

to Minority Serving Institutions to help recruit and prepare teachers and to expand opportunities for Americans of all educational, 

ethnic, class, and geographic backgrounds to become highly qualified teachers. 

INVESTING IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES, 

HISPANIC SERVING INSTITUTIONS AND MINORITY SERVING INSTITUTIONS

H.R. 2669 makes a deliberate and landmark investment of $500 

million in HBCUs, HSIs, PBIs, TCUs, Alaska Native and Native 

Hawaiian institutions, and institutions serving Asian Americans 

and Pacific Islanders to ensure that students attending these institutions will not only enter college, but remain and graduate. 

PROMOTING PUBLIC-PRIVATE PARTNERSHIPS TO PROVIDE

SCHOLARSHIPS FOR COLLEGE

This legislation establishes the College Access Challenge Grants 

which will leverage federal funds to increase the number of students from underserved populations who enter and complete college 

through matching grants to philanthropic organizations. The federal government will provide a 2 to 1 match for private and other 

public funds for these purposes. 

IDENTIFYING INEFFICIENCIES IN THE STUDENT LOAN SUBSIDIES

The bill is fully paid for with cuts to excess lender subsidies and 

builds on the proposals contained in both H.R. 5 and the President’s fiscal year 2008 budget. 

• Four of the six offsets have already been approved by the 

House this year, when it overwhelmingly voted to pass the College 

Student Relief Act of 2007 (H.R. 5) in January. 

• Four of the six offsets have been proposed in the President’s 

fiscal year 2008 budget. 

Decrease lender Special Allowance Payment (SAP) rate by 0.55 

percentage point: The Special Allowance Payment is the subsidy 

paid to lenders over and above their cost of money. Currently, the 

SAP is 2.34 percentage points (234 basis points). The College Cost 

Reduction Act includes a 0.55 percentage point (or 55 basis point) 

reduction in the SAP payment. 

In his FY 2008 budget, President Bush proposed decreasing the 

SAP rate by 50 basis points. 

Lower lender insurance rates from 97% to 95%: When a student 

or parent defaults on a loan, the government pays the lender this 

share of the owed funds. 

The House passed this offset as part of H.R. 5 and it was also 

proposed in the President’s FY 2008 budget. The Education Department estimates that approximately 5% of loans default. 


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Eliminate ‘‘Exceptional Performer’’ lender status: Lenders may be 

designated on an annual basis as ‘‘exceptional performers’’ by the 

Secretary of Education if they are in substantial compliance with 

loan servicing or ‘‘due diligence’’ requirements. This status is nothing more than a reward to lenders for merely doing their job, rather than for engaging in any exceptional activity. Lenders designated as ‘‘exceptional performers’’ receive a two-percentage-point 

higher insurance rate. 

The House passed this offset as part of H.R. 5. 

Increase for-profit lender origination fees from 0.5% to 1% and 

eliminate fees for small and non-profit lenders: Lenders are currently charged a fee of 0.5% on all new loans to partially offset the 

federal cost of administering the FFEL program. 

The House passed a similar offset in H.R. 5. The President proposed a similar provision in his FY 2008 budget. 

Lower guaranty agency collection fees to 16%: Guaranty agencies 

now retain 23% of the funds they collect from defaulted loans, partly to cover the cost of collection. But guaranty agencies’ collection 

methods have become more efficient, thus reducing collection costs. 

The Education Department projects that these efficiencies will continue to increase. The Department pays only 16% of amounts collected by its private sector contractors in the Direct Loan program. 

The President proposed this offset in his FY 2008 budget. A provision to lower the collection fees to 16% by 2010 was passed by 

the House as part of H.R. 5. 

Change the guaranty account maintenance fee: Guaranty agencies 

are paid a fee based on the original principal amount of active 

loans they have guaranteed. This bill shifts this fee so that it is 

tied to the number of accounts lenders have—which more accurately reflects guarantors’ costs. 

The President proposed this change in his FY 2008 budget request. 

IV. COMMITTEE VIEWS

The Congress and the public have long recognized higher education as key to promoting economic opportunity for all Americans. 

In 1944, the GI Bill provided educational benefits to World War II 

veterans. In 1965, Congress established the foundation of the federal student aid system with the passage of the Higher Education 

Act. In 1972, the Pell Grant program was created to provide grants 

for low-income students to attend college. The Committee’s action 

on H.R. 2669, the College Cost Reduction Act, continues this historic trend by investing where it counts, with our nation’s students 

and their families. 

The Committee strongly believes that federal higher education 

policy should focus on the holistic picture of college readiness, access, success, and completion. Therefore, policies and investments 

should not only be directed to ensure that students can afford college tuition, but investments—like many of those passed in H.R. 

2669—should also ensure that all qualified students, regardless of 

their background, be prepared for college, have the appropriate information about and access to higher education and support services, and graduate to achieve their goals. 

As America moves to a more knowledge-based economy, a college 

degree is becoming more essential than ever for basic entry-level 


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1Donna Desrochers, Higher Education’s Contribution to the Knowledge Economy, Solutions 

for Our Future Project. Accessed June 20, 2006 at www.solutionsforourfuture.org/site/ 

DocServer/08.Knowledge-Economy.pdf?docID=103. 2Trends in Student Aid, The College Board, 2006. 

3 IBID 

4 National Conference of State Legislatures, http://www.ncsl.org/programs/press/2005/ 

pr050428.htm 5 National Center for Education Statistics (NCES), National Postsecondary Student Aid Study 

(NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS); calculations by the 

Project on Student Debt. 6 Advisory Committee on Student Financial Assistance, ‘‘Mortgaging Our Future: How Financial Barriers to College Undercut America’s Global Competitiveness,’’ September 2006. 

jobs,1 as well as for our country to remain competitive on a global 

scale. The Committee believes that a college education is as important today as a high school diploma was a generation ago. Yet, students and families are faced with the challenge of paying for college. Over the past five years, tuition and fees at public colleges 

and universities have increased by 35 percent, and those at the private universities have increased by 11 percent.2

Furthermore, need-based grant aid and other forms of federal 

and state support have been unable to keep pace with the increase 

in college tuition prices. Currently grants only make up 48 percent 

of all student aid.3 Recognizing these challenges, the goal of helping every qualified student go to college should remain the focus. 

Despite the growing importance of higher education, many state 

governments have cut funding for colleges and universities over the 

past decade.4 The failure of states to provide adequate support for 

higher education is compounded by the significant lack of increases 

in federal grant aid, resulting in students taking out larger loans 

to pay for college. More than two-thirds of students now borrow to 

pay for college, and their average debt more than doubled between 

1993 and 2004.5

Debt, and the aversion to accumulating debt, is severely impacting a student’s ability to enter, continue, and complete higher education and to make long-range decisions about jobs after college. 

According to the Federal Advisory Committee on Student Financial 

Assistance (ACSFA), limited financial aid and declining affordability is already prohibiting hundreds of thousands of collegequalified high school graduates from attending a four-year institution. Further, over 40 percent of those students will not enter postsecondary education at all.6

INCREASING THE PURCHASING POWER OF THE PELL GRANT

SCHOLARSHIP

The Committee believes boosting the nation’s investment in the 

Pell Grant program is essential to ensuring access and making college more affordable for students and families. Research indicates 

that investment in need-based grant aid is the best and most important contribution that the federal government can make to 

keeping the dream of a college education a reality for all Americans. However, over the last several years, the purchasing power 

of the Pell Grant has declined. Today, the maximum Pell Grant 

covers only one third of the average price of attendance at a public 

four-year institution compared to more than two-thirds in 1980. 

The Pell Grant has recently received a significant boost of support since the beginning of the 110th Congress. In February, the 

Appropriations Committee, led by Chairman Obey, increased the 


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maximum Pell Grant by $260, from $4,050 to $4,310. This increase 

was the first to be signed into law since 2003, when it was raised 

by $50. At the beginning of June, Chairman Obey proposed an additional increase to the Pell Grant for the FY 2008 appropriations 

bill, which could bring the maximum Pell Grant to $4,700. 

Following suit with these investments in the Pell Grant program, 

the Committee believes a greater and sustainable commitment 

should be made to the Pell Grant through mandatory funding. To 

that end, H.R. 2669 increases the maximum Pell Grant scholarship 

by at least $500 over the next five years, ultimately reaching a 

maximum scholarship of at least $5,200. The Pell Grant increases 

will be phased in with $200 for 2008 and 2009, $300 for 2010, and 

$500 for 2011 and beyond. The Pell Grant increases provided in 

this bill will be added to the existing maximum Pell Grant set by 

the Appropriations Committee. 

The Committee believes it is critical not only to increase the Pell 

Grant maximum award but also to expand eligibility for the grants. 

H.R. 2669 includes changes to the needs analysis formula that is 

used to calculate a student’s financial aid award. Specifically, the 

bill increases the income threshold below which families are automatically qualified for maximum aid. Under current law, this 

threshold is set at $20,000. H.R. 2669 increases the threshold to 

$30,000. H.R. 2669 makes other changes to the needs analysis formula as well, including reducing the amount of students’ earnings 

that are considered in awarding financial aid, and excluding certain income from need determinations, including social security 

and welfare benefits. 

As a result of the increase in the Pell Grant maximum and the 

changes to the needs analysis formula, almost 600,000 additional 

students will become eligible to receive a Pell Grant by 2011. 

STRENGTHENING THE MIDDLE CLASS BY MAKING COLLEGE MORE

AFFORDABLE

Cutting interest rates in half 

In 2006, the House Democrats issued their ‘‘Six in 06’’ agenda, 

which included several higher education proposals aimed at helping the middle class. A central principle of the agenda included cutting student loan interest rates in half. In carrying out that agenda, House Democrats, led by members of this Committee, championed the initiative on the floor of the House. On January 17, 

2007, the House of Representatives overwhelmingly passed H.R. 5 

the College Student Relief Act of 2007 by a roll call vote of 356– 

71. The legislation calls for cutting interest rates in half, to 3.4 percent, on all subsidized student loans over a five year period. This 

provision is included in H.R. 2669. 

Once fully phased in, these interest rate cuts will save the typical borrower, with $13,800 in need-based federal student loan 

debt, $4,400 over the life of the loan. Half of the student-loan borrowers who would benefit under this legislation have family incomes between $26,000 and $68,000, according to the Congressional Research Service; the median family income of borrowers 

was $45,000 in 2003–2004. This is well below the overall U.S. median family income of approximately $54,000, according to the Economic Policy Institute. 


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7Project on Student Debt ‘‘Quick Facts About Student Debt.’’ http://projectonstudentdebt.org/ 

files/File/DebtlFactslandlSourcesl5l4l07.pdf 

Increasing loan limits and protecting student and families from unscrupulous practices in the student loan industry 

While loans are not the preferred method of paying for college, 

they are the reality in today’s world. To assist students and families pay for college, the Committee adopted increases in loan limits. 

In particular, H.R. 2669 increases loan limits for third and fourth 

year students from $5,500 to $7,500. Additionally, the aggregate 

limit increases from the current $23,000 to $30,500 for undergraduates and from $65,500 to $73,000 for graduates. 

The Committee believes that these increases will not only help 

to finance college costs but will allow students and families to rely 

less on costlier private loans. Private loans have received increased 

scrutiny over the last six months in light of reported abuses among 

lenders and financial aid officers, including school officials steering 

students toward certain lenders in exchange for financial or other 

favors. The Committee has strong feelings about this issue and, as 

an initial step, passed H.R. 890, the Student Loan Sunshine Act on 

the floor of the House on May 9, 2007 by a roll call vote of 414– 

3.The Committee expects to further address the abuses in the student loan industry in its consideration of the reauthorization of the 

Higher Education Act during this Congress. 

Managing student debt to keep college within reach 

The Committee believes that loan limits should only be raised in 

tandem with options for students to manage their debt. With students borrowing at record levels, ensuring borrower protections and 

alternative payment options is important. According to the Project 

on Student Debt, ‘‘over the past decade, debt levels for graduating 

seniors with student loans more than doubled from $9,250 to 

$19,200 a 108% increase (58% after accounting for inflation).’’ 7

H.R. 2669 builds on the existing Income Contingent Repayment 

Program offered in the Direct Loan program and extends this option to individuals participating in the FFEL loan program. The Income-Based Repayment proposal guarantees that borrowers will 

not have to pay more than 15 percent of their discretionary income 

in loan repayments, and allows borrowers to have their loans forgiven after 20 years of payments. Payment options such as the Income-Based Repayment proposal serve to expand rather than restrict educational and economic opportunities for graduates who 

would otherwise be unable to afford to work as teachers or social 

workers. 

HELPING STUDENTS ENTER COLLEGE AND SUCCEED

Through H.R. 2669, the Committee has made a deliberate decision to invest not only in much needed federal grant aid and in interest rate reduction, but also in programs and support services 

that assist students to persist through in college to meet their educational goals. With this objective in mind, H.R. 2669 makes historic investments in HBCUs and MSIs; includes funding for Upward Bound; and strengthens campus-based aid programs through 

mandatory funding of the Perkins loan program. Additionally, the 

Committee believes that investments should also be made in buildVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00044 Fmt 6659 Sfmt 6602 E:\HR\OC\HR210.XXX HR210

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ing on the successes of numerous philanthropic organizations, 

many of which have a proven track record in providing support 

services and financial assistance to help students get into and remain in college. 

Making historic new investments in Historically Black Colleges and 

Universities, and Hispanic-Serving Institutions, Tribal Colleges, Alaska and Hawaiian Native, Predominately Black Institutions, and Asian American and Pacific Islanders 

Historically Black Colleges and Universities, Hispanic-Serving 

Institutions, Tribal Colleges, Alaska and Hawaiian Native, Predominately Black Institutions, and institutions serving Asian 

American and Pacific Islanders are critical to the nation’s economic 

and social well-being. As the growth in the nation’s population increasingly reflects the diversity of the students at these institutions, the Committee believes that this mandatory funding is an investment in our future. By educating the nation’s emerging majority populations, these institutions represent the vanguard of the 

country’s potential and promise and should be appropriately supported. 

According to the Institute for Higher Education Policy, approximately 2.3 million students, or about one-third of all African Americans, American Indians/Alaska Natives, and Hispanics in all higher education institutions in the United States and Puerto Rico, 

were enrolled at HBCUs, HSIs, TCUs, Alaska and Hawaiian Native institutions. These numbers have grown rapidly in recent 

years—in fact, enrollment at these institutions accelerated by 66 

percent from 1995 to 2003, compared to only 20 percent at all postsecondary institutions. 

The importance of these unique institutions is underscored by 

the fact that they provide postsecondary educational opportunities 

specifically tailored to students who traditionally have been denied 

access to adequately funded elementary and secondary schools, especially low-income, educationally disadvantaged students. Additionally, a high proportion of students attending these institutions 

are the first in their family to attend college. In 2003–2004, 43 percent of students attending an HBCU or HSI were first-generation 

students, compared to 35 percent of students enrolled at all institutions. 

For far too long, little attention and only nominal investments 

have been directed to institutions funded under Title III and Title 

V of the Higher Education Act. Given the years of neglect and lack 

of support, the Committee believes that H.R. 2669 offers an opportunity to help these institutions carry out their missions to assist 

students to meet their educational goals. 

Promoting persistence through support of Upward Bound 

In order to successfully complete college, students need to be adequately prepared both academically and emotionally. The Upward 

Bound program has long provided invaluable academic and nonacademic services to students who would not otherwise receive 

them, specifically, low-income, first-generation students. This program has a broad and significant reach; for example, in 2006, Upward Bound served nearly 60,000 students across the country. As 

one of the longest running programs authorized by the Higher EduVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\HR210.XXX HR210

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8 Institute for Higher Education Policy, ‘‘Private Scholarships Count,’’ May 4, 2005. http:// 

www.ihep.org/organizations.php3?action=printContentItem&orgid=104&typeID=906&itemID=10848&templateID=1418 

cation Act, many Upward Bound programs become the cornerstone 

of a community and each year successfully help students graduate 

from high school and enroll in institutions of higher education. The 

Committee strongly believes in the purposes and intent of the program, including the longevity and continuation of individual programs. To this end, H.R. 2669 provides funding to reinstate programs that lost their funding in the fiscal year 2007 competition 

so that students, and the communities in which they live, will continue to be served. 

Helping students pay for college through support of the Perkins 

Loan Program 

The Perkins Loan Program, created by Congress in 1958, started 

as our country’s first federally supported student loan program. 

Throughout the history of the Perkins Loan Program, $7.9 billion 

in federal contributions has been leveraged to award over $28.8 billion in loans to students through almost 26 million aid awards 

making it one of the most effective public-private partnerships in 

the federal government. 

Perkins Loans offer long-term, low-interest rate loans targeted to 

students with exceptional need. More than 500,000 students received a Perkins Loan last academic year to help pay for their education. Given that Perkins loans are designed to fill in the need 

gaps of low-and moderate-income students, the Committee believes 

that without mandatory funding of this program, students will be 

forced to borrow from high-cost alternative sources, such as private 

education loans. 

Building support for student retention and financing of college 

through philanthropic participation 

While government-sponsored grants and loans make up a significant part of the financing for higher education for students and 

families, the private sector has demonstrated a commitment to the 

goal of ensuring that students have financial support to attend college. A 2005 Institute for Higher Education Policy study found that 

at least $3 billion per year is awarded through private scholarship 

programs. Further, the study found that employer-provided education assistance to employees and their dependents totals several 

billion dollars more.8

The Committee believes that the contributions of the private sector should be better recognized and supported through efforts such 

as the College Access Challenge Grants, established in H.R. 2669. 

The legislation specifically promotes partnerships with federal, 

state and local government entities and philanthropic organizations 

by establishing matching challenge grants aimed at increasing the 

number of first generation and low-income students to attend college. 

The Committee expects that the program will spur new interest 

in the private sector to initiate partnerships, while rewarding those 

organizations that have participated in such efforts for some time. 

The College Access Challenge Grants are not intended or designed 

to supplant the federal government’s role in providing financial 


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9Dennis Jones, ‘‘State Shortfalls Projected to Continue Despite Economic Gains,’’ National 

Center for Public Policy and Higher Education. February, 2006. 

support for students to meet their educational goals. Rather, the 

grants are meant to supplement the efforts of the private sector 

and recognize it as a key partner in working to support students 

and families. 

CONTAINING THE RISING COST OF COLLEGE TUITION

The Committee believes that the issue of rising college tuition 

must be addressed as part of the overall discussion on college affordability and access. While the proposals in H.R. 2669 are not a 

comprehensive response to the challenge of rising college costs, the 

Committee believes these initiatives serve as a marker to begin the 

discussion on this important issue. As such, the Committee intends 

to continue this dialogue among the major stakeholders and together develop a more comprehensive response to skyrocketing tuition at colleges and universities during the reauthorization of the 

Higher Education Act. 

Of particular concern to the Committee is the declining support 

that states have provided to higher education, in particular during 

the recessions a few years ago.9 Over the last few years, higher 

education has had to compete for resources at the state level 

against other major programs including Medicaid and No Child 

Left Behind. With this in mind, the Committee has included a provision mandating that states maintain an adequate level of support 

for higher education to ensure continued funding of the state-federal partnership program LEAP (Leveraging Education Assistance 

Program). 

Understanding the challenges that some states are facing as a 

result of uncontrollable circumstances, such as the closure of major 

economic supports in the state or a natural disaster, H.R. 2669 includes authority to the Secretary to provide an exemption for those 

states that find themselves in such circumstances. 

While the Committee believes that states play a significant role 

in supporting higher education, particularly for public institutions, 

there is a strong belief that initiatives to curtail college costs 

should also include incentives to lower tuition. To this end, H.R. 

2669 includes additional mandatory Pell Grant funds for schools 

that keep their annual net tuition increases at a rate equal to, or 

below, the increase in the Higher Education Price Index (HEPI) for 

that academic year. 

The Committee is particularly interested in providing information to the public on how to best inform themselves about the costs 

at specific institutions. To reach this goal, H.R. 2669 ensures the 

redesign of the existing U.S. Department of Education College Opportunity Online Locator (COOL) website, making it easier for parents and students to use in order to compare schools, while not 

adding burdensome reporting requirements for colleges and universities. 

ENSURING A HIGHLY QUALIFIED TEACHER IN EVERY CLASSROOM

There are not enough qualified teachers in the nation’s classrooms, and an unprecedented number of teachers will retire over 


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the next five years. Over the next decade, the nation will need to 

recruit 2 million new teachers into the public schools. 

Unfortunately, the shortage is compounded by the fact that more 

than one-third of children in grades 7–12 are taught by a teacher 

who lacks both a college major and certification in the subject being 

taught. Rates for ‘‘out of field teaching’’—teachers teaching in fields 

in which they are not certified—are especially high. 

The creation of a ‘‘highly qualified teacher’’ definition in the No 

Child Left Behind Act started the dialogue on defining the qualities 

of a good teacher as well as ways to ensure that individuals can 

meet this threshold. The Committee identifies this issue as a top 

priority and as such offers a step in the direction of paving the way 

for individuals interested in teaching, to ensure they become highly 

qualified and then going a step further, steering them to areas of 

most need. 

H.R. 2669 creates a new TEACH Grants program (modeled after 

the legislation introduced by Chairman Miller, H.R. 2204, the 

Teacher Excellence for All Children Act) that would provide upfront pre-paid tuition assistance of $4,000 per year (with a maximum of $16,000) for high-achieving graduate and undergraduate 

students who commit to teaching a high-need subject in a highneed school for four years. Under this program, at least 21,500 undergraduate and graduate students are expected to receive these 

grants over the next five years. 

To further steer teacher candidates into high quality teacher 

education programs, the bill includes a bonus grant for students to 

receive up to an additional $2,000 to attend institutions with programs that integrate both content and teacher education training 

into their overall program. The bonus grants are modeled after programs such as those offered in the Cal State University system, 

and Cal Teach, a program at U.C. Berkeley, as well as the 

UTEACH program at the University of Texas. All these programs 

have demonstrated that high caliber students can be recruited into 

teaching programs with a specific content focus in areas of high 

need. 

The Committee strongly believes, while not the silver bullet solution to teacher quality, that TEACH Grants will help alleviate the 

challenges of ensuring a highly qualified teacher in every classroom. The issue of teacher quality will continue to be addressed in 

the reauthorization of the Higher Education Act when the Committee considers Title II, which covers pre-service for teacher candidates. The Committee will also consider this issue during the reauthorization of the No Child Left Behind Act, which includes inservice support for teachers already in the classroom. 

ENCOURAGING AND REWARDING PUBLIC SERVICE

As noted earlier, the Committee is concerned with the growing 

number of individuals who do not choose to enter into lower paying 

professions, such as public service, because of growing debt due to 

student loans. Building on the Income-Based proposal mentioned 

above, H.R. 2669 includes loan forgiveness for individuals serving 

the country in professions of national need. These targeted professions include: first responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, librarians, and other public sector employees. The legislaVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00048 Fmt 6659 Sfmt 6602 E:\HR\OC\HR210.XXX HR210

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tion specifically provides for $1,000 of loan forgiveness each year 

for five years—a maximum $5,000, which constitutes just about 

one-third of the average graduating debt—to those students in public service professions. 

To further encourage public service, the legislation includes revisions to the Direct Loan Income Contingent Repayment program. 

Individuals who choose public service will have the option to have 

their loans forgiven after 10 years if payments are made during 

that time period. 

The Committee believes that through increased Pell Grants, programs for better debt management and loan forgiveness, students 

are better able to assemble a package of debt relief to ensure a 

brighter future with less financial burdens. Debt burdens are particularly troublesome for public servants who often earn low salaries for their work. The policies embodied in H.R. 2669 recognize 

the contributions and challenges of public service, and the Committee hopes to encourage participation in these careers. 

CAPTURING EFFICIENCIES IN THE STUDENT LOAN PROGRAMS

In the past few years, student lenders have greatly increased 

their efficiencies through market-driven mechanisms; however, the 

government operation and subsidization of the programs have not 

changed. This imbalance has resulted in greater profits for lenders 

rather than decreased costs for the taxpayers. 

The College Cost Reduction Act reduces approximately $19 Billion over the next five years in excess subsidies paid by the federal 

government to lenders in order to return billions of dollars to students and families. This bill fully meets ‘‘pay-go’’ rules, and returns 

$750 million to deficit reduction. Further, all savings are built on 

proposals passed by the U.S. House of Representatives through 

H.R. 5 and those outlined by the President in his fiscal year 2008 

budget. 

Under the College Cost Reduction Act, the Committee believes 

lenders will still yield a profit, and all savings will be returned to 

students with reduced interest rates on loans, increased grant aid, 

and lower college costs. Further, the Congressional Budget Office 

(CBO) estimates of the College Cost Reduction Act assume continued robust participation in both the FFEL and the Direct Loan 

(DL) student loan programs. 

Current ‘‘borrower benefits’’ fail to help all students 

Often lenders point to auxiliary benefits offered to students as a 

reward for particular repayment behavior. These ‘‘borrower benefits’’ vary by lender and institution. The fine print is often overlooked and for benefits, such as reduced interest rates, students 

frequently must make a series of on-time payments before they can 

reap these particular benefits. 

Even one of the largest lenders has acknowledged that only a 

small percentage of borrowers may ever realize repayment benefits. 

According to the student loan company, ‘‘The bottom line is that 

less than 10 percent of borrowers will earn all the advertised Repayment Benefits as they will either consolidate their loans or miss 


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10http://www.salliemae.com/NR/rdonlyres/6030E40E–BE7A–4268–B253–F417CFB63EB5/0/ 

StraightTalkfromTimFitzpatrickvFINAL022007.pdf 

a scheduled payment sometime during the first several years of repayment.’’10

The College Cost Reduction Act ensures that ALL students can 

benefit from efficiencies achieved in the Federal student loan program. 

Further, legislative action has already limited a number of these 

benefits offered by lenders. For example, borrower origination fees 

are already scheduled to be reduced or eliminated for students by 

2010—currently one of the most common benefits offered by lenders. 

Students will continue to have lender choice 

There are over 3,000 lenders that participate in the FFEL program. If one participating lender leaves, another will take over. Additionally, the Higher Education Act ensures access for all students 

by mandating that the state-designated guaranty agency will provide a loan to any student who is unable to receive a loan from a 

lender (sec. 428j). The bottom line is that all students will continue 

to have access to low-cost federally-backed student loans to pay for 

college. 

Protecting non-profit and ‘‘small’’ lenders 

Under current law, non-profit and small lenders are treated the 

same as for-profit lenders. Recognizing the unique mission of nonprofit lenders, putting all their profits back into students, and the 

role of small lenders in communities across the country, H.R. 2669 

provides for a fee reduction for these two categories of lenders. For 

FY 2008 alone, this translates into $85 million in benefits to small 

and non-profit lenders and nearly $500 million, or half a billion, 

over the next five years. The Committee believes these protections 

will further ensure borrower choice and an active marketplace. 

H.R. 2669 defines ‘‘small’’ lenders as those with portfolios that 

collectively comprise the lower 15% of total FFEL volume, which 

includes 99 percent of lenders participating in the program. 

CONCLUSION

H.R. 2669 represents a historic step forward in our efforts not 

only to help every qualified student go to college, but to persist 

through their college careers, and successfully graduate. No one 

should be denied the opportunity to go to college simply because of 

the price. The Committee believes the College Cost Reduction Act 

will pave the way to putting the American dream back within 

reach of every family in our country. 


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V. SECTION-BY-SECTION ANALYSIS

Title I—Investing in Student Aid 

PART A—INCREASING THE PURCHASING POWER OF THE PELL GRANT

Section 101. Mandatory Pell Grant increases 

The College Cost Reduction Act amends the Higher Education 

Act to include new mandatory funding for the Pell Grant. This is 

additional mandatory funding that is above the appropriated level. 

ADDITIONAL MANDATORY PELL FUNDS 

2008–2009 2009–2010 2010–2011 2011–2012 2012 & beyond 

$200 ....................................................................................... $200 $300 $500 $500 

Coupled with an appropriated maximum, in 2008–2009, the maximum Pell Grant award will be $4,900. By 2011 the maximum Pell 

Grant will be at least $5,200. 

This section also includes language removing the tuition sensitivity provision which will allow low-income students at low cost institutions to fully benefit from the Pell Grant. This provision will 

go into effect immediately upon enactment of the College Cost Reduction Act. 

A year-round Pell Grant program is established in this section. 

This will allow students who attend more than two semesters (or 

quarters or the equivalent) in a calendar year, to continue to receive a Pell Grant. 

Eligibility criteria are amended to include legal permanent residents, part-time students, and students in certificate programs. 

Further the language in this section clarifies the definition of an 

academic year by giving institutions the flexibility to define academic year in order to accommodate institutional schedules. 

Section 102. Support for working students 

This section includes provisions that will increase students’ eligibility for the Pell grant through phased-in increases in the Income 

Protection Allowance for all students. The protected income for unmarried independent students without dependents will be $8,090 

by 2012. For dependent students the protected income will be 

$6,000 by 2012. 

Section 103. Simplified needs test and automatic zero improvements 

This section provides increases in the ‘‘auto-zero’’ from the current $20,000 to $30,000. This change will ensure that students in 

families with incomes below $30,000 will be eligible to receive the 

maximum Pell grant award. 

Further, this section amends the untaxed income and benefits in 

current law. Specifically, the legislation excludes TANF (welfare 

benefits), Earned Income Tax Credits, and Social Security from the 

income calculation in the needs analysis. 

Clarifications are also made to the asset calculation in this section of the bill to ensure that 529 plans are counted as the asset 

of the parent for independent students. 


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Section 104. Definitions 

This section outlines definitions for dislocated workers and 

means-tested federal benefits. 

PART B—MAKING STUDENT LOANS MORE AFFORDABLE

Section 111. Interest rate reductions 

The College Cost Reduction Act will cut interest rates in half for 

undergraduate students with subsidized student loans—those in 

most financial need—over the next five years. The plan will begin 

by cutting interest rates to 6.12% on July 1, 2008, and will continue to decrease rates until they reach 3.4% in 2012. 

CUTTING INTEREST RATES IN HALF: PHASE-IN SCHEDULE 

2008 2009 2010 2011 2012 

6.12 5.44 4.76 4.08 3.40 

NOTE.—All interest rate changes will take place on July 1 of that year 

Section 112. Increasing loan limits and eliminating fees 

The College Cost Reduction Act will increase the borrowing lim- its for third and fourth year students to $7,500 and increase the 

aggregate borrowing limits (new levels in bold). 

STUDENT LOAN LIMITS 

Subsidized Total (subsidized & unsubsidized) 

ANNUAL LIMITS 

DEPENDENT UNDERGRADUATES: 

First-Year Students ......................................................................... $3,500 $3,500 

Second-Year Students .................................................................... 4,500 4,500 

Third-Year Students ........................................................................ (5,500) 7,500 (5,500) 7,500 

Fourth-Year+ Students ................................................................... (5,500) 7,500 (5,500) 7,500 

INDEPENDENT UNDERGRADUATES: 

First-Year Students ......................................................................... 3,500 3,500 

Second-Year Students .................................................................... 4,500 4,500 

Third-Year Students ........................................................................ (5,500) 7,500 (10,500) 12,500 

Fourth-Year+ Students ................................................................... (5,500) 7,500 (10,500) 12,500 

GRADUATE STUDENTS .............................................................................. 8,500 20,500 

AGGREGATE LIMITS 

DEPENDENT UNDERGRADUATES ............................................................... (23,000) 30,500 (23,000) 30,500 

INDEPENDENT UNDERGRADUATES ........................................................... (23,000) 30,500 (46,000) 53,500 

GRADUATE STUDENTS .............................................................................. (65,500) 73,000 (138,500) 156,000 

Section 113. Reduction of Special Allowance Payments 

This section decreases the lender Special Allowance Payments 

(SAP) rate by 0.55 percentage points (or 55 basis points) and equalizes the SAP rate for Stafford and PLUS loans. 

Section 114. Elimination of exceptional performer status for lenders 

This section eliminates the ‘‘exceptional performance’’ designation the Secretary of Education may give to lenders, loan servicers, 

and guaranty agencies if they are in full compliance with due diligence requirements. There are currently 18 ‘‘Exceptional Performers,’’ including four of the five largest lenders. 


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Section 115. Reduction of lender insurance percentage 

Currently, lenders have an insurance rate of 97% which insures 

private lenders from defaulted loans. In the case of default, the 

government will pay the private lender this percentage of the owed 

funds. This section reduces this percentage to 95%. 

Section 116. Guaranty agency collection retention 

Currently, guaranty agencies are allowed to retain 23% of the 

funds they collect from defaulted loans, in part to cover the cost of 

collection. This section reduces the collection rate to 16%, which is 

consistent with the fee paid to those who serve as collection contractors for the Direct Loan program. 

Section 117. Unit costs for account maintenance fees 

Currently guarantors are paid a fee for administrative costs 

based on the original principal amount of active loans they have 

guaranteed. This section shifts this fee so that it is tied to the 

number of accounts lenders have, which more accurately reflects 

the guarantors’ cost. 

Section 118. Increased loan fees from lenders 

Lenders are currently charged a fee of 0.5% on all new loans to 

partially offset the federal cost of administering the FFEL program. 

This section increases this origination fee to 1% for for-profit lenders. The fee is eliminated for non-profit lenders and small lenders, 

defined as those in the lower 15% of volume. 

Section 119. Student loan information 

This section requires lenders and guaranty agencies to provide 

student loan information to institutions of higher education and 

third-party servicers for the purposes of preventing student loan 

defaults. 

Section 120. Market-based determination of lender returns 

This section requires a study by the Secretaries of Education and 

Treasury with the Congressional Budget Office, the Office of Management and Budget, and the General Accounting Office to identify 

and select among the best mechanisms for a loan auction. Based 

on the information from the study, a pilot program shall be implemented by the Secretary of Education using 10% of loan volume 

under Part B and 20% the second year of the pilot study. 

PART C—REWARDING SERVICE IN REPAYMENT

Section 131. Loan forgiveness for service in areas of national need 

The College Cost Reduction Act provides $5,000 in loan forgiveness for those serving the country in critical areas, including first 

responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, and librarians. 

This section makes $1,000 available for each year up to $5000. 


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Section 132. Income-Contingent Repayment for public service employees 

This section amends the current Income-Contingent Repayment 

program in the Direct Loan program and provides complete loan 

forgiveness for public sector employees after 10 years of service. 

Section 133. Income-based repayment 

The College Cost Reduction Act builds on the tenants of the Income Contingent Repayment program (currently not an option in 

the FFEL program) by guaranteeing that borrowers will not pay 

more than 15% of their adjusted gross income in student loan repayments. Under this section, unpaid interest and principal are 

capitalized. 

Section 134. Definition of economic hardship 

This section redefines the eligibility for economic hardship to 

150% of the poverty line applicable to the borrower’s family size. 

Section 135. Deferrals 

This section amends the appropriate parts of the law to eliminate 

the 3 year time restriction for deferrals. 

Section 136. Maximum repayment period 

This section amends the maximum repayment period in the income-contingent repayment program. 

Section 137. Deferral of loan repayment following active duty 

This section allows veterans who were enrolled in or left college 

within six months of deployment, to receive extended repayment on 

loan terms of up to 13 months upon return from active duty. 

Section 138. Sense of the Congress 

This section declares the Sense of Congress that the Secretary of 

Education and Treasury work together with the Government Accountability Office to develop a process to pay for loans using income tax withholdings. 

PART D—SUSTAINING THE PERKINS LOAN PROGRAM

Section 141. Federal Perkins Loans 

This section provides $500 million for the Perkins Loan Federal 

Contribution program for fiscal years 2008–2012. 

Title II—Reducing the Cost of College 

Section 201. State commitment to affordable college education 

This bill mandates that states maintain their own level of college 

financing—to ensure that they fulfill their end of the bargain to 

make a quality college education affordable to all students and constrain tuition hikes. Under this section, states risk losing their 

LEAP funds (Leveraging Educational Assistance Partnership), if 

they fail to meet this state maintenance of effort. 

This section also provides a waiver for states that may have 

specified challenges in maintaining support for higher education. 


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Section 202. Consumer information and public accountability in 

higher education 

The College Cost Reduction Act will redesign the existing U.S. 

Department of Education College Opportunity Online Locator 

(COOL) website (http://nces.ed.gov/ipeds/cool), making it easier for 

parents and students to use, while not imposing burdensome reporting requirements on colleges and universities. 

Included on the COOL website will be user-friendly College Consumer Profiles that will give parents and students access to more 

information about colleges and universities than ever before. The 

information will include: • ‘‘Sticker price’’ for a school over a three year time period; • ‘‘Net tuition price’’ (average costs minus average grants) 

over that same time period; • Percentage change in both over that same time period; and • Percentage change in the Higher Education Price Index 

(HEPI) over that same time period. 

Any school that raises its tuition at twice the rate of the HEPI 

will be required to provide students and parents a description of 

the factors necessitating the increase. 

Section 203. Incentives and rewards for low tuition 

This bill, through ‘‘Incentives and Rewards for Low Tuition,’’ will 

allow for additional mandatory need-based grant aid to schools that 

keep their annual net tuition increases at a rate equal to, or below, 

the increase in the Higher Education Price Index (HEPI) for that 

academic year and to institutions that guarantee their tuition. 

Section 204. Cooperative education 

This section creates Cooperative Education Rewards for institutions or consortia of institutions that provide students with both 

academic and work experiences to prepare them for their careers 

and that help students support themselves financially while in 

school. Grant funds will be used to increase the quality and availability of such programs and to provide outreach to underserved 

populations. 

Title III—Ensuring a Highly Qualified Teacher in Every Classroom 

PART A—TEACH GRANTS

Section 301. TEACH grants 

This section creates new TEACH Grants that provide up-front pre-paid tuition assistance of $4,000/year (with a maximum of 

$16,000) for high-achieving graduate and undergraduate students 

who commit to teaching a high-need subject in a high-need school 

for four years. Bonus grants are provided to students who are enrolled in a qualified teacher education program. 

PART B—CENTERS OF EXCELLENCE

Section 311. Centers of Excellence 

This section establishes the Centers of Excellence which will provide funds to minority serving institutions to help recruit and prepare teachers and to increase opportunities for Americans of all 

educational, ethnic, class, and geographic backgrounds to become 


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highly qualified teachers. Funds will be used to strengthen teacher 

preparation programs by implementing reforms, using advanced 

technology, and retraining faculty. Further, the Centers of Excellence will provide programs with sustained and high-quality clinical experience that prepare teachers to close student achievement 

gaps. 

Title IV—Leveraging Funds To Increase College Access 

PART A—STRENGTHENING HISTORICALLY BLACK COLLEGES AND

UNIVERSITIES AND MINORITY SERVING INSTITUTIONS

Section 401. Investment in Historically Black Colleges and Universities and other minority serving institutions 

The College Cost Reduction Act provides a total $500 million 

over the next five years to the following designated institutions 

with the following amounts: • $200 million to Hispanic-Serving Institutions to be distributed 

to the institutions in the same competitive manner as is done 

under Title V of the Higher Education Act, and for uses under Title 

V with priority to those applications that will increase the number 

of low-income students attaining degrees in the fields of science, 

technology, and math and to applications that develop model transfer articulation agreements. • $170 million to Historically Black Colleges and Universities to 

be distributed for use through some of the activities described in 

section 323(a) of the Higher Education Act including the purchase 

of laboratory equipment, the funding of instruction, the purchase of 

materials, and the establishment or enhancement of a teacher education program. Additionally, funds may be used in a manner consistent with the institution’s comprehensive plan and designed to 

increase the institution’s capacity to prepare students for careers in 

the physical and natural sciences, math, computer science, information technology, engineering, language instruction and other specified areas. • $30 million to Predominately Black Institutions to award 10 grants of $600,000 annually for programs in the fields of science, 

technology, engineering, health education, teacher education, or 

programs that improve the educational outcomes of African American males. • $60 million to Tribal Colleges and Universities to be distributed in the manner that the funds are used under current law in 

section 316 of the Higher Education Act including the purchase of 

laboratory equipment, the funding of instruction, the purchase of 

materials, or the establishment or enhancement of teacher education and outreach programs. • $30 million to Alaska/Hawaiian Native Institutions to be distributed in the manner that the funds are used under current law 

in section 317 of the Higher Education Act including the purchase 

of laboratory equipment, the funding of instruction, the purchase of 

materials, and the creation of academic tutoring programs. • $10 million to Asian American and Pacific Islander Institutions 

to be distributed to institutions as defined in this section, and used 

in a manner that may include the purchase of laboratory equipment, the funding of instruction, the purchase of materials, and the 

creation of tutoring programs. 


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This section defines the following for the purposes of distributing 

funds: 

Predominately Black Institutions as institutions that have an enrollment of financially needy undergraduate students; an enrollment of undergraduate students at least 40% of whom are Black; 

and, that has at least 1,000 undergraduate students of whom not 

less than 50% enrolled at the institution are low-income or first 

generation and registered in a BA or AA program leading to a degree. 

Asian and Pacific Islander-serving institution as institutions that 

have an enrollment of undergraduate students that is at least 10% 

Asian American and Pacific Islander and has a significant enrollment of financially needy students. 

PART B—COLLEGE ACCESS CHALLENGE GRANTS

Section 411. College Access Challenge Grants 

This section establishes the ‘‘College Access Challenge Grants,’’ 

which leverages federal funds to increase the number of students 

from underserved populations who enter and complete college 

through matching grants to philanthropic organizations. The federal government will provide a 2 to 1 match for private and other 

public funds for these purposes. 

The philanthropic organizations will work with states, institutions of higher education, and local education agencies and other 

organizations to raise funds and provide outreach and student support programs. 

PART C—UPWARD BOUND

Section 412. Upward Bound 

The College Cost Reduction Act restricts the Secretary’s use of 

funds for the purposes of evaluating and selecting participants of 

the Upward Bound program. 

This section provides an additional $120 million to restore Upward Bound funding to unfunded programs from the FY07 competition. 

Title V—Additional Provisions 

Section 501. Independent evaluation of distance education programs 

This section calls for a study by the National Academy of 

Sciences to evaluate the quality of distance education programs as 

compared to campus-based education programs at institutions of 

higher education. 

Section 502. Encouraging colleges and universities to ‘‘go green’’ 

This section declares the Sense of the Committee on Education 

and Labor that there should be increased awareness of the need to 

use sustainable economic and environmental practices on colleges 

and universities. 

VI. EXPLANATION OF AMENDMENTS

The Amendment in the Nature of a Substitute, as amended, is 

explained in the body of this report. 


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VII. APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1, the Congressional Accountability Act, requires a description of the application of this bill 

to the legislative branch. H.R. 2669 amends does not prevent legislative branch employees’ coverage under this legislation. 

VIII. UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandates Reform Act, P.L. 104–4) requires a statement of whether the 

provisions of the reported bill include unfunded mandates. H.R. 

2669 contains no intergovernmental or private-sector mandates as 

defined by the Unfunded Mandates Reform Act (UMRA). 

IX. EARMARK STATEMENT

H.R. 2669 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clauses 9(d), 

9(e) or 9(f) of rule XXI of the House of Representatives. 


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XI. STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS

OF THE COMMITTEE

In compliance with clause 3(c)(1) of rule XIII and clause 2(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee advises that the bill was a result of the Committee’s budget 

reconciliation instructions. 

XII. NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the House of Representatives and section 308(a) of the Congressional Budget Act of 1974 and with respect to requirements of 

3(c)(3) of rule XIII of the House of Representatives and section 402 

of the Congressional Budget Act of 1974, the Committee has received the following estimate for H.R. 2669 from the Director of the 

Congressional Budget Office: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, June 25, 2007. 

Hon. GEORGE MILLER, 

Chairman, Committee on Education and Labor, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2669, the College Cost 

Reduction Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Deborah Kalcevic and 

Justin Humphrey. 

Sincerely, 

PETER R. ORSZAG, 

Director. 

Enclosure. 

H.R. 2669—College Cost Reduction Act of 2007 

Summary: H.R. 2669 would amend the Higher Education Act of 

1965 and make a number of changes to the federal financial assistance programs related to postsecondary education. The bill would 

reduce costs for some borrowers, reduce the government’s payments 

to lenders and guaranty agencies, modify fees for lenders, and create new grant programs for postsecondary students and institutions. CBO estimates that net effects of those changes would reduce direct spending by $1.7 billion over the 2008–2012 period and 

by $0.9 billion over the 2008–2017 period. 

Implementing the bill also would affect discretionary spending, 

primarily by increasing Pell grants. Assuming the appropriation of 

the necessary funds, those discretionary costs would total about 

$158 billion over the 2008–2012 period. 

H.R. 2669 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated Costs to the Federal Government: The estimated 

budgetary impact of H.R. 2669 is summarized in Table 1. The 

budgetary effects of this legislation fall within budget function 500 

(education, training, employment, and social services). 


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TABLE 1.—ESTIMATED BUDGETARY IMPACT OF H.R. 2669 

By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 2

CHANGES IN DIRECT SPENDING 

STUDENT LOANS 

Provisions Affecting Borrowers: 

Estimated Budget Authority ...... 1,075 1,588 2,350 3,125 3,850 2,265 1,000 1,050 1,090 1,105 11,988 Estimated Outlays ..................... 795 1,136 1,855 2,545 3,195 2,890 905 950 990 1,010 9,526 

Provisions Affecting Lenders: 

Estimated Budget Authority ...... ¥5,405 ¥3,165 ¥3,340 ¥3,500 ¥3,665 ¥3,830 ¥3,995 ¥4,160 ¥4,340 ¥4,530 ¥19,075 

Estimated Outlays ..................... ¥4,105 ¥2,650 ¥2,815 ¥2,945 ¥3,085 ¥3,220 ¥3,360 ¥3,500 ¥3,655 ¥3,810 ¥15,600 

Provisions Affecting Guaranty Agencies: 

Estimated Budget Authority ...... ¥2,470 ¥155 ¥165 ¥170 ¥180 ¥185 ¥190 ¥200 ¥210 ¥215 ¥3,140 

Estimated Outlays ..................... ¥2,405 ¥135 ¥140 ¥145 ¥155 ¥160 ¥165 ¥170 ¥175 ¥180 ¥2,980 

Net Programmatic Interactions for 

Student Loan Changes: 

Estimated Budget Authority ...... ¥65 ¥103 ¥65 ¥30 * ¥100 ¥175 ¥190 ¥190 ¥195 ¥263 

Estimated Outlays ..................... ¥35 ¥91 ¥55 ¥40 * ¥55 ¥135 ¥160 ¥160 ¥165 ¥221 

GRANT PROGRAMS 

Increases in Grant Aid to Students: 

Budget Authority ........................ 915 975 1,455 2,400 2,470 2,505 2,560 2,620 2,660 2,685 8,215 Estimated Outlays ..................... 305 910 1,042 1,646 2,393 2,467 2,516 2,568 2,628 2,664 6,297 

Increases in Grants to Institutions of 

Higher Education: 

Budget Authority ........................ 595 245 245 245 215 0 0 0 0 0 1,545 Estimated Outlays ..................... 78 388 289 300 255 195 33 9 0 0 1,309 

TOTAL CHANGES IN DIRECT SPENDING: 

Estimated Budget Authority ...... ¥5,355 ¥615 480 2,070 2,690 655 ¥800 ¥880 ¥990 ¥1,150 ¥730 

Estimated Outlays ..................... ¥5,368 ¥442 176 1,361 2,603 2,117 ¥206 ¥303 ¥372 ¥481 ¥1,670 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Pell Grant Program: 1

Estimated Authorization Level ... 28,311 34,167 39,386 44,784 50,780 51,989 53,300 0 0 0 197,428 Estimated Outlays ..................... 6,795 29,150 35,302 40,577 46,115 50,950 52,279 40,482 1,066 0 157,939 


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TABLE 1.—ESTIMATED BUDGETARY IMPACT OF H.R. 2669—Continued 

By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 2

MEMORANDUM 

Student Loan Spending Under the 

CBO Baseline: 

Estimated Budget Authority ...... 4,575 5,248 5,825 6,011 5,800 5,738 5,681 5,586 5,480 5,389 26,859 Estimated Outlays ..................... 3,241 3,889 4,506 4,839 4,734 4,764 4,769 4,752 4,712 4,638 21,209 

1 Assumes the maximum award for academic years 2013–2014 and 2014–2015 is the same level ($11,600) as that specified for academic year 2012–2013. 

Note.—* = Less than $500,000. 


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Basis of estimate: For this estimate, CBO assumes that H.R. 

2669 will be enacted early in fiscal year 2008. 

As required under the Federal Credit Reform Act of 1990, the 

costs of student loans are estimated on a net-present-value basis 

rather than the cash basis used for most other federal programs. 

H.R. 2669 would affect such credit estimates in several ways: by 

reducing interest rates charged on student loans, by reducing certain payments to private lenders of federally guaranteed loans, by 

decreasing payments to guaranty agencies, and by increasing certain fees paid to the government by such lenders. 

In fiscal year 2006, the student aid programs provided an esti- mated $16 billion in federal grant aid to over 5 million students 

and an estimated $61 billion in federal loan aid or guarantees to 

8 million students and parents. The current grant aid is mostly discretionary spending (i.e., from annual appropriation action); the 

loan aid is virtually all direct spending. 

H.R. 2669 would expand loan aid to student borrowers while reducing the federal cost of providing that aid, establish new mandatory grant aid to students, and establish several other mandatory 

grant programs to institutions of higher education. The bill also 

would authorize a major increase in discretionary funding for the 

Pell Grant Program. 

Direct spending—student loans 

Provisions Affecting Borrowers. H.R. 2669 would make several 

changes affecting student loan borrowers. The bill would reduce interest rates and increase the borrowing limits for some borrowers, 

expand borrower repayment options, provide loan forgiveness for 

borrowers working in specified public-sector jobs, and expand eligibility by altering the determination of financial need. Combined, 

these changes are estimated to increase costs by $795 million in 

2008, by $9.5 billion over the 2008–2012 period, and by $16.3 billion over the 2008–2017 period. 

Reductions in Interest Rates. Under current law, the interest rate 

charged borrowers for both subsidized and unsubsidized student 

loans is 6.8 percent for new loans disbursed after June 30, 2006. 

H.R. 2669 would reduce the rate for new subsidized loans in stages: 

for successive 12–month periods beginning in July 2008, the rates 

would be 6.12 percent, 5.44 percent, 4.76 percent, 4.08 percent, and 

3.4 percent, respectively. Between $30 billion and $34 billion in 

new loans would be affected each year. Beginning in July 2013, for 

new loans, the rate would revert back to the 6.8 percent rate prescribed in current law. 

For guaranteed student loans, private lenders are paid interest 

based on a formula; if that rate exceeds what the borrower pays, 

the federal government is responsible for paying the difference between the two rates. When the lender formula produces a lower 

rate than the borrower pays, the lender must return the difference 

to the government. Consequently, any reduction in the borrower’s 

interest rate increases federal costs by either increasing the payments made to lenders or reducing the rebate lenders pay to the 

government. In the direct student loan program, the interest rate 

reductions reduce federal collections. In both cases—either through 

an increase in federal payments for loan guarantees or a decrease 

in federal collections for direct loans—the net cost of providing the 


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student loan assistance rises and is measured as an increase in the 

subsidy cost, recorded on a present-value basis at the time of loan 

disbursement. CBO estimates that, as a result, loan subsidy costs 

would rise by $6.2 billion over the 2008–2012 period and $8.2 billion over the 2008–2017 period (see Table 2). 

Increases in Loan Limits. H.R. 2669 would increase the annual 

loan limits for third- and fourth-year undergraduate students, and 

adjust the lifetime loan limits to accommodate those increases. 

Under current law, the maximum loan a third- or fourth-year dependent student can borrow is $5,500, and the lifetime limits are 

$23,000 for undergraduates and $65,500 for combined undergraduate and graduate school borrowing. For third- and fourth-year 

independent students, the maximum annual limit is $10,500 and 

lifetime limits are $46,000 for undergraduates and $138,500 for 

combined undergraduates and graduate borrowers. 

Beginning in 2008, the legislation would increase the third- and fourth-year limit to $7,500 and the respective lifetime limits to 

$30,500 and $73,000 for dependent students. The third- and fourthyear limit would rise for independent students to $12,500, and the 

respective lifetime limits would rise to $53,500 and $156,000. Overall, the increases in the loan limits would raise loan volume between $1 billion and $3 billion each year and would increase subsidy costs by $1.4 billion over the 2008–2012 period and $3.5 billion 

over the 2008–2017 period, CBO estimates. 

Income-based Repayment and Economic Deferment. Beginning in 

October 2007 for all student loan borrowers, the current maximum 

three-year period for which a borrower could receive an economic 

hardship deferment would be eliminated. (A deferment is a repayment status during which a borrower does not have to make any 

payment on their student loan.) In addition, the eligibility criteria 

for an economic hardship deferment would be altered. Currently, 

borrowers are eligible for an economic hardship deferment if their 

income is below 100 percent of poverty for a family of two or their 

income is below 220 percent of poverty for a family of two and their 

debt payments exceed 20 percent of their income. H.R. 2669 would 

set the eligibility at 150 percent of poverty based on family size. 


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TABLE 2.—DIRECT SPENDING OUTLAY EFFECTS OF MAJOR PROVISIONS 

By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 

STUDENT LOANS 

Provisions Affecting Borrowers: 

Interest Rate Reductions—Estimated 

Outlays .............................................. 205 665 1,205 1,780 2,370 2,020 0 0 0 0 6,225 

Loan Limit Increases—Estimated Outlays .................................................... 80 250 345 370 380 390 400 410 415 425 1,425 Income-Based Repayment—Estimated 

Outlays .............................................. 455 130 130 135 140 150 155 160 165 170 990 

Loan Forgiveness—Estimated Outlays 50 85 165 245 290 315 335 365 390 395 835 Needs Analysis—Estimated Outlays ..... 5 6 10 15 15 15 15 15 20 20 51 

Subtotal, Provisions Affecting 

Borrowers—Estimated Outlays 795 1,136 1,855 2,545 3,195 2,890 905 950 990 1,010 9,526 

Provisions Affecting Lenders: 

Special Allowance Payment—Estimated 

Outlays .............................................. ¥3,110 ¥2,255 ¥2,385 ¥2,500 ¥2,620 ¥2,735 ¥2,855 ¥2,975 ¥3,105 ¥3,240 ¥12,870 

Lender Insurance—Estimated Outlays ¥765 ¥235 ¥255 ¥265 ¥275 ¥285 ¥295 ¥310 ¥325 ¥335 ¥1,795 

Lender Fees—Estimated Outlays .......... ¥230 ¥160 ¥175 ¥180 ¥190 ¥200 ¥210 ¥215 ¥225 ¥235 ¥935 

Subtotal, Provisions—Affecting 

Lenders—Estimated Outlays ... ¥4,105 ¥2,650 ¥2,815 ¥2,945 ¥3,085 ¥3,220 ¥3,360 ¥3,500 ¥3,655 ¥3,810 ¥15,600 

Provisions Affecting Guaranty Agencies: 

Retention of Guaranty Agency Collections—Estimated Outlays ................ ¥1,365 ¥135 ¥140 ¥145 ¥155 ¥160 ¥165 ¥170 ¥175 ¥180 ¥1,940 

Guaranty Agency Fee—Estimated Outlays .................................................... ¥1,040 * * * * * * * * * ¥1,040 

Subtotal, Provisions—Affecting 

Guaranty Agencies—Estimated Outlays ..................................... ¥2,405 ¥135 ¥140 ¥145 ¥155 ¥160 ¥165 ¥170 ¥175 ¥180 ¥2,980 

Net Programmatic Interactions for Student 

Loan Changes—Estimated Outlays .......... ¥35 ¥91 ¥55 ¥40 * ¥55 ¥135 ¥160 ¥160 ¥165 ¥221 

GRANT PROGRAMS 

Provisions Affecting Grant Aid to Students: 

Mandatory Pell Grants—Estimated 

Outlays .............................................. 202 830 982 1,556 2,278 2,361 2,411 2,463 2,518 2,554 5,848 

Other Grants—Estimated Outlays ........ 104 80 60 90 115 107 105 105 110 110 449 


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TABLE 2.—DIRECT SPENDING OUTLAY EFFECTS OF MAJOR PROVISIONS—Continued 

By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 

Subtotal, Provisions—Affecting 

Grant Aid to Students—Estimated Outlays .......................... 305 910 1,042 1,646 2,393 2,467 2,516 2,568 2,628 2,664 6,297 

Grant Aid to Institutions—Estimated Outlays 78 388 289 300 255 195 33 9 0 0 1,309 

TOTAL CHANGES IN DIRECT SPENDING 

Estimated Outlays .......................................... ¥5,368 ¥442 176 1,361 2,603 2,117 ¥206 ¥303 ¥372 ¥481 ¥1,670 

Notes.—* = Costs or savings of less than $500,000. Components may not sum to totals because of rounding. 


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In addition, beginning in October 2007, the bill would establish 

a new income-based repayment plan available to all student loan 

borrowers similar to the current income-contingent repayment 

(ICR) plan in the direct student loan program. If borrowers’ total 

federal student loan payments would exceed 15 percent of their calculated income, which is their adjusted gross income less an 

amount which is 150 percent of poverty for their family size, borrowers could elect to have their payments limited to 15 percent of 

their calculated income. If their payments are less than the amount 

due, payments would first be credited to interest, and then to principal. Any unpaid interest due on the loans would be capitalized. 

If, or when, borrowers are able to make 100 percent of their principal and interest payments, borrowers would return to a 10–year 

repayment, with some qualifications. At the end of 20 years, any 

unpaid principal, including any unpaid capitalized interest, would 

be paid by the government in case of a guaranteed loan and would 

be forgiven in the case of a direct loan. 

Using the CBO’s Long-Term (CBOLT) model, we estimated the 

eligible population based on the projected earnings for workers 

with some post-secondary schooling. CBO expects that participation 

in this program would be relatively low because of the required 

capitalization of interest and the seeming reluctance of borrowers 

to apply for similar relief elsewhere (for example, the low participation in the current ICR plan). 

CBO estimates that extending the economic deferment combined 

with the new income-based repayment plan would increase federal 

costs by $1.0 billion over the 2008–2012 period and $1.8 billion 

over the 2008–2017 period. 

Loan Forgiveness for Certain Public-Sector Jobs. The bill would 

create two new loan forgiveness programs for public-sector borrowers. The first, loan forgiveness for service in areas of national 

need, would forgive loans to new borrowers as of October 1, 2007, 

who are employed in certain public-sector jobs, including law enforcement, public safety, emergency management, public health, 

early childhood and bilingual education, nursing, social work and 

child welfare, public interest legal services, speech pathology, and 

library science. 

For each year of full-time employment, a borrower would have up 

to $1,000 of his or her loans forgiven, up to a lifetime maximum 

of $5,000. Based on data from the Bureau of Labor Statistics and 

the Department of Education, CBO estimates that this provision 

would cost $2.7 billion over 10 years and that approximately 

115,000 borrowers each year would be eligible for some amount of 

forgiveness in the initial years, with the total growing over 10 

years. 

The second program, income-contingent repayment for public-sector employees, would provide forgiveness to borrowers who agree to 

repay their loans through the income-contingent repayment plan 

under the direct loan program beginning in October 2007. To be eligible, a borrower would have to be employed in a public-sector job 

for 10 years and make 120 payments on the loan. Eligible publicsector jobs include government, emergency management, public 

safety, law enforcement, public health, early childhood education, 

social work in a public child or family service agency, and public 


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interest legal services. Once borrowers met these criteria, they 

would have their remaining outstanding loan balance forgiven. 

Based on data from the Census Bureau, the Survey of Income 

and Program Participation, the Bureau of Labor Statistics, and the 

Department of Education, CBO estimates that approximately 

50,000 new borrowers each year would eventually be eligible for, 

and participate in, income-contingent loan forgiveness each year. 

The cost of the loan forgiveness would be covered by savings from 

borrowers switching from the guaranteed loan program to the income-contingent repayment plan in the direct program. As a result, 

CBO estimates the program would save $70 million between 2008 

and 2017. 

Changes in Calculation of Needs Analysis. The bill would change 

the way eligibility is calculated for Pell grants and subsidized student loans; the latter is classified as mandatory spending (see the 

section on ‘‘Spending Subject to Appropriation’’ for the discretionary impact on Pell grants). Those changes include: • Raising the level at which a student automatically qualifies to have no expected family contribution; • Changing the definition of untaxed income and the treatment of education savings accounts; • Expanding the discretion of financial aid officers; • Increasing income protection allowances for dependent and 

independent students; and • Changing eligibility for the simplified needs test. 

Using data on applicants for federal financial assistance, CBO es- timates that those provisions in total would add costs of $51 million over the 2008–2012 period and $136 million over the 2008– 

2017 period to the student loan program. 

Provisions Affecting Lenders. H.R. 2669 would alter payments to lenders in the guaranteed student loan program. The 

quarterly payments to lenders on all new loans would be reduced, 

federal insurance against default would be lowered, and lenders’ 

origination fees would be increased. Combined, these changes 

would reduce costs by an estimated $4.1 billion in 2008, $15.6 billion over the 2008–2012 period, and $33.1 billion over the 2008– 

2017 period, 

Reduction of Special Allowance Payments to Lenders. Under current law, private lenders receive quarterly payments from the government when the interest rate formula used to pay lenders would 

provide an interest rate higher than that which would apply to borrowers. Such payments are referred to as special allowance payments. The specific lender formulas are based on the 91-day commercial paper rate plus: 

• 1.74 percent for loans when borrowers are in school, in the 

six-month grace period after leaving school, or in a deferment 

period (for example, for economic hardship); 

• 2.34 percent when the borrower is repaying the loan; and 

• 2.64 percent when the borrower has consolidated the loan 

or the borrower is a parent (including graduate students participating in the parent program: GradPLUS). 

Beginning in October 2007, H.R. 2669 would lower those ‘‘addons’’ by 55 basis points (or 0.55 percentage points—roughly one-half 

of one percent) for new student and new consolidation loans and by 

85 basis points for new parent and new GradPLUS loans. 


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CBO projects new loan volume in the guaranteed loan program will rise from nearly $58 billion in 2008 to $86 billion by 2017, and 

that loan volume for new consolidations will range from about $21 

billion to $28 billion a year over the same period. CBO estimates 

that the reduced special allowance payments would reduce federal 

spending by $12.9 billion over the 2008–2012 period and $27.8 billion over the 2008–2017 period. 

Reductions in Percentage Guaranteed. The bill would reduce the 

percentages that lenders receive when borrowers default on their 

loans in two ways: lowering the insurance rate from 97 percent of 

unpaid principal to 95 percent and eliminating the differential 

treatment (99 percent insurance) accorded to lenders defined as exceptional performers. Consequently, all lenders would receive the 

same insurance rate (95 percent) on loans originating after September 2007. CBO estimates that those changes together would reduce outlays by $1.8 billion over the 2008–2012 period and by $3.3 

billion over the 2008–2017 period. 

The reduction in the percentage guaranteed rate from 97 percent 

to 95 percent would apply for loans whose first disbursement is 

after September 2007, including new consolidation loans. CBO estimates the two-point reduction in the insured percentage by itself 

would save about $0.2 billion over the 2008–2017 period. 

Under current law, exceptional performers—lenders who exceed 

standards for various administrative activities—are insured at 99 

percent rather than 97 percent. Based on recent information from 

the Department of Education, CBO estimates that, in any given 

year, about 90 percent of outstanding principal is held by lenders 

with that designation. H.R. 2669 would reduce the insurance rate 

for those lenders from 99 percent to 95 percent on loans whose first 

disbursement is on or after October 2007. CBO estimates that the 

reduction for those lenders would save about $3.2 billion over the 

2008–2017 period. 

Increased Loan Fees From Lenders. Under current law, lenders 

pay the federal government 0.5 percent on each new loan (including consolidations). Beginning in October 2007, H.R. 2669 would 

eliminate this fee on new loans for relatively small lenders and all 

nonprofit lenders, but increase the fee on new loans made by other 

lenders to 1.0 percent. CBO estimates that for about 70 percent of 

loans, the fee would increase by 0.5 percentage points; the remainder would see the fee eliminated. Based on its projections of loans 

to be disbursed over the projection period, CBO estimates that the 

modified fee would lower federal costs by $2.0 billion over the 

2008–2017 period. 

Loan Auction. H.R. 2669 would authorize a series of activities 

that could introduce an auction process for student loans. Those activities would begin with a planning study of alternative marketbased mechanisms for setting lenders’ yields, followed by a pilot 

program that would test the recommended approach. That is, the 

government could auction the right to make federally guaranteed 

loans with the ‘‘winners’’ of such auction determined by bidding for 

the lowest acceptable payments by the government to such prospective lenders. Upon completion of an evaluation by the Government 

Accountability Office, the Secretary of Education could implement 

the approach for the entire student loan program. Because of the 

substantial uncertainties about the specific approach that would be 


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adopted as well as the significant discretion allowed the Secretary 

of Education, CBO does not have a sufficient basis upon which to 

estimate the budgetary effects of this provision. 

Provisions Affecting Guaranty Agencies. H.R. 2669 would 

lower payments to guaranty agencies that administer the guaranteed student loan program on behalf of the government. The share 

of default collections retained by the guaranty agencies would be 

lowered and the method of federal payment to manage the overall 

portfolio would be changed. Combined, those changes would reduce 

costs by an estimated $2.4 billion in 2008, $3.0 billion over the 

2008–2012 period, and $3.8 billion over the 2008–2017 period. 

Retention of Guaranty Agency Collections. Under current law, 

nonfederal guaranty agencies are allowed to retain 23 percent of 

their collections on defaulted loans. H.R. 2669 would reduce that 

percentage to 16 percent beginning in fiscal year 2008. CBO estimates that reducing the retention rates would save $1.9 billion 

over the 2008–2012 period and $2.8 billion over the 2008–2017 period. 

Account Maintenance Fee. Guaranty agencies currently receive 

federal payments of up to 0.1 percent of the original principal of 

their outstanding insured loans to support their administrative 

costs. Starting in October 2007, H.R. 2669 would change the percentage fee to a fixed dollar payment per loan. Based on information provided by the Department of Education, CBO expects that 

the fee would be set at about $7.50 per loan in 2008. CBO estimates that the change, on average, would reduce payments tied to 

outstanding loans, but would have no significant net budgetary impact with respect to future loans. The savings with respect to outstanding loans reflect the surge in consolidations in the past several years and for which are much larger than the average loan 

and for which the current 0.1 percent fee exceeds the fixed $7.50 

amount. Reduced costs for outstanding loans would total $1.0 billion. 

Programmatic Interactions for Student Loans. There are 

interactions among the numerous loan-related provisions included 

in H.R. 2669. For example, increasing loan volume by raising the 

borrowing limits would affect the overall savings from decreasing 

lenders’ yields and the percentages of loans guaranteed. The combined effect of all the interactions is to lower costs by $221 million 

over the 2008–2012 period and by $896 million over the 2008–2017 

period. 

Direct spending—grant programs 

Increases in Grant Aid to Students. H.R. 2669 also would create new grant programs, increase funding for the existing Pell 

Grant Program, and expand eligibility for the Academic Competitiveness and SMART grant programs. Combined, those changes 

would increase costs by $305 million in 2008, by $6.3 billion over 

the 2008–2017 period, and by $19.1 billion over the 2008–2017 period, CBO estimates. 

Mandatory Pell Grant Add-on. The bill would appropriate $19.3 

billion over the next 10 years to create a direct spending add-on to 

the existing discretionary Pell Grant program. The mandatory 

funds in H.R. 2669 would be added to the funds provided in the 

annual appropriation act to raise the maximum award level above 


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that set in such appropriation acts (currently $4,310 for academic 

year 2007–2008). 

CBO estimates that, along with the costs of other provisions in 

the bill that affect Pell grants, the additional funds provided would 

allow the maximum grant to be increased by approximately $200 

for academic year 2008–2009 and by additional amounts each year 

until the increase reached approximately $5,200 in 2012 and beyond. Any additional amounts realized in future grants awards 

could vary depending on the underlying discretionary maximum 

award level set in annual appropriation acts. CBO estimates that 

the outlays associated with those increases would total $5.8 billion 

over the 2008–2012 period and $18.2 billion over the 2008–2017 period. 

TEACH Grants. Beginning in academic year 2008–2009, H.R. 

2669 would establish a new grant program for students who meet 

certain criteria and submit an agreement to teach specific highneed subjects, such as mathematics and science, for at least 4 years 

in schools that meet criteria for enrollment of low-income students. 

Each undergraduate participant would be eligible for up to $4,000 

(plus $500 for a Bonus TEACH grant for some students) up to a 

maximum of $16,000 ($18,000 for those participating in the Bonus 

TEACH Program); graduate students would be eligible for up to a 

maximum of $8,000 ($10,000 for those participating in the Bonus 

TEACH program). CBO estimates costs for this grant program 

would total $0.4 billion over the 2008–2012 period and $0.9 billion 

over the 2008–2017 period. 

To be eligible for a TEACH grant, a student would have to meet 

the following requirements: • Maintain a grade point average of at least 3.25 and display high academic aptitude on certain admissions tests; and • Engage in coursework and other requirements necessary 

to begin a career in teaching. 

If the grant recipient fails to complete the service requirement, 

the grants would become a direct loan that the recipient would 

have to repay with interest. 

CBO estimates that more than 25,000 students would participate 

in the grant program in a typical year. CBO bases this estimate 

on data from the Department of Education, including the Digest of 

Education Statistics, the Condition of Education, the Schools and 

Staffing Survey, Teacher Attrition and Mobility, and the National 

Postsecondary Student Aid Study. 

Academic Competitiveness Grant and SMART Grant Programs. 

The bill would adjust how a student’s academic year is determined 

and expand eligibility to part-time students for both the Academic 

Competitiveness and SMART grant programs. Currently, only fulltime students are eligible for grants. Because funding for these programs is capped at specified amounts and the Secretary has the 

authority to proportionately reduce award levels to stay within the 

provided amounts, CBO estimates these changes would have no net 

impact on federal spending over the 2008–2012 or 2008–2017 periods. 

Incentives and Rewards for Low Tuition. The bill would appropriate $15 million per year for 2008 through 2012 to provide grants 

to institutions that increase their tuition by less than the national 

average. The Secretary of Education would award grants to the inVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00075 Fmt 6659 Sfmt 6602 E:\HR\OC\HR210.XXX HR210

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stitutions starting with the one with the lowest tuition increase, 

and continuing until the funds are exhausted. The grants would be 

used to increase Pell grants at the institution by 25 percent. CBO 

estimates that outlays would increase by $74 million over five 

years and by $75 million over 10 years. 

Grants to Institutions of Higher Education. H.R. 2669 would 

appropriate funds for the existing Federal Perkins Loan Program 

and create several new grant programs for institutions of higher 

education. Combined, these changes would cost $1.3 billion over 

the 2008–2012 period and $1.5 billion over the 2008–2017 period. 

Estimated outlays reflect the historical patterns of spending for 

higher education programs and other federal grant programs. 

Federal Perkins Loan Program. The bill would appropriate $100 

million each year for fiscal years 2008 through 2012 for capital contributions to the existing Federal Perkins Loan Program. CBO estimates this provision would increase outlays by $407 million between 2008 and 2012 and by $500 over 10 years. 

Cooperative Education Rewards Program. Under this new pro- gram, $15 million a year for 2008 through 2012 would be available 

to support programs for students that provide alternating or parallel periods of academic study and of public or private employment. The grants would range from $1,000 to $75,000 annually, 

and the grants would have to be matched by the institutions. The 

federal share would decline in stages over five years from 85 percent to 25 percent. CBO estimates the grant program would increase outlays by $75 million over the 2008–2017 period. 

Centers of Excellence. H.R. 2669 would set up a new grant program to encourage minority institutions to create centers of excellence that would focus on implementing policies that would improve the preparation of teachers. Funding for the centers would 

total $50 million for the 2008–2012 period, with a minimum grant 

of $500,000 for any participating institution. CBO estimates that 

all of the outlays associated with those grants would occur during 

the 2008–2012 period. 

Upward Bound. The bill would appropriate $30 million for each 

of fiscal years 2008 through 2011 to provide funding to Upward 

Bound projects that received assistance in fiscal year 2006 but not 

in fiscal year 2007 and that also received a grant score above a certain level. CBO estimates that this provision would increase outlays by $109 million over five years and $120 million over 10 years. 

Investment in Historically Black Colleges and Universities and 

Other Minority Serving Institutions. The bill also would create the 

Investment in Historically Black Colleges and Universities and 

Other Minority Serving Institutions to provide grants to such institutions to enhance their undergraduate programs in educating and 

training under-represented populations in all areas of study. For 

the purposes of this estimate, CBO assumes the program would expire after 2012, and thus would not result in any new budget authority after that year. H.R. 2669 would appropriate $100 million 

for each of fiscal years 2008 through 2012, resulting in a total cost 

of $500 million over 10 years. 

College Access Challenge Grants Program. H.R. 2669 would appropriate $300 million in fiscal year 2008 to create the College Access Challenge Grants. The funds, which would be available for obligation through fiscal year 2012, would be used to award grants 


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to philanthropic organizations that are members of eligible consortia to provide: (1) need-based grants, (2) school-based mentoring 

programs, and (3) outreach programs to encourage students to pursue higher education. CBO estimates outlays would total $300 million over the 2008–2012 period. 

Spending subject to appropriation 

Implementing H.R. 2669 would also result in additional discretionary spending. The vast majority of additional discretionary 

spending would result from the reauthorization of, and changes to, 

the Pell Grant Program. Projected spending subject to appropriation is summarized in Table 3. For this estimate, CBO assumes 

that the necessary amounts to implement the bill will be appropriated and that spending will follow the historical pattern for the 

program. 

H.R. 2669 would authorize the appropriation of such sums as 

may be necessary for the Pell Grant program through fiscal year 

2013. The General Education Provisions Act would automatically 

extend this authorization through 2014. This estimate assumes 

that sufficient funds are appropriated to provide the maximum 

grant to all students eligible for it. On that basis, CBO estimates 

that the cumulative changes in H.R. 2669 would increase outlays 

for Pell grants by $6.8 billion in 2008 and $158.0 billion over the 

2008–2012 period. If funding were enacted at the authorized levels, 

CBO estimates that 5.7 million students would receive grants in 

academic year 2008–2009 and 6.5 million would receive grants in 

2012–2013, up from the 5.3 million that CBO estimates will receive 

grants in the upcoming 2007–2008 academic year. 

Pell Grants. The bill would make several changes to the underlying Pell Grant program. First, it would set the authorized maximum award level at $7,600 for academic year 2008–2009 and raise 

it by $1,000 each academic year up to $11,600 for academic year 

2012–2013. 

Historically, the authorized maximum award level has been replaced with a lower maximum award level during the appropriations process. The maximum award level for Pell grants for the upcoming academic year (2007–2008) was set by the Revised Continuing Appropriations Resolution, 2007 (Public Law 110–5) at 

$4,310. 

Effective upon enactment, the bill also would eliminate the tuition sensitivity provision, which reduces Pell awards for some students who attend low-cost postsecondary institutions. In addition, 

beginning in academic year 2009–2010 it would allow students who 

attend year-round institutions to receive multiple Pell grants in the 

same academic year. Assuming the appropriation of the necessary 

amounts, CBO estimates that these provisions would cost $6.8 billion in 2008 and $153.0 billion through 2012. 

Other portions of the bill would make changes to the formulas 

for calculating who is eligible for Pell grants and how much each 

applicant would receive. Those changes, described below, would not 

take effect until the 2009–2010 academic year. CBO’s estimate assumes that funding for the maximum authorized award level would 

be provided. If the appropriated award level is set below the authorized level, the ultimate costs would be lower. 


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TABLE 3.—ESTIMATED DISCRETIONARY COSTS FOR THE PELL GRANT PROGRAM UNDER H.R. 2669 

By fiscal year, in millions of dollars— 

2007 2008 2009 2010 2011 2012 

SPENDING SUBJECT TO APPROPRIATION 

Pell Grant Spending Under Current Law: 

Budget Authority .......................................... 13,661 0 0 0 0 0 

Estimated Outlays ....................................... 13,179 10,660 281 0 0 0 

Proposed Changes: 

Pell Grants: 

Estimated Authorization Level ............ 0 28,311 33,166 37,906 42,822 48,454 

Estimated Outlays .............................. 0 6,795 28,910 34,206 38,991 44,076 

Income Protection Allowances: 

Estimated Authorization Level ............ 0 0 327 714 1,084 1,420 

Estimated Outlays .............................. 0 0 78 413 795 1,157 

Simplified Needs Test and Automatic Zero: 

Estimated Authorization Level ............ 0 0 330 364 403 422 

Estimated Outlays .............................. 0 0 79 332 373 407 

Definition and Treatment of Untaxed Income: 

Estimated Authorization Level ............ 0 0 581 658 747 806 

Estimated Outlays .............................. 0 0 139 588 678 759 

Interactions: 

Estimated Authorization Level ............ 0 0 ¥237 ¥256 ¥272 ¥322 

Estimated Outlays .............................. 0 0 ¥57 ¥237 ¥259 ¥284 

Total Changes: 

Estimated Authorization Level ... 0 28,311 34,167 39,386 44,784 50,780 

Estimated Outlays ..................... 0 6,795 29,150 35,302 40,577 46,115 

Pell Grant Spending Under H.R. 2669 1

Estimated Authorization Level 2 .................. 13,661 28,311 34,167 39,386 44,784 50,780 

Estimated Outlays ....................................... 13,179 17,455 29,431 35,302 40,577 46,115 

1 In addition to the discretionary spending for Pell grants shown in this table, H.R. 2669 also would provide a new mandatory add-on to 

the Pell Grant Program. Those funds would constitute direct spending, and would total $5.8 billion over the 2008–2012 period and $18.2 billion over the 2008–2017 period as shown in table 2 (on page 5 of this estimate). 2 The Concurrent Resolution on the Budget for Fiscal Year 2006 (H. Con. Res. 95) requires that, for budget enforcement purposes, the estimate of new discretionary budget authority for the Pell Grant program include the accumulated shortfall or surplus from prior award years. 

The current estimated shortfall for fiscal year 2008 is $258 million. This amount is not included in figures in the table. 

Income Protection Allowances. H.R. 2669 would raise the income protection allowances for both dependent and independent 

students (but not for parents of dependent students). The income 

protection allowance is a set amount of a student’s income that is 

not counted toward his or her expected family contribution. Under 

current law, these allowances are inflated by the Consumer Price 

Index (CPI) each year. This legislation would increase these levels 

for academic years 2009–2010 through 2012–2013 at rates greater 

than inflation and then return to CPI adjustments after academic 

year 2012–2013. CBO estimates that this provision would cost $2.4 

billion through 2012. 

Simplified Needs Test and Automatic Zero Changes. The 

bill would raise the income level at which a student automatically 

qualifies to have no expected family contribution from $20,000 to 

$30,000, beginning in academic year 2009–2010. It also would inflate this level by the CPI for each academic year after 2009–2010. 

H.R. 2669 would change eligibility for the simplified needs test and 

expand the discretion of financial aid officers. CBO estimates that 

implementing these changes would cost $1.2 billion over the 2008– 

2012 period. 

Definitions and Treatment of Untaxed Income. The bill 

would eliminate certain categories of untaxed income, such as the 

earned income tax credit and welfare and Social Security benefits, 

from the calculation of total income for students and parents. It 

also would change the treatment of education savings accounts. 


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CBO estimates that these changes would cost $2.2 billion through 

2012. 

Interactions. The cumulative impact of the above changes to 

the Pell Grant program is less than when each is measured separately from current law because their effects overlap. For example, 

a student may be eligible for the maximum Pell grant because of 

both the increased income protection allowances and the increase 

in the automatic zero expected family contribution level. As a result, the combined effect of these changes is $840 million less over 

the 2008–2012 period than when each change is estimated separately. 

Intergovernmental and private-sector impact: H.R. 2669 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. The bill would authorize funding for student aid and higher 

education programs and increase requirements for public colleges 

and universities that participate in voluntary federal programs. 

Any costs to those institutions or to state, local, or tribal governments would result from complying with conditions for receiving 

federal assistance. 

Estimate prepared by: Federal Costs: Deborah Kalcevic and Justin Humphrey; Impact on State, Local, and Tribal Governments: 

Lisa Ramirez-Branum; Impact on the Private Sector: Nabeel A. 

Alsalam. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

XIII. STATEMENT OF GENERAL PERFORMANCE GOALS AND

OBJECTIVES

In accordance with clause 3(c) of rule XIII of the House of Representatives, the goal of H.R. 2669 is to amend the Higher Education Act consistent with the policy announced in the Committee’s 

budget instructions to reduce the deficit by $750,000,000 for the period of fiscal years 2007 through 2012 without reducing assistance 

that makes college more affordable for students. The Committee 

expects the Department of Education to comply with H.R. 2669 and 

implement the changes to the law in accordance with these stated 

goals. 

XIV. CONSTITUTIONAL AUTHORITY STATEMENT

Under clause 3(d)(1) of rule XIII of the House of Representatives, 

the Committee must include a statement citing the specific powers 

granted to Congress in the Constitution to enact the law proposed 

by H.R. 2669. The Committee believes that the amendments made 

by this bill are within Congress’ authority under Article I, section 

8, clause 1 of the U.S. Constitution. 

XV. COMMITTEE ESTIMATE

Clause 3(d)(2) of rule XIII of the House of Representatives requires an estimate and a comparison of the costs that would be incurred in carrying out H.R. 2669. However, clause 3(d)(3)(B) of that 

rule provides that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate 


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of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act. 

XVI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman): 

HIGHER EDUCATION ACT OF 1965 

* * * * * * * 

TITLE I—GENERAL PROVISIONS 

* * * * * * * 

PART C—COST OF HIGHER EDUCATION 

øSEC. 131. IMPROVEMENTS IN MARKET INFORMATION AND PUBLIC 

ACCOUNTABILITY IN HIGHER EDUCATION. 

ø(a) IMPROVED DATA COLLECTION.— ø(1) DEVELOPMENT OF UNIFORM METHODOLOGY.—The Secretary shall direct the Commissioner of Education Statistics to 

convene a series of forums to develop nationally consistent 

methodologies for reporting costs incurred by postsecondary institutions in providing postsecondary education. 

ø(2) REDESIGN OF DATA SYSTEMS.—On the basis of the methodologies developed pursuant to paragraph (1), the Secretary 

shall redesign relevant parts of the postsecondary education 

data systems to improve the usefulness and timeliness of the 

data collected by such systems. 

ø(3) INFORMATION TO INSTITUTIONS.—The Commissioner of 

Education Statistics shall— 

ø(A) develop a standard definition for the following data 

elements: 

ø(i) tuition and fees for a full-time undergraduate 

student; 

ø(ii) cost of attendance for a full-time undergraduate 

student, consistent with the provisions of section 472; 

ø(iii) average amount of financial assistance received 

by an undergraduate student who attends an institution of higher education, including— 

ø(I) each type of assistance or benefit described 

in section 428(a)(2)(C)(i) ; 

ø(II) fellowships; and 

ø(III) institutional and other assistance; and 

ø(iv) number of students receiving financial assistance described in each of subclauses (I), (II), and (III) 

of clause (iii); 

ø(B) not later than 90 days after the date of enactment 

of the Higher Education Amendments of 1998, report the 

definitions to each institution of higher education and 

within a reasonable period of time thereafter inform the 


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Committee on Labor and Human Resources of the Senate 

and the Committee on Education and the Workforce of the 

House of Representatives of those definitions; and 

ø(C) collect information regarding the data elements described in subparagraph (A) with respect to at least all institutions of higher education participating in programs 

under title IV, beginning with the information from academic year 2000–2001 and annually thereafter. 

ø(b) DATA DISSEMINATION.—The Secretary shall make available 

the data collected pursuant to subsection (a). Such data shall be 

available in a form that permits the review and comparison of the 

data submissions of individual institutions of higher education. 

Such data shall be presented in a form that is easily understandable and allows parents and students to make informed decisions 

based on the costs for typical full-time undergraduate students. 

ø(c) STUDY.— ø(1) IN GENERAL.—The Commissioner of Education Statistics 

shall conduct a national study of expenditures at institutions 

of higher education. Such study shall include information with 

respect to— 

ø(A) the change in tuition and fees compared with the 

consumer price index and other appropriate measures of 

inflation; 

ø(B) faculty salaries and benefits; 

ø(C) administrative salaries, benefits and expenses; 

ø(D) academic support services; 

ø(E) research; 

ø(F) operations and maintenance; and 

ø(G) institutional expenditures for construction and technology and the potential cost of replacing instructional 

buildings and equipment. 

ø(2) EVALUATION.—The study shall include an evaluation 

of— 

ø(A) changes over time in the expenditures identified in 

paragraph (1); 

ø(B) the relationship of the expenditures identified in 

paragraph (1) to college costs; and 

ø(C) the extent to which increases in institutional financial aid and tuition discounting practices affect tuition increases, including the demographics of students receiving 

such discounts, the extent to which financial aid is provided to students with limited need in order to attract a 

student to a particular institution, and the extent to which 

Federal financial aid, including loan aid, has been used to 

offset the costs of such practices. 

ø(3) FINAL REPORT.—The Commissioner of Education Statistics shall submit a report regarding the findings of the study 

required by paragraph (1) to the appropriate committees of 

Congress not later than September 30, 2002. 

ø(4) HIGHER EDUCATION MARKET BASKET.—The Bureau of 

Labor Statistics, in consultation with the Commissioner of 

Education Statistics, shall develop a higher education market 

basket that identifies the items that comprise the costs of higher education. The Bureau of Labor Statistics shall provide a report on the market basket to the Committee on Labor and 


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Human Resources of the Senate and the Committee on Education and the Workforce of the House of Representatives not 

later than September 30, 2002. 

ø(5) 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 described in paragraph (1) in a 

timely and accurate manner, or for failing to otherwise cooperate with the National Center for Education Statistics regarding 

efforts to obtain data on the cost of higher education under this 

section and pursuant to the program participation agreement 

entered into under section 487. 

ø(d) STUDENT AID RECIPIENT SURVEY.—(1) The Secretary shall 

survey student aid recipients on a regular cycle, but not less than 

once every 3 years— 

ø(A) to identify the population of students receiving Federal 

student aid; 

ø(B) to determine the income distribution and other socioeconomic characteristics of federally aided students; 

ø(C) to describe the combinations of aid from State, Federal, 

and private sources received by students from all income 

groups; 

ø(D) to describe the debt burden of loan recipients and their 

capacity to repay their education debts; and 

ø(E) to disseminate such information in both published and 

machine readable form. 

ø(2) The survey shall be representative of full-time and parttime, undergraduate, graduate, and professional and current and 

former students in all types of institutions, and should be designed 

and administered in consultation with the Congress and the postsecondary education community.¿ 

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 related to college costs 

that are of greatest importance to prospective students, enrolled 

students, and their families, paying particular attention to lowincome, 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; and 

(D) make recommendations regarding the inclusion of 

specific data items and the most effective and least burdenVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00082 Fmt 6659 Sfmt 6603 E:\HR\OC\HR210.XXX HR210

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some 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 System 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 

undergraduate student. 

(B) The room and board charges for a first-time, full-time 

undergraduate student. 

(C) The price of attendance for a first-time, full-time undergraduate student, consistent with the provisions of section 472. 

(D) The average amount of financial assistance received 

by a first-year, full-time 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 undergraduate 

students receiving financial assistance described in each 

clause of subparagraph (D). 

(F) The institutional instructional expenditure per fulltime equivalent student. 


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(G) Student enrollment information, including information on the number and percentage of full-time and parttime students, and 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 parttime. 

(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 higher education price index 

(as defined in section 401B(d)) over the same 3-year time period; and 

(5) whether the institution has been placed on affordability 

alert status as required by subsection (d)(2). 

(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 higher education price index (as defined in section 401B(d)) 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 


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(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) 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 higher education price index (as defined in section 

401B(d)) 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. 

(3) EXEMPTIONS.—Notwithstanding paragraph (2), 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 the the class of institutions described in 

paragraph (5) 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 higher education price index (as 

defined in section 401B(d)) over the same time period, but 

the dollar amount of the sticker price increase is less than 

$500. 

(4) 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. 

(5) 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. 

(6) 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. 


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(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 subsection 

(c) 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 sticker price, 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. 

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) WAIVER.—The Secretary may waive the requirements of this 

section, if the Secretary determines that such a waiver would be equitable due to exceptional or uncontrollable circumstances, such as 

a natural disaster or a precipitous and unforeseen decline in the financial resources of the State educational agency. 

(c) 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) (except a 

State that receives a waiver under subsection (b)) 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.– 

* * * * * * * 

TITLE II—TEACHER QUALITY 

ENHANCEMENT 

* * * * * * *– 

PART C—CENTERS OF EXCELLENCE 

SEC. 231. DEFINITIONS 

As used in this part: 

(1) ELIGIBLE INSTITUTION.—The term ‘‘eligible institution’’ 

means— 


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(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 


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(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 as 

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—STUDENT ASSISTANCEPart 

A—Grants to Students in Attendance at 

Institutions of Higher Education 

* * * * * * * 


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Subpart 1—Federal Pell Grants 

SEC. 401. FEDERAL PELL GRANTS: AMOUNT AND DETERMINATIONS; 

APPLICATIONS. 

(a) PROGRAM AUTHORITY AND METHOD OF DISTRIBUTION.—(1) For 

each fiscal year through øfiscal year 2004¿ fiscal year 2013, 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) for each academic year during which that student 

is in attendance at an institution of higher education, as an undergraduate, a Federal Pell Grant in the amount for which that student is eligible, as determined pursuant to subsection (b). Not less 

than 85 percent of such sums 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) 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) Grants made under this subpart shall be known as ‘‘Federal 

Pell Grants’’. 

(b) PURPOSE AND AMOUNT OF GRANTS.—(1) * * * 

ø(2)(A) The amount of the Federal Pell Grant for a student eligible under this part shall be— 

ø(i) $4,500 for academic year 1999–2000; 

ø(ii) $4,800 for academic year 2000–2001; 

ø(iii) $5,100 for academic year 2001–2002; 

ø(iv) $5,400 for academic year 2002–2003; and 

ø(v) $5,800 for academic year 2003–2004, 

less an amount equal to the amount determined to be the expected 

family contribution with respect to that student for that year.¿– 

(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; and 

(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. 

* * * * * * * 

ø(3)(A) For any academic year for which an appropriation Act 

provides a maximum basic grant in an amount in excess of $2,700, 

the amount of a student’s basic grant shall equal $2,700 plus— 

ø(i) one-half of the amount by which such maximum basic grant 

exceeds $2,700; plus 

ø(ii) the lesser of— 


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ø(I) the remaining one-half of such excess; or 

ø(II) the sum of the student’s tuition and, if the student has 

dependent care expenses (as described in section 472(8)) or disability-related expenses (as described in section 472(9)), an allowance determined by the institution for such expenses. 

ø(B) An institution that charged only fees in lieu of tuition as of 

October 1, 1998, may include in the institution’s determination of 

tuition charged, fees that would normally constitute tuition.¿ 

ø(4)¿ (3) No Federal Pell Grant under this subpart shall exceed 

the difference between the expected family contribution for a student and 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 Federal Pell 

Grant plus the amount of the expected family contribution for that 

student exceeds the cost of attendance for that year, the amount 

of the Federal Pell Grant shall be reduced until the combination of 

expected family contribution and the amount of the Federal Pell 

Grant does not exceed the cost of attendance at such institution. 

ø(5)¿ (4) No Federal Pell Grant shall be awarded to a student 

under this subpart if the amount of that grant for that student as 

determined under this subsection for any academic year is less 

than $400, except that a student who is eligible for a Federal Pell 

Grant that is equal to or greater than $200 but less than $400 

shall be awarded a Federal Pell Grant of $400. 

ø(6)(A) The Secretary may allow, on a case-by-case basis, a student to receive 2 Pell grants during a single award year, if— 

ø(i) the student is enrolled full-time in an associate or baccalaureate degree program of study that is 2 years or longer at 

an eligible institution that is computed in credit hours; and 

ø(ii) the student completes course work toward completion of 

an associate or baccalaureate degree that exceeds the requirements for a full academic year as defined by the institution. 

(B) The Secretary shall promulgate regulations implementing 

this paragraph.¿ 

(5) YEAR-ROUND PELL GRANTS.—The Secretary is authorized, 

for students enrolled in a baccalaureate degree, associate’s degree, or certificate 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 or certificate objectives by enrolling in courses 

for more than 2 semesters, or 3 quarters, or the equivalent, in 

a given academic year. 

ø(7)¿ (6) Notwithstanding any other provision of this subpart, the 

Secretary shall allow the amount of the Federal Pell Grant to be 

exceeded for students participating in a program of study abroad 

approved for credit by the institution at which the student is enrolled when the reasonable costs of such program are greater than 

the cost of attendance at the student’s home institution, except that 

the amount of such Federal Pell Grant in any fiscal year shall not 

exceed the grant level specified in the appropriate Appropriation 

Act for this subpart for such year. If the preceding sentence applies, the financial aid administrator at the home institution may 

use the cost of the study abroad program, rather than the home institution’s cost, to determine the cost of attendance of the student. 


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ø(8)¿ (7) No Federal Pell Grant shall be awarded under this subpart to any individual who is incarcerated in any Federal or State 

penal institution.– 

(8) 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) $840,000,000 for fiscal year 2008; 

(ii) $870,000,000 for fiscal year 2009; 

(iii) $1,340,000,000 for fiscal year 2010; 

(iv) $2,280,000,000 for fiscal year 2011; 

(v) $2,350,000,000 for fiscal year 2012; 

(vi) $2,400,000,000 for fiscal year 2013; 

(vii) $2,450,000,000 for fiscal year 2014; 

(viii) $2,510,000,000 for fiscal year 2015; 

(ix) $2,550,000,000 for fiscal year 2016; and 

(x) $2,570,000,000 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) $200 for each of the award years 2008—2009 and 

2009—2010; 

(ii) $300 for award year 2010—2011; and 

(iii) $500 for award year 2011—2012 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.– 

* * * * * * * 

SEC. 401A. ACADEMIC COMPETITIVENESS GRANTS. 

(a) * * * 

* * * * * * * 

(c) DEFINITION OF ELIGIBLE STUDENT.—In this section the term 

‘‘eligible student’’ means a øfull-time¿ student who, for the academic year for which the determination of eligibility is made— 

ø(1) is a citizen of the United States;¿– 

(1) is an eligible student under section 484, including being 

enrolled or accepted for enrollment in a degree, certificate, or 

other eligible program leading to a recognized educational credential at an institution of higher education; 

* * * * * * * 

(3) in the case of a student enrolled or accepted for enrollment in— 


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(A) the first academic year of a program of undergraduate education at a two- or four-year degree-granting 

institution of higher education— 

(i) * * * 

(ii) has not been previously enrolled in a program of 

undergraduate education, except as part of a secondary 

school program of study; 

* * * * * * * 

(d) GRANT AWARD.— (1) * * * 

* * * * * * *– 

(3) ADJUSTMENT FOR LESS THAN FULL-TIME ENROLLMENT.—A 

grant awarded under this section to an eligible student who attends an eligible institution on a less than full-time (but at least 

half-time or more) basis shall be reduced in the same proportion as would a Federal Pell Grant pursuant to section 

401(b)(2)(B). 

* * * * * * *– 

(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.– 

ø(g)¿ (h) SUNSET PROVISION.—The authority to make grants 

under this section shall expire at the end of academic year 2010– 

2011.– 

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

(a) REWARDS FOR LOW TUITION.—For an institution of higher 

education that, for academic year 2008—2009 or any succeeding 

academic year, has an annual net tuition price increase (expressed 

as a percentage) for the most recent academic year for which satisfactory data is available that is equal to or less than the percentage 

change in the higher education price index for such academic year, 

the Secretary shall 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 (3) of this subsection, the Secretary 

shall provide to such institution a bonus amount equal to 25 

percent of the aggregate amount of aid received by students at 

the institution under section 401(a). Such institution shall 

award the bonus amount to the Pell Grant recipients who were 

in attendance at the institution during the award year that 

such institution satisfied the eligibility criteria for maintaining 


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low tuition and fees. Each such student shall receive an amount 

that equals 25 percent of their total Pell Grant award for such 

award year, except that no student shall recieve an amount 

under this section that would cause the amount of total financial aid received by such student to exceed the cost of attendance of the institution. If there are additional funds remaining 

after all eligible students have been paid from the bonus 

amount, the institution shall award all excess funds first to remaining Pell Grant recipients who were not in attendance at 

the institution during such award year, and then to other eligible students under this title in attendance at such institution in 

the form of need-based aid. 

(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. 


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(d) PRIORITY.—In awarding incentives and rewards under this 

section, the Secretary shall give priority to institutions of higher 

education with the lowest annual net tuition price increase (expressed as a percentage) for the most recent academic year for which 

satisfactory data is available, when compared with other institutions of higher education with annual net tuition price increases 

that are equal to or less than the percentage change in the higher 

education price index for such academic year. 

(e) 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. 

(f) 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. 

(g) SUNSET.—The authority to carry out this section shall expire 

at the end of fiscal year 2012.– 

Subpart 2—Federal Early Outreach and Student 

Services Programs 

CHAPTER 1—FEDERAL TRIO PROGRAMS 

* * * * * * * 

SEC. 402C. UPWARD BOUND. 

(a) * * * 

* * * * * * *– 

(f) ABSOLUTE PRIORITY PROHIBITED IN UPWARD BOUND PROGRAM.—Except as otherwise expressly provided by amendment to 

this section, the Secretary shall not implement or enforce, and shall 

rescind, the absolute priority for Upward Bound Program participant selection and evaluation published by the Department of Education in the Federal Register on September 22, 2006 (71 Fed. Reg. 

55447 et seq.). 

(g) ADDITIONAL FUNDS.— 

(1) AUTHORIZATION AND APPROPRIATION.—There are authorized to be appropriated, and there are appropriated to the Secretary, from funds not otherwise appropriated, $30,000,000 for 

each of the fiscal years 2008 through 2011 to carry out paragraph (2), except that any amounts that remain unexpended for 

such purpose for each of such fiscal years may be available for 

technical assistance and administration costs for the Upward 

Bound program. 

(2) USE OF FUNDS.—The amounts made available by paragraph (1) shall be available to provide assistance to all Upward 

Bound projects that received assistance in fiscal year 2006 but 

that did not receive assistance in fiscal year 2007 (other than 


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new applicants) with a grant score above 70. Such assistance 

shall be made available in the form of 4-year grants.– 

* * * * * * *– 

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 


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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 


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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. 

(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 the applicant is— 

(A) eligible for, and has applied for, a TEACH Grant; 

and 


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(B) 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. 

(2) QUALIFIED TEACHER PREPARATION PROGRAM.—The term 

‘‘qualified teacher preparation program’’ means a program for 

students and teachers described in subparagraph (A) or (B) of 

section 420M(a)(2) (referred to jointly in this paragraph as 

‘‘teacher candidates’’) that— 

(A) recruits and prepares teacher candidates who major 

in science, technology fields, special education, foreign language, engineering, or mathematics disciplines to become 

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ciplines, special education teachers, or teachers of English 

Language Learners, 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 

relevant 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 the disciplines described in subparagraph (A); 

(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 institution 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 

disciplines described in subparagraph (A); 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 applicant.– 

Part B—Federal Family Education Loan Program 

* * * * * * * 

SEC. 425. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS 

AND ON FEDERAL LOAN INSURANCE. 

(a) ANNUAL AND AGGREGATE LIMITS.— (1) ANNUAL LIMITS.—(A) The total of loans made to a student 

in any academic year or its equivalent (as determined by the 

Secretary) which may be covered by Federal loan insurance 

under this part may not exceed— 

(i) * * * 

* * * * * * * 

(iii) in the case of a student at an eligible institution 

who has successfully completed the first and second years 


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of a program of undergraduate education but has not successfully completed the remainder of such program— 

(I) ø$5,500¿ $7,500; or 

* * * * * * * 

(2) AGGREGATE LIMITS.—(A) The aggregate insured unpaid 

principal amount for all such insured loans made to any student shall not at any time exceed— 

(i) ø$23,000¿ $30,500, in the case of any student who 

has not successfully completed a program of undergraduate education, excluding loans made under section 

428A or 428B; and 

(ii) ø$65,500¿ $73,000, in the case of any graduate or 

professional student (as defined by regulations of the Secretary) and (I) including any loans which are insured by 

the Secretary under this section, or by a guaranty agency, 

made to such student before the student became a graduate or professional student), but (II) excluding loans 

made under section 428A or 428B, 

except that the Secretary may increase the limit applicable to 

students who are pursuing programs which the Secretary determines are exceptionally expensive. 

* * * * * * * 

SEC. 427. ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF FEDERALLY INSURED STUDENT LOANS. 

(a) LIST OF REQUIREMENTS.—Except as provided in section 428C, 

a loan by an eligible lender shall be insurable by the Secretary 

under the provisions of this part only if— 

(1) * * * 

(2) evidenced by a note or other written agreement which— 

(A) * * * 

* * * * * * * 

(C) provides that periodic installments of principal need 

not be paid, but interest shall accrue and be paid, during 

any period— 

(i) * * * 

* * * * * * * 

(iii) ønot in excess of 3 years¿ for any reason which 

the lender determines, in accordance with regulations 

prescribed by the Secretary under section 435(o), has 

caused or will cause the borrower to have an economic 

hardship; 

* * * * * * * 

SEC. 427A. APPLICABLE INTEREST RATES. 

(a) * * * 

* * * * * * * 

(l) INTEREST RATES FOR NEW LOANS ON OR AFTER JULY 1, 

2006.— 

(1) * * * 

* * * * * * *– 

(4) REDUCED RATES FOR UNDERGRADUATE SUBSIDIZED

LOANS.—Notwithstanding subsection (h) and paragraph (1) of 


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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.– 

* * * * * * * 

SEC. 428. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST 

COSTS. 

(a) * * * 

(b) INSURANCE PROGRAM AGREEMENTS TO QUALIFY LOANS FOR

INTEREST SUBSIDIES.— 

(1) REQUIREMENTS OF INSURANCE PROGRAM.—Any State or 

any nonprofit private institution or organization may enter 

into an agreement with the Secretary for the purpose of entitling students who receive loans which are insured under a 

student loan insurance program of that State, institution, or 

organization to have made on their behalf the payments provided for in subsection (a) if the Secretary determines that the 

student loan insurance program— 

(A) authorizes the insurance in any academic year, as 

defined in section 481(a)(2), or its equivalent (as determined under regulations of the Secretary) for any student 

who is carrying at an eligible institution or in a program 

of study abroad approved for credit by the eligible home institution at which such student is enrolled at least one-half 

the normal full-time academic workload (as determined by 

the institution) in any amount up to a maximum of— 

(i) * * * 

* * * * * * * 

(iii) in the case of a student at an eligible institution 

who has successfully completed the first and second 

years of a program of undergraduate education but 

has not successfully completed the remainder of such 

program— 


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(I) ø$5,500¿ $7,500; or 

* * * * * * * 

(B) provides that the aggregate insured unpaid principal 

amount for all such insured loans made to any student 

shall be any amount up to a maximum of— 

(i) ø$23,000¿ $30,500, in the case of any student 

who has not successfully completed a program of undergraduate education, excluding loans made under 

section 428A or 428B; and 

(ii) ø$65,500¿ $73,000, in the case of any graduate 

or professional student (as defined by regulations of 

the Secretary), and (I) including any loans which are 

insured by the Secretary under this section, or by a 

guaranty agency, made to such student before the student became a graduate or professional student, but 

(II) excluding loans made under section 428A or 428B, 

* * * * * * * 

ø(G) insures 98 percent of the unpaid principal of loans 

insured under the program, except that— 

ø(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); 

ø(ii) for any loan for which the first disbursement of 

principal is made on or after July 1, 2006, the preceding provisions of this subparagraph shall be applied by substituting ‘‘97 percent’’ for ‘‘98 percent’’; and 

ø(iii) 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);¿– 

(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);– 

* * * * * * * 

(M) provides that periodic installments of principal need 

not be paid, but interest shall accrue and be paid by the 

Secretary, during any period— 

(i) * * * 

* * * * * * * 

(iv) ønot in excess of 3 years¿ for any reason which 

the lender determines, in accordance with regulations 

prescribed by the Secretary under section 435(o), has 

caused or will cause the borrower to have an economic 

hardship; 

* * * * * * * 

(c) GUARANTY AGREEMENTS FOR REIMBURSING LOSSES.— 


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(1) AUTHORITY TO ENTER INTO AGREEMENTS.—(A) * * * 

* * * * * * * 

ø(D) Reimbursements of losses made by the Secretary on 

loans submitted for claim by an eligible lender, servicer, or 

guaranty agency designated for exceptional performance under 

section 428I shall not be subject to additional review by the 

Secretary or repurchase by the guaranty agency for any reason 

other than a determination by the Secretary that the eligible 

lender, servicer, or guaranty agency engaged in fraud or other 

purposeful misconduct in obtaining designation for exceptional 

performance.¿ 

ø(E)¿ (D) Notwithstanding any other provisions of this section, in the case of a loan made pursuant to a lender-of-lastresort program, the Secretary shall apply the provisions of— 

(i) * * * 

* * * * * * * 

ø(F)¿ (E) Notwithstanding any other provisions of this section, in the case of an outstanding loan transferred to a guaranty agency from another guaranty agency pursuant to a plan 

approved by the Secretary in response to the insolvency of the 

latter such guarantee agency, the Secretary shall apply the 

provision of— 

(i) * * * 

* * * * * * * 

ø(G)¿ (F)(i) Notwithstanding any other provisions of this section, in the case of exempt claims, the Secretary shall apply 

the provisions of— 

(I) * * * 

* * * * * * * 

ø(H)¿ (G) Notwithstanding any other provision of this section, the Secretary shall exclude a loan made pursuant to a 

lender-of-last-resort program when making reimbursement 

payment calculations under subparagraphs (B) and (C). 

* * * * * * * 

(6) SECRETARY’S EQUITABLE SHARE.—(A) For the purpose of 

paragraph (2)(D), the Secretary’s equitable share of payments 

made by the borrower shall be that portion of the payments remaining after the guaranty agency with which the Secretary 

has an agreement under this subsection has deducted from 

such payments— 

(i) * * * 

ø(ii) an amount equal to 24 percent of such payments for 

use in accordance with section 422B, except that, beginning on October 1, 2003, this subparagraph shall be applied by substituting ‘‘23 percent’’ for ‘‘24 percent’’.¿ 

(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’’. 

* * * * * * * 

(k) INFORMATION ON DEFAULTS.— 


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(1) * * * 

* * * * * * * 

(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 or 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 paragraph— 

(i) 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; and 

(ii) 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. 

* * * * * * * 

øSEC. 428I. SPECIAL INSURANCE AND REINSURANCE RULES. 

ø(a) DESIGNATION OF LENDERS, SERVICERS, AND GUARANTY AGEN- CIES.— ø(1) AUTHORITY.—Whenever the Secretary determines that 

an eligible lender, servicer, or guaranty agency has a compliance performance rating that equals or exceeds 97 percent, the 

Secretary shall designate the eligible lender, servicer, or guaranty agency, as the case may be, for exceptional performance. 

The Secretary shall notify each appropriate guaranty agency of 

the eligible lenders and servicers designated under this section. 

ø(2) COMPLIANCE PERFORMANCE RATING.—For purposes of 

paragraph (1), a compliance performance rating is determined 

with respect to compliance with due diligence in the collection 

of loans under this part for each year for which the determination is made. Such rating is equal to the percent of all due diligence requirements applicable to each loan, on average, as established by the Secretary by regulation, with respect to— 

ø(A) loans serviced during the period by the eligible 

lender or servicer; or 

ø(B) loans on which loan collection was attempted by the 

guaranty agency. 

ø(b) PAYMENT TO LENDERS AND SERVICERS.— 

ø(1) 99 PERCENT PAYMENT RULE.—Each guaranty agency 

shall pay each eligible lender or servicer (as agent for an eligible lender) designated under subsection (a) 99 percent of the 

unpaid principal and interest of all loans for which claims are 

submitted for payment by that eligible lender or servicer for 

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cy of the notification of designation under this section or until 

the guaranty agency receives notice from the Secretary that 

the designation of the lender or servicer under subsection (a) 

has been revoked. 

ø(2) REVOCATION AUTHORITY.—The Secretary shall revoke 

the designation of a lender or servicer under subsection (a) if 

any quarterly audit required under subsection (c)(5) is not received by the Secretary by the date established by the Secretary or if the audit indicates the lender or servicer failed to 

maintain 97 percent or higher compliance with program regulations, as reflected in the performance of not less than 97 percent of all due diligence requirements applicable to each loan, 

on average, as established by the Secretary for the purpose of 

this section, for 2 consecutive months or 90 percent for 1 

month. 

ø(3) DOCUMENTATION.—Nothing in this section shall restrict 

or limit the authority of guaranty agencies to require the submission of claims documentation evidencing servicing performed on loans, except that the guaranty agency may not require greater documentation than that required for lenders and 

servicers not designated under subsection (a). 

ø(4) PAYMENTS TO GUARANTY AGENCIES.—The Secretary shall 

pay to each guaranty agency designated under subsection (a) 

the appropriate percentage under this subsection for the 1-year 

period following the receipt by the guaranty agency of the notification of designation under subsection (a). 

ø(c) SUPERVISION OF DESIGNATED LENDERS AND SERVICERS.— ø(1) AUDITS FOR LENDERS AND SERVICERS.—Each eligible 

lender or servicer desiring a designation under subsection (a) 

shall have a financial and compliance audit of the loan portfolio of such eligible lender or servicer conducted annually by 

a qualified independent organization from a list of qualified organizations promulgated by the Secretary in accordance with 

standards established by the Comptroller General and the Secretary. The standards shall measure the lender’s or servicer’s 

compliance with the due diligence standards and shall include 

a defined statistical sampling technique designed to measure 

the performance rating of the eligible lender or servicer for the 

purpose of this section. Each eligible lender or servicer shall 

submit the audit required by this section to the Secretary and 

to each appropriate guaranty agency. 

ø(2) ADDITIONAL INFORMATION ON LENDERS AND SERVICERS.— 

Each appropriate guaranty agency shall provide the Secretary 

with such other information in its possession regarding an eligible lender or servicer desiring designation as may relate to 

the Secretary’s determination under subsection (a), including 

but not limited to any information suggesting that the application of a lender or servicer for designation under subsection (a) 

should not be approved. 

ø(3) SECRETARY’S DETERMINATIONS.—The Secretary shall 

make the determination under subsection (a) based upon the 

audits submitted under this section, such other information as 

provided by any guaranty agency under paragraph (2), and any 

information in the possession of the Secretary or submitted by 

any other agency or office of the Federal Government. If the 


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results of the audit are not persuasively rebutted by such other 

information, the Secretary shall inform the eligible lender or 

servicer and the appropriate guaranty agency that its application for designation as an exceptional lender or servicer has 

been approved. 

ø(4) COST OF AUDIT.—Each eligible lender or servicer shall 

pay for all the costs of the audits required under this section. 

ø(5) COMPLIANCE AUDIT.—In order to maintain its status as 

an exceptional eligible lender or servicer, the lender or servicer 

shall undergo a quarterly compliance audit at the end of each 

quarter (other than the quarter in which status as an exceptional lender or servicer is established through a financial and 

compliance audit, as described in subsection (c)(1)), and submit 

the results of such audit to the Secretary and such appropriate 

guaranty agency. The compliance audit will review compliance 

with due diligence requirements for the period since the last 

audit. 

ø(6) LOSS OF DESIGNATION.—If the audit performed pursuant 

to paragraph (5) fails to meet the standards for designation as 

an exceptional lender or servicer under subsection (a)(1), the 

lender or servicer shall lose its designation as an exceptional 

lender or servicer. A lender or servicer receiving a compliance 

audit not meeting the standard for designation as an exceptional lender or servicer may reapply for designation under 

subsection (a) at any time. 

ø(7) DUE DILIGENCE STANDARDS.—Due diligence standards 

used for determining compliance under paragraph (5) shall be 

promulgated by the Secretary after consultation with lenders, 

guaranty agencies and servicers and shall consist of a list of 

specific elements for the Federal regulations selected to provide 

an indication of systems degradation. 

ø(8) ADDITIONAL REVOCATION AUTHORITY.—Notwithstanding 

any other provision of this section, designation under subsection (a) may be revoked at any time by the Secretary if the 

Secretary determines that the eligible lender or servicer has 

failed to maintain an overall level of regulatory compliance 

consistent with the audit submitted by the eligible lender or 

servicer under this section or if the Secretary believes the lender or servicer may have engaged in fraud in securing designation under subsection (a) or is failing to service loans in accordance with program regulations. 

ø(d) SUPERVISION OF DESIGNATED GUARANTY AGENCIES.— 

ø(1) AUDIT OF GUARANTY AGENCIES.—Each guaranty agency 

desiring a designation under subsection (a) shall have a financial and compliance audit of the defaulted loan portfolio of such 

guaranty agency conducted annually by a qualified independent organization or person from a list of qualified organizations or persons promulgated by the Secretary in accordance 

with standards established by the Comptroller General and the 

Secretary. The standards shall include defined statistical sampling techniques designed to measure the performance rating 

of the guaranty agency for the purpose of this section. Each 

guaranty agency shall submit the audit required by this paragraph to the Secretary. 


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ø(2) QUARTERLY SAMPLE AUDITS.—The Secretary may require 

quarterly sample audits as a means of determining continued 

qualification of the guaranty agency for designation as an exceptional guaranty agency. 

ø(3) SECRETARY’S DETERMINATIONS.—The Secretary shall 

make the determination under subsection (a) based upon the 

audits submitted under this section and other information in 

his possession. If the results of the audit are not persuasively 

rebutted by such other information, the Secretary shall inform 

the guaranty agency that its application for designation as an 

exceptional guaranty agency has been approved. 

ø(4) COSTS OF AUDITS.—Each guaranty agency shall pay for 

all of the costs of the audits regulated by this section. 

ø(5) REVOCATION FOR FRAUD.—The Secretary may revoke the 

designation of a guaranty agency under subsection (a) at any 

time if the Secretary has reason to believe the guaranty agency 

secured its designation under subsection (a) through fraud or 

fails to comply with applicable regulations. 

ø(6) REVOCATION BASED ON PERFORMANCE.—Designation as 

an exceptional guaranty agency may be revoked at any time by 

the Secretary upon 30 days notice and an opportunity for a 

hearing before the Secretary upon a finding by the Secretary 

that the guaranty agency has failed to maintain an acceptable 

overall level of regulatory compliance. 

ø(e) SPECIAL RULE.—Reimbursements made by the Secretary on 

loans submitted for claim by an eligible lender or loan servicer designated for exceptional performance under this section shall not be 

subject to additional review by the Secretary or repurchase by the 

guaranty agency for any reason other than a determination by the 

Secretary that the eligible lender, loan servicer, or guaranty agency 

engaged in fraud or other purposeful misconduct in obtaining designation for exceptional performance. 

ø(f) LIMITATION.—Nothing in this section shall be construed to affect the processing of claims on student loans of eligible lenders not 

subject to this paragraph. 

ø(g) CLAIMS.—A lender, servicer, or guaranty agency designated 

under subsection (a) failing to service loans or otherwise comply 

with applicable program regulations shall be considered in violation of section 3729 of title 31, United States Code, . 

ø(h) EVALUATION.—Not later than 3 years after the date of enactment of this Act, the Comptroller General shall submit to the 

Chairman of the Senate Labor and Human Resources Committee 

and the House Committee on Education and Labor, an evaluation 

of the provisions of this section including, but not limited to, the 

following: 

ø(1) The effectiveness of due diligence performed by lenders 

and servicers receiving designation as exceptional lenders or 

servicers from the perspective of securing maximum collections 

from borrowers. 

ø(2) A quantification of the dollar volume of claims that were 

paid to exceptional lenders and servicers that would not have 

been paid under applicable program provisions prior to the enactment of this section. 

ø(3) An assessment of the impact of this section on the financial condition of guaranty agencies. 


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ø(4) An assessment of the savings to lenders, servicers, and 

guaranty agencies resulting from designation as exceptional 

performance. 

ø(5) An identification of specific administration steps that 

lenders, servicers, and guaranty agencies do not have to perform as a result of designation as exceptional lenders, 

servicers, or guaranty agencies. 

ø(6) A recommendation for program modifications applicable 

to all program participants based on the findings of the evaluation. 

ø(7) A recommendation for modifications to this section and 

whether the program should be continued. 

ø(i) TERMINATION.—After receipt of the study authorized in subsection (h), the Secretary may terminate such program if he determines such termination to be in the fiscal interest of the United 

States. 

ø(j) DEFINITIONS.—For the purpose of this section— 

ø(1) the term ‘‘due diligence requirements’’ means the activities required to be performed by lenders on delinquent loans 

pursuant to regulations issued by the Secretary; 

ø(2) the term ‘‘eligible loan’’ means a loan made, insured or 

guaranteed under part B of title IV; 

ø(3) the term ‘‘servicer’’ means an entity servicing and collecting student loans which— 

ø(A) has substantial experience in servicing and collecting consumer loans or student loans; 

ø(B) has an independent financial audit annually which 

is furnished to the Secretary and any other parties designated by the Secretary; 

ø(C) has business systems which are capable of meeting 

the requirements of part B of title IV; 

ø(D) has adequate personnel who are knowledgeable 

about the student loan programs authorized by part B of 

title IV; and 

ø(E) does not have any owner, majority shareholder, director, or officer of the entity who has been convicted of a 

felony.¿ 

* * * * * * * 

øSEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS. 

ø(a) PURPOSE.—It is the purpose of this section— 

ø(1) to bring more highly trained individuals into the early 

child care profession; and 

ø(2) to keep more highly trained child care providers in the 

early child care field for longer periods of time. 

ø(b) DEFINITIONS.—In this section: 

ø(1) CHILD CARE FACILITY.—The term ‘‘child care facility’’ 

means a facility, including a home, that— 

ø(A) provides child care services; and 

ø(B) meets applicable State or local government licensing, certification, approval, or registration requirements, if 

any. 

ø(2) CHILD CARE SERVICES.—The term ‘‘child care services’’ 

means activities and services provided for the education and 


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care of children from birth through age 5 by an individual who 

has a degree in early childhood education. 

ø(3) DEGREE.—The term ‘‘degree’’ means an associate’s or 

bachelor’s degree awarded by an institution of higher education. 

ø(4) EARLY CHILDHOOD EDUCATION.—The term ‘‘early childhood education’’ means education in the areas of early child 

education, child care, or any other educational area related to 

child care that the Secretary determines appropriate. 

ø(5) INSTITUTION OF HIGHER EDUCATION.—Notwithstanding 

section 102, the term ‘‘institution of higher education’’ has the 

meaning given the term in section 101. 

ø(c) DEMONSTRATION PROGRAM.— 

ø(1) IN GENERAL.—The Secretary may carry out a demonstration program of assuming the obligation to repay, pursuant to subsection (d), a loan made, insured, or guaranteed 

under this part or part D (excluding loans made under sections 

428B and 428C or comparable loans made under part D) for 

any new borrower after the date of enactment of the Higher 

Education Amendments of 1998, who— 

ø(A) completes a degree in early childhood education; 

ø(B) obtains employment in a child care facility; and 

ø(C) has worked full time for the 2 consecutive years 

preceding the year for which the determination is made as 

a child care provider in a low-income community. 

ø(2) LOW-INCOME COMMUNITY.—For the purposes of this subsection, the term ‘‘low-income community’’ means a community 

in which 70 percent of households within the community earn 

less than 85 percent of the State median household income. 

ø(3) AWARD BASIS; PRIORITY.— 

ø(A) AWARD BASIS.—Subject to subparagraph (B), loan 

repayment under this section shall be on a first-come, 

first-served basis and subject to the availability of appropriations. 

ø(B) PRIORITY.—The Secretary shall give priority in providing loan repayment under this section for a fiscal year 

to student borrowers who received loan repayment under 

this section for the preceding fiscal year. 

ø(4) REGULATIONS.—The Secretary is authorized to prescribe 

such regulations as may be necessary to carry out the provisions of this section. 

ø(d) LOAN REPAYMENT.— 

ø(1) IN GENERAL.—The Secretary shall assume the obligation 

to repay— 

ø(A) after the second consecutive year of employment described in subparagraphs (B) and (C) of subsection (c)(1), 

20 percent of the total amount of all loans made after date 

of enactment of the Higher Education Amendments of 

1998, to a student under this part or part D; 

ø(B) after the third consecutive year of such employment, 20 percent of the total amount of all such loans; and 

ø(C) after each of the fourth and fifth consecutive years 

of such employment, 30 percent of the total amount of all 

such loans. 


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ø(2) CONSTRUCTION.—Nothing in this section shall be construed to authorize the refunding of any repayment of a loan 

made under this part or part D. 

ø(3) INTEREST.—If a portion of a loan is repaid by the Secretary under this section for any year, the proportionate 

amount of interest on such loan which accrues for such year 

shall be repaid by the Secretary. 

ø(4) SPECIAL RULE.—In the case where a student borrower 

who is not participating in loan repayment pursuant to this 

section returns to an institution of higher education after graduation from an institution of higher education for the purpose 

of obtaining a degree in early childhood education, the Secretary is authorized to assume the obligation to repay the total 

amount of loans made under this part or part D incurred for 

a maximum of two academic years in returning to an institution of higher education for the purpose of obtaining a degree 

in early childhood education. Such loans shall only be repaid 

for borrowers who qualify for loan repayment pursuant to the 

provisions of this section, and shall be repaid in accordance 

with the provisions of paragraph (1). 

ø(5) INELIGIBILITY OF NATIONAL SERVICE AWARD RECIPIENTS.—No student borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of 

title I of the National and Community Service Act of 1990 (42 

U.S.C. 12601 et seq.). 

ø(e) REPAYMENT TO ELIGIBLE LENDERS.—The Secretary shall pay 

to each eligible lender or holder for each fiscal year an amount 

equal to the aggregate amount of loans which are subject to repayment pursuant to this section for such year. 

ø(f) APPLICATION FOR REPAYMENT.— 

ø(1) IN GENERAL.—Each eligible individual desiring loan repayment under this section shall submit a complete and accurate application to the Secretary at such time, in such manner, 

and containing such information as the Secretary may require. 

ø(2) CONDITIONS.—An eligible individual may apply for loan 

repayment under this section after completing each year of 

qualifying employment. The borrower shall receive forbearance 

while engaged in qualifying employment unless the borrower is 

in deferment while so engaged. 

ø(g) EVALUATION.— 

ø(1) IN GENERAL.—The Secretary shall conduct, by grant or 

contract, an independent national evaluation of the impact of 

the demonstration program assisted under this section on the 

field of early childhood education. 

ø(2) COMPETITIVE BASIS.—The grant or contract described in 

subsection (b) shall be awarded on a competitive basis. 

ø(3) CONTENTS.—The evaluation described in this subsection 

shall— 

ø(A) determine the number of individuals who were encouraged by the demonstration program assisted under 

this section to pursue early childhood education; 

ø(B) determine the number of individuals who remain 

employed in a child care facility as a result of participation 

in the program; 


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ø(C) identify the barriers to the effectiveness of the program; 

ø(D) assess the cost-effectiveness of the program in improving the quality of— 

ø(i) early childhood education; and 

ø(ii) child care services; 

ø(E) identify the reasons why participants in the program have chosen to take part in the program; 

ø(F) identify the number of individuals participating in 

the program who received an associate’s degree and the 

number of such individuals who received a bachelor’s degree; and 

ø(G) identify the number of years each individual participates in the program. 

ø(4) INTERIM AND FINAL EVALUATION REPORTS.—The Secretary shall prepare and submit to the President and the Congress such interim reports regarding the evaluation described 

in this subsection as the Secretary deems appropriate, and 

shall prepare and so submit a final report regarding the evaluation by January 1, 2002. 

ø(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 

to be appropriated to carry out this section $10,000,000 for fiscal 

year 1999, and such sums as may be necessary for each of the 4 

succeeding fiscal years.¿– 

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) is employed full-time 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 


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care, development, and education of infants, toddlers, or young 

children age 5 and under. 

(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 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— 


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(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 a 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 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.—At the end of each school, academic, or calendar year of full-time employment in an area of national need described in subsection (b), not to exceed 5 years, the 

Secretary shall forgive not more than $1,000 of the student loan obligation of a borrower that is outstanding after the completion of 

each such school, academic, or calendar year of employment, as appropriate, not to exceed $5,000 in the aggregate for any borrower. 

(d) CONSTRUCTION.—Nothing in this section shall be construed to 

authorize the refunding of any repayment of a loan. 

(e) SEGAL AMERICORPS EDUCATION AWARD AND NATIONAL SERV- ICE 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 receive under this section the amount, if any, by which the 

maximum benefit available under this section exceeds the maximum 

education award available under such subtitle. 

(f) INELIGIBILITY FOR DOUBLE BENEFITS.—No borrower may receive a reduction of loan obligations under both this section and section 428J or 460. 

(g) 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, 


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development, and education of infants, toddlers, or young children age 5 and under, meets any applicable State or local government licensing, certification, approval, and registration requirements, and is operated by— 

(A) a public or private school that is 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— 


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(A) 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) provides speech-language pathology services under 

section 1861(ll)(1) of the Social Security Act (42 U.S.C. 

1395x(ll)(1), or meets or exceeds the qualifications for a 

qualified speech-language pathologist under subsection 

(ll)(3) of such section (42 U.S.C. 1395x(ll)(3)). 

(h) 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. 435. DEFINITIONS FOR STUDENT LOAN INSURANCE PROGRAM. 

As used in this part: 

(a) * * * 

* * * * * * * 

(o) ECONOMIC HARDSHIP.— (1) IN GENERAL.—For purposes of this part and part E, a borrower shall be considered to have an economic hardship if— 

(A) such borrower is working full-time and is earning an 

amount which does not exceed the greater of— 

(i) * * * 

(ii) an amount equal to ø100 percent of the poverty 

line for a family of 2¿ 150 percent of the poverty line 

applicable to the borrower’s family size as determined 

in accordance with section 673(2) of the Community 

Service Block Grant Act; or 

ø(B) such borrower is working full-time and has a Federal educational debt burden that equals or exceeds 20 

percent of such borrower’s adjusted gross income, and the 

difference between such borrower’s adjusted gross income 

minus such burden is less than 220 percent of the greater 

of— 

ø(i) the annual earnings of an individual earning the 

minimum wage under section 6 of the Fair Labor 

Standards Act of 1938; or 

ø(ii) the income official poverty line (as defined by 

the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Community Services Block Grant Act) applicable to a family of two; or¿ 

ø(C)¿ (B) such borrower meets such other criteria as are 

established by the Secretary by regulation in accordance 

with paragraph (2). 

(2) CONSIDERATIONS.—In establishing criteria for purposes of 

paragraph ø(1)(C)¿ (1)(B), the Secretary shall consider the borrower’s income and debt-to-income ratio as primary factors. 

* * * * * * * 

SEC. 438. SPECIAL ALLOWANCES. 

(a) * * * 


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(b) COMPUTATION AND PAYMENT.— (1) * * * 

(2) RATE OF SPECIAL ALLOWANCE.—(A) * * * 

* * * * * * * 

(I) LOANS DISBURSED ON OR AFTER JANUARY 1, 2000.— (i) IN GENERAL.—Notwithstanding subparagraphs (G) 

and (H), but subject to paragraph (4) and øclauses (ii), (iii), 

and (iv)¿ the following clauses of this subparagraph, and 

except as provided in subparagraph (B), the special allowance paid pursuant to this subsection on loans for which 

the first disbursement is made on or after January 1, 

2000, shall be computed— 

(I) * * * 

* * * * * * * 

(ii) IN SCHOOL AND GRACE PERIOD.—In the case of any 

loan— 

(I) * * * 

(II) for which the first disbursement is made on or 

after July 1, 2006, and for which the applicable rate 

of interest is described in øsection 427A(l)(1)¿ section 

427A(l)(1) or (l)(4), but only with respect to (aa) periods prior to the beginning of the repayment period of 

the loan; or (bb) during the periods in which principal 

need not be paid (whether or not such principal is in 

fact paid) by reason of a provision described in section 

427(a)(2)(C) or 428(b)(1)(M); 

* * * * * * * 

(v) RECAPTURE OF EXCESS INTEREST.— (I) * * * 

* * * * * * * 

(III) SPECIAL ALLOWANCE SUPPORT LEVEL.—For purposes of this clause, the term ‘‘special allowance support level’’ means, for any loan, a number expressed as 

a percentage equal to the sum of the rates determined 

under subclauses (I) and (III) of clause (i), and applying any substitution rules applicable to such loan 

under øclauses (ii), (iii), and (iv)¿ clauses (ii), (iii), (iv), 

and (vi) in determining such sum.– 

(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. 


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(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.– 

* * * * * * * 

(5) DEFINITION OF ELIGIBLE LOAN.—As used in this section, 

the term ‘‘eligible loan’’ means a loan— 

(A) * * * 

øAs used in this section, the term ‘‘eligible loan’’ includes all loans 

subject to section 428I.¿ 

* * * * * * * 

(d) LOAN FEES FROM LENDERS.— (1) * * * 

ø(2) AMOUNT OF LOAN FEES.—With respect to any loan under 

this part for which the first disbursement was made on or after 

October 1, 1993, the amount of the loan fee which shall be deducted under paragraph (1) shall be equal to 0.50 percent of 

the principal amount of the loan.¿– (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 

described in subclause (I) or (II) of clause (iii); 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— 

(I) any holder that, together with its affiliated 

holders, is designated by the Secretary as a small 

lender under subparagraph (B); or 

(II) any holder that— 

(aa) is a unit of State or local government or 

a nonprofit private entity; and 

(bb) is not owned in whole or in part by, or 

controlled or operated by, or otherwise affiliated with, a for-profit entity. 

(B) DESIGNATION OF SMALL LENDERS.—In determining 

which holders of eligible loans qualify as small lenders for 

purposes of subparagraph (A)(iii)(I), 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 of eligible loans (combined with 

their affiliated holders) 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 


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(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).– 

* * * * * * * 

PART D—WILLIAM D. FORD FEDERAL DIRECT 

LOAN PROGRAM 

* * * * * * * 

SEC. 455. TERMS AND CONDITIONS OF LOANS. 

(a) * * * 

(b) INTEREST RATE.— (1) * * * 

* * * * * * * 

(7) INTEREST RATE PROVISION FOR NEW LOANS ON OR AFTER

JULY 1, 2006.— (A) * * * 

* * * * * * *– 

(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, 


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3.40 percent on the unpaid principal balance of the 

loan.– 

* * * * * * * 

(d) REPAYMENT PLANS.— (1) DESIGN AND SELECTION.—Consistent with criteria established by the Secretary, the Secretary shall offer a borrower of 

a loan made under this part a variety of plans for repayment 

of such loan, including principal and interest on the loan. The 

borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. The borrower 

may choose— 

(A) * * * 

* * * * * * * 

(C) an extended repayment plan, consistent with section 

ø428(b)(9)(A)(v)¿ 428(b)(9)(A)(iv), except that the borrower 

shall annually repay a minimum amount determined by 

the Secretary in accordance with section 428(b)(1)(L); and 

(D) an income contingent repayment plan, with varying 

annual repayment amounts based on the income of the 

borrower, paid over an extended period of time prescribed 

by the Secretary, not to exceed 25 years, except that the 

plan described in this subparagraph shall not be available 

to the borrower of a Federal Direct PLUS loan made on behalf of a dependent student. 

* * * * * * * 

(e) INCOME CONTINGENT REPAYMENT.— (1) * * * 

* * * * * * *– 

(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. 

(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, 


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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).– 

(f) DEFERMENT.— (1) * * * 

(2) ELIGIBILITY.—A borrower of a loan made under this part 

shall be eligible for a deferment during any period— 

(A) * * * 

* * * * * * * 

(D) ønot in excess of 3 years¿ during which the Secretary determines, in accordance with regulations prescribed under section 435(o), that the borrower has experienced or will experience an economic hardship. 

* * * * * * * 

SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES. 

(a) * * * 

(b) CALCULATION BASIS.—øAccount¿ 

(1) FOR FISCAL YEARS 2006 AND 2007.—For fiscal years 2006 

and 2007, account maintenance fees payable to guaranty agencies under subsection (a)(3) shall be calculated on the basis of 

0.10 percent of the original principal amount of outstanding 

loans on which insurance was issued under part B.– 

(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 


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(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.– 

* * * * * * * 

Part E—Federal Perkins Loans 

SEC. 461. APPROPRIATIONS AUTHORIZED. 

(a) * * * 

(b) AUTHORIZATION OF APPROPRIATIONS.—(1) * * * 

* * * * * * *– 

(3) In addition to any amounts appropriated pursuant to paragraph (1) or (2) of this subsection, there shall be available to the 

Secretary for contributions to student loan funds established under 

part E, from funds not otherwise appropriated, $100,000,000 for 

each of the fiscal years 2008 through 2012. The sum of the amount 

made available under this subsection for any such fiscal year, plus 

the amount so appropriated for such fiscal year, shall, for purposes 

of allocations under section 462, be treated as the amount appropriated pursuant to section 461(b) for such fiscal year. 

(4) The authority to make contributions to student loan funds 

under this part shall expire at the end of fiscal year 2012.– 

* * * * * * * 

SEC. 464. TERMS OF LOANS. 

(a) * * * 

* * * * * * * 

(c) CONTENTS OF LOAN AGREEMENT.—(1) * * * 

(2)(A) No repayment of principal of, or interest on, any loan from 

a student loan fund assisted under this part shall be required during any period— 

(i) * * * 

* * * * * * * 

(iv) ønot in excess of 3 years¿ for any reason which the lender 

determines, in accordance with regulations prescribed by the Secretary under section 435(o), has caused or will cause the borrower 

to have an economic hardship; or 

* * * * * * * 

PART F—NEED ANALYSIS 

* * * * * * * 

SEC. 475. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS. 

(a) * * * 

* * * * * * * 

(g) STUDENT CONTRIBUTION FROM AVAILABLE INCOME.— 

(1) * * * 


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(2) ADJUSTMENT TO STUDENT INCOME.—The adjustment to 

student income is equal to the sum of— 

(A) * * * 

* * * * * * * 

ø(D) an income protection allowance of $2,200 (or a successor amount prescribed by the Secretary under section 

478);¿– 

(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;– 

* * * * * * * 

SEC. 476. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS 

WITHOUT DEPENDENTS OTHER THAN A SPOUSE. 

(a) * * * 

(b) FAMILY’S CONTRIBUTION FROM AVAILABLE INCOME.— 

(1) IN GENERAL.—The family’s contribution from income is 

determined by— 

(A) deducting from total income (as defined in section 

480)— 

(i) * * * 

* * * * * * * 

ø(iv) an income protection allowance of the following 

amount (or a successor amount prescribed by the Secretary under section 478)— 

ø(I) $5,000 for single students; 

ø(II) $5,000 for married students where both are 

enrolled pursuant to subsection (a)(2); and 

ø(III) $8,000 for married students where one is 

enrolled pursuant to subsection (a)(2);¿– 

(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; 


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(cc) for the 2011—2012 academic year, $12,220; and 

(dd) for the 2012—2013 academic year, $12,960;– 

* * * * * * * 

SEC. 478. REGULATIONS; UPDATED TABLES. 

(a) * * * 

(b) INCOME PROTECTION ALLOWANCE.— (1) REVISED TABLES.— (A) IN GENERAL.—For each academic year after academic 

year 1993–1994, the Secretary shall publish in the Federal 

Register a revised table of income protection allowances for 

the purpose of sections 475(c)(4) and 477(b)(4). Such revised table shall be developed by increasing each of the 

dollar amounts contained in the table in each such section 

by a percentage equal to the estimated percentage increase 

in the Consumer Price Index (as determined by the Secretary) between December 1992 and the December next 

preceding the beginning of such academic year, and rounding the result to the nearest $10. øFor the 2007–2008¿ 

(B) SPECIAL RULE FOR 2007–2008 ACADEMIC YEAR.—For the 

2007–2008 academic year, the Secretary shall revise the 

tables in accordance with this paragraph, except that the 

Secretary shall increase the amounts contained in the 

table in section 477(b)(4) by a percentage equal to the 

greater of the estimated percentage increase in the Consumer Price Index (as determined under the øpreceding 

sentence¿ subparagraph (A)) or 5 percent.– 

(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.– 

(2) REVISED AMOUNTS.—For each academic year after academic year 2007–2008, the Secretary shall publish in the Federal Register revised income protection allowances for the purpose of sections 475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised 

allowances øshall be developed by increasing each of the dollar 

amounts contained in such section 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.¿ 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 defined in section 478(f)) between December 

2006 and the December next preceding the beginning of 


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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 defined in section 478(f)) between December 2011 and 

the December next preceding the beginning of such academic year, and rounding the result to the nearest $10. 

* * * * * * * 

SEC. 479. SIMPLIFIED NEEDS TESTS. 

(a) * * * 

(b) SIMPLIFIED NEEDS TEST.— (1) ELIGIBILITY.—An applicant is eligible to file a simplified 

form containing the elements required by paragraph (2) if— 

(A) in the case of an applicant who is a dependent student— 

(i) the student’s parents— 

(I) * * * 

(II) certify that the parents are not required to 

file a Federal income tax return; øor¿– (III) 1 of whom is a dislocated worker; or– 

ø(III)¿ (IV) received, or the student received, 

benefits at some time during the previous ø12- 

month¿ 24-month period under a means-tested 

Federal benefit program as defined under subsection (d); and 

* * * * * * * 

(B) in the case of an applicant who is an independent 

student— 

(i) the student (and the student’s spouse, if any)— 

(I) * * * 

(II) certifies that the student (and the student’s 

spouse, if any) is not required to file a Federal income tax return; øor¿– 

(III) 1 of whom is a dislocated worker; or– 

ø(III)¿ (IV) received benefits at some time during the previous ø12-month¿ 24-month period 

under a means-tested Federal benefit program as 

defined under subsection (d); and 

* * * * * * * 

(c) ZERO EXPECTED FAMILY CONTRIBUTION.—The Secretary shall 

consider an applicant to have an expected family contribution equal 

to zero if— 

(1) in the case of a dependent student— 

(A) the student’s parents— 

(i) file, or are eligible to file, a form described in subsection (b)(3); 

(ii) certify that the parents are not required to file 

a Federal income tax return; øor¿– 

(iii) 1 of whom is a dislocated worker; or– 

ø(iii)¿ (iv) received, or the student received, benefits 

at some time during the previous ø12-month¿ 24- 


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month period under a means-tested Federal benefit 

program as defined under subsection (d); and 

(B) the sum of the adjusted gross income of the parents 

is less than or equal to ø$20,000¿ $30,000; or 

(2) in the case of an independent student with dependents 

other than a spouse— 

(A) the student (and the student’s spouse, if any)— 

(i) files, or is eligible to file, a form described in subsection (b)(3); 

(ii) certifies that the student (and the student’s 

spouse, if any) is not required to file a Federal income 

tax return; øor¿– (iii) is a dislocated worker; or– 

ø(iii)¿ (iv) received benefits at some time during the 

previous ø12-month¿ 24-month period under a meanstested Federal benefit program as defined under subsection (d); and 

(B) the sum of the adjusted gross income of the student 

and spouse (if appropriate) is less than or equal to 

ø$20,000¿ $30,000. An individual is not required to qualify or file for the earned income credit in order to be eligible under this subsection. 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). 

ø(d) DEFINITION OF MEANS-TESTED FEDERAL BENEFIT PRO- GRAM.—In this section, the term¿ 

(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 

‘‘means-tested Federal benefit program’’ means a mandatory 

spending program of the Federal Government, other than a 

program under this title, in which eligibility for the program’s 

benefits, or the amount of such benefits, are determined on the 

basis of income or resources of the individual or family seeking 

the benefit, and may include such programs as— 

ø(1)¿ (A) the supplemental security income program 

under title XVI of the Social Security Act (42 U.S.C. 1381 

et seq.); 

ø(2)¿ (B) the food stamp program under the Food Stamp 

Act of 1977 (7 U.S.C. 2011 et seq.); 

ø(3)¿ (C) the free and reduced price school lunch program established under the Richard B. Russell National 

School Lunch Act (42 U.S.C. 1751 et seq.); 

ø(4)¿ (D) the program of block grants for States for temporary assistance for needy families established under part 

A of title IV of the Social Security Act (42 U.S.C. 601 et 

seq.); 

ø(5)¿ (E) the special supplemental nutrition program for 

women, infants, and children established by section 17 of 

the Child Nutrition Act of 1966 (42 U.S.C. 1786); and 

ø(6)¿ (F) other programs identified by the Secretary. 


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SEC. 479A. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS. 

(a) IN GENERAL.—Nothing in this part shall be interpreted as 

limiting the authority of the financial aid administrator, on the 

basis of adequate documentation, to make adjustments on a caseby-case basis to the cost of attendance or the values of the data 

items required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances. However, this authority shall not 

be construed to permit aid administrators to deviate from the contributions expected in the absence of special circumstances. Special 

circumstances may include tuition expenses at an elementary or 

secondary school, medical or dental expenses not covered by insurance, unusually high child care costs, recent unemployment of a 

family member, 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)), the number of parents enrolled at least half-time in 

a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation 

agreement under section 487, or other changes in a family’s income, a family’s assets, or a student’s status. Special circumstances 

shall be conditions that differentiate an individual student from a 

class of students rather than conditions that exist across a class of 

students. Adequate documentation for such adjustments shall substantiate such special circumstances of individual students. In addition, nothing in this title shall be interpreted as limiting the authority of the student financial aid administrator in such cases to 

request and use supplementary information about the financial status or personal circumstances of eligible applicants in selecting recipients and determining the amount of awards under this title. No 

student or parent shall be charged a fee for collecting, processing, 

or delivering such supplementary information. 

* * * * * * * 

SEC. 480. DEFINITIONS. 

As used in this part: 

(a) TOTAL INCOME.—(1) * * * 

(2) No portion of any student financial assistance received from 

any program by an individual, no portion of a national service educational award or post-service benefit received by an individual 

under title I of the National and Community Service Act of 1990 

(42 U.S.C. 12571 et seq.), øand no portion¿ no portion of any tax 

credit taken under section 25A of the Internal Revenue Code of 

1986, and no distribution from any qualified education benefit described in subsection (f)(3) that is not subject to Federal income tax, 

shall be included as income or assets in the computation of expected family contribution for any program funded in whole or in 

part under this Act. 

ø(b) UNTAXED INCOME AND BENEFITS.—The term ‘‘untaxed income and benefits’’ means— 

ø(1) child support received; 

ø(2) welfare benefits, including assistance under a State program funded under part A of title IV of the Social Security Act 

and aid to dependent children; 

ø(3) workman’s compensation; 


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ø(4) veterans’ benefits such as death pension, dependency, 

and indemnity compensation, but excluding veterans’ education 

benefits as defined in subsection (c); 

ø(5) interest on tax-free bonds; 

ø(6) 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); 

ø(7) cash support or any money paid on the student’s behalf, 

except, for dependent students, funds provided by the student’s 

parents; 

ø(8) the amount of earned income credit claimed for Federal 

income tax purposes; 

ø(9) untaxed portion of pensions; 

ø(10) credit for Federal tax on special fuels; 

ø(11) the amount of foreign income excluded for purposes of 

Federal income taxes; 

ø(12) untaxed social security benefits; 

ø(13) payments to individual retirement accounts and Keogh 

accounts excluded from income for Federal income tax purposes; and 

ø(14) 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.¿– (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 (29 U.S.C. 2801 et seq.). 

(2) The term ‘‘untaxed income and benefits’’ shall not include 

the amount of additional child tax credit claimed for Federal 

income tax purposes.– 

* * * * * * * 


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(f) ASSETS.—(1) * * * 

* * * * * * * 

(3) A qualified education benefit øshall not be considered an 

asset of a student for purposes of section 475¿ shall be considered 

an asset of the parent for purposes of section 475.– (4) A qualified education benefit shall be considered an asset of 

the student for purposes of section 476 and 477.– 

ø(4)¿ (5) In determining the value of assets in a determination 

of need under this title (other than for subpart 4 of part A), the 

value of a qualified education benefit shall be— 

(A) * * * 

* * * * * * * 

ø(5)¿ (6) In this subsection: 

(A) * * * 

* * * * * * * 

(j) OTHER FINANCIAL ASSISTANCE.—(1) * * * 

(2) Notwithstanding paragraph (1), a tax credit taken under section 25A of the Internal Revenue Code of 1986, 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, shall not be treated as estimated financial assistance 

for purposes of section 471(3). 

* * * * * * * 

Part G—General Provisions Relating to Student 

Assistance Programs 

* * * * * * *– 

SEC. 484C. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE 

DUTY. 

(a) DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.— 

In addition to any deferral of repayment of a loan made under this 

title pursuant to section 428(b)(1)(M)(iii), 455(f)(2)(C), or 

464(c)(2)(A)(ii), a borrower of a loan under this title who is a member of the National Guard or other reserve component of the Armed 

Forces of the United States, or a member of such Armed Forces in 

a retired status, is called or ordered to active duty, and is currently 

enrolled, or was enrolled within six months prior to the activation, 

in a program of instruction at an eligible institution, shall be eligible for a deferment during the 13 months following the conclusion 

of such service, except that a deferment under this subsection shall 

expire upon the borrower’s return to enrolled student status. 

(b) ACTIVE DUTY.—Notwithstanding section 481(d), in this section, the term ‘‘active duty’’ has the meaning given such term in section 101(d)(1) of title 10, United States Code, except that such 

term— 

(1) does not include active duty for training or attendance at 

a service school; but 

(2) includes, in the case of members of the National Guard, 

active State duty. 

* * * * * * * 


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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’’, when used with respect to a borrower, means 

that for such borrower— 

(A) the annual amount due on the total amount of loans 

made, insured, or guaranteed under part B or D (other 

than an excepted PLUS loan) 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— 


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(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 to participate in income-based 

repayment under paragraph (1); 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.– 

* * * * * * *– 

PART I—STRENGTHENING HISTORICALLY 

BLACK COLLEGES AND UNIVERSITIES AND 

OTHER MINORITY-SERVING INSTITUTIONS 

SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND OTHER MINORITY-SERVING INSTITUTION. 

(a) ELIGIBLE INSTITUTION.—An institution of higher education is 

eligible to receive funds from the amounts made available under 

this section if such institution is— 

(1) a part B institution (as defined in section 322 (20 U.S.C. 

1061)); 

(2) a Hispanic-serving institution (as defined in section 502 

(20 U.S.C. 1101a)); 

(3) a Tribal College or University (as defined in section 316 

(20 U.S.C. 1059c)); 

(4) an Alaska Native-serving institution or a Native Hawaiian-serving institution (as defined in section 317(b) (20 U.S.C. 

1059d(b))); 

(5) a Predominantly Black Institution (as defined in subsection (c)); or 

(6) an Asian and Pacific Islander-serving institution (as defined in subsection (c)). 

(b) NEW INVESTMENT OF FUNDS.— 

(1) IN GENERAL.—There shall be available to the Secretary to 

carry out this section, from funds not otherwise appropriated, 

$100,000,000 for each of the fiscal years 2008 through 2012. 

The authority to carry out this section shall expire at the end 

of fiscal year 2012. 


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(2) ALLOCATION AND ALLOTMENT.— (A) IN GENERAL.—Of the amounts made available under 

paragraph (1) for any fiscal year— 

(i) 40 percent shall be available for allocation under 

subparagraph (B); 

(ii) 40 percent shall be available for allocation under 

subparagraph (C); and 

(iii) 20 percent shall be available for allocation 

under subparagraph (D). 

(B) HSI STEM AND ARTICULATION PROGRAMS.—The 

amount made available for allocation under this subparagraph by subparagraph (A)(i) for any fiscal year shall be 

available for Hispanic-serving Institutions for activities described in section 503, with a priority given to applications 

that propose— 

(i) to increase the number of Hispanic and other low 

income students attaining degrees in the fields of 

science, technology, engineering and mathematics; and 

(ii) to develop model transfer and articulation agreements between 2-year Hispanic-serving institutions and 

4-year institutions in such fields. 

(C) ALLOCATION AND ALLOTMENT HBCUS AND PBIS.— From the amount made available for allocation under this 

subparagraph by subparagraph (A)(ii) for any fiscal year— (i) $34,000,000 shall be available to eligible institutions described in subsection (a)(1) and shall be made 

available as grants under section 323 and allotted 

among such institutions under section 324, treating 

such amount, plus the amount appropriated for such 

fiscal year in a regular or supplemental appropriation 

Act to carry out part B of title III, as the amount appropriated to carry out part B of title III for purposes 

of allotments under section 324, for use by such institutions with a priority for— 

(I) activities described in paragraphs (1), (2), (4), 

(5), and (10) of section 323(a); and 

(II) other activities, consistent with the institution’s comprehensive plan and designed to increase 

the institution’s capacity to prepare students for 

careers in the physical and natural sciences, mathematics, computer science and information technology and sciences, engineering, language instruction in the less-commonly taught languages and 

international affairs, and nursing and allied 

health professions; and 

(ii) $6,000,000 shall be available to eligible institutions described in subsection (a)(5) and shall be available for a competitive grant program to award 10 

grants of $600,000 annually for programs in the following areas: science, technology, engineering, or mathematics (STEM); health education; internationalization 

or globalization; teacher preparation; or improving 

educational outcomes of African American males. 

(D) ALLOCATION AND ALLOTMENT TO OTHER MINORITYSERVING INSTITUTIONS.—From the amount made available 


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for allocation under this subparagraph by subparagraph 

(A)(iii) for any fiscal year (in this subparagraph referred to 

as the ‘‘allocable amount’’)— 

(i) 60 percent of the allocable amount for such fiscal 

year shall be available to eligible institutions described 

in subsection (a)(3) and shall be made available as 

grants under section 316, treating such 60 percent of 

the allocable amount as part of the amount appropriated for such fiscal year in a regular or supplemental appropriation Act to carry out such section, and 

using such 60 percent for purposes described in subsection (c) of such section; 

(ii) 30 percent of the allocable amount for such fiscal 

year shall be available to eligible institutions described 

in subsection (a)(4) and shall be made available as 

grants under section 317, treating such 30 percent of 

the allocable amount as part of the amount appropriated for such fiscal year in a regular or supplemental appropriation Act to carry out such section and 

using such 60 percent for purposes described in subsection (a) of such section; and 

(iii) 10 percent of the allocable amount for such fiscal 

year shall be available to eligible institutions described 

in subsection (a)(6) for activities described in section 

311(c). 

(c) DEFINITIONS.— (1) PREDOMINANTLY BLACK INSTITUTION.—The term ‘‘Predominantly Black institution’’ means an institution of higher 

education that— 

(A) has an enrollment of needy undergraduate students 

as required and defined by paragraph (2); 

(B) has an average educational and general expenditure 

which is low, per full-time equivalent undergraduate student in comparison with the average educational and general expenditure per full-time equivalent undergraduate 

student of institutions that offer similar instruction, except 

that the Secretary may apply the waiver requirements described in section 392(b) to this subparagraph in the same 

manner as the Secretary applies the waiver requirements to 

section 312(b)(1)(B); 

(C) has an enrollment of undergraduate students— 

(i) that is at least 40 percent Black American students; 

(ii) that is at least 1,000 undergraduate students; 

(iii) of which not less than 50 percent of the undergraduate students enrolled at the institution are lowincome individuals or first-generation college students 

(as that term is defined in section 402A(g)); and 

(iv) of which not less than 50 percent of the undergraduate students are enrolled in an educational program leading to a bachelor’s or associate’s degree that 

the institution is licensed to award by the State in 

which it is located; 

(D) is legally authorized to provide, and provides within 

the State, an educational program for which the institution 


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of higher education awards a bachelors degree, or in the 

case of a junior or community college, an associate’s degree; 

(E) is accredited by a nationally recognized accrediting 

agency or association determined by the Secretary to be a 

reliable authority as to the quality of training offered, or is, 

according to such an agency or association, making reasonable progress toward accreditation; and 

(F) is not receiving assistance under part B of title III. 

(2) ENROLLMENT OF NEEDY STUDENTS.—The term ‘‘enrollment 

of needy students’’ means the enrollment at an eligible institution with respect to which not less than 50 percent of the undergraduate students enrolled in an academic program leading to 

a degree— 

(A) in the second fiscal year preceding the fiscal year for 

which the determination is made, were Federal Pell Grant 

recipients for such year; 

(B) come from families that receive benefits under a 

means-tested Federal benefits program (as defined in paragraph (4)); 

(C) attended a public or nonprofit private secondary 

school— 

(i) that is in the school district of a local educational 

agency that was eligible for assistance under part A of 

title I of the Elementary and Secondary Education Act 

of 1965 for any year during which the student attended 

such secondary school; and 

(ii) which for the purpose of this paragraph and for 

that year was determined by the Secretary (pursuant to 

regulations and after consultation with the State educational agency of the State in which the school is located) to be a school in which the enrollment of children counted under section 1113(a)(5) of such Act exceeds 30 percent of the total enrollment of such school; 

or 

(D) are first-generation college students (as that term is 

defined in section 402A(g)), and a majority of such firstgeneration college students are low-income individuals. 

(3) LOW-INCOME INDIVIDUAL.—The term ‘‘low-income individual’’ has the meaning given such term in section 402A(g). 

(4) MEANS-TESTED FEDERAL BENEFIT PROGRAM.—The term 

‘‘means-tested Federal benefit program’’ means a program of the 

Federal Government, other than a program under title IV, in 

which eligibility for the programs’ benefits, or the amount of 

such benefits, or both, are determined on the basis of income or 

resources of the individual or family seeking the benefit. 

(5) ASIAN AMERICAN AND PACIFIC ISLANDER-SERVING INSTITUTION.—The term ‘‘Asian American and Pacific Islander-serving 

institution’’ means an institution of higher education that— 

(A) is an eligible institution under section 312(b); and 

(B) at the time of application, has an enrollment of undergraduate students that is at least 10 percent Asian 

American and Pacific Islander students from subgroups 

with low levels of college degree attainment. 

(6) ASIAN AMERICAN.—The term ‘‘Asian American’’ has the 

meaning given the term ‘‘Asian’’ in the Office of Management 


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and Budget’s Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity as published on 

October 30, 1997 (62 Fed. Reg. 58789). 

(7) PACIFIC ISLANDER.—The term ‘‘Pacific Islander’’ has the 

meaning given the term ‘‘Native Hawaiian’’ or ‘‘Other Pacific Islander’’ in such Standards for Maintaining, Collecting, and 

Presenting Federal Data on Race and Ethnicity. 

(8) LOW LEVELS OF COLLEGE DEGREE ATTAINMENT.—The term 

‘‘low levels of college degree attainment’’ mean college degree attainment that is less than 20 percent for adults ages 25 through 

29 as reported by the National Center for Educational Statistics. 

(d) TERMINATION OF AUTHORITY.—The authority to carry out this 

section expires at the end of fiscal year 2012.– 

* * * * * * *– 

TITLE VIII—COOPERATIVE EDUCATION 

REWARDS FOR INSTITUTIONS THAT 

RESTRAIN TUITION INCREASES 

SEC. 801. DEFINITION OF 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. 

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 more than 11 percent shall be available for demonstration projects under paragraph (1) of section 804(a); 

(4) not more than 11 percent shall be available for training 

and resource centers under paragraph (2) of section 804(a); and 

(5) not more than 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. 


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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 previously received a grant under this paragraph 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. 


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(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, inVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00136 Fmt 6659 Sfmt 6603 E:\HR\OC\HR210.XXX HR210

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cluding 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— 

(1) from the amounts available in each fiscal year under section 802(b)(3), for the conduct of demonstration projects designed to demonstrate or determine the feasibility or value of innovative methods of cooperative education ; 

(2) from the amounts available in each fiscal year under section 802(b)(4), for the conduct of training and resource centers 

designed to— 


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(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; and 

(3) from the amounts available in each fiscal year under section 802(b)(5), for the conduct of research relating to cooperative 

education. 

(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 make grants or 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 make grants or 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 to supplement and, to the extent possible, increase the level of funds that 

would, in the absence of such funds, be made available from nonFederal sources to carry out the activities supported by such grant 

or contract, and in no case to supplant such funds from non-Federal 

sources. 

XVII. COMMITTEE CORRESPONDENCE 

None. 


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(139) 

MINORITY VIEWS 

Republican Members of the Committee on Education and Labor 

are committed to ensuring that every child in America is afforded 

the highest quality education possible. We also remain committed 

to the principle of a balanced budget without raising taxes. A balanced budget can be obtained by supporting pro-growth economic 

policies, restraining excessive entitlement spending, and ensuring 

programs are working as efficiently as possible—Committee Republicans have supported all of these proposals. 

While Committee Republicans appreciated the ability to contribute and improve the final bill, we strongly disagree with the 

abuse of the reconciliation process, the level of cuts that were included in the final bill and the significant amount of new entitlement spending that is not focused on increasing access to higher 

education for low-income students. In addition, we strongly object 

to the shift in focus of entitlement spending away from individuals 

to institutions of higher education that have failed to control excessive tuition increases thereby causing the most harm to the exact 

students this bill should be supporting. 

THE ABUSE OF THE RECONCILIATION PROCESS

Committee Republicans reject the idea that the reconciliation 

process should be used to overhaul the student loan programs in 

a manner that could not pass under regular order and that results 

in an unprecedented expansion of entitlement spending coupled 

with minimal deficit reduction. Under Republican leadership, the 

Committee established a strong record on matters of deficit reduction. In the Fiscal Year (FY) 2006 budget, the then-Education & 

the Workforce Committee was tasked with finding more than $12 

billion in budget savings over five years—the second highest total 

of any House Committee. Not only did we find those savings 

through slashing costly subsidies to student loan lenders, but we 

also found nearly eight billion dollars in additional savings, which 

we translated into new and expanded benefits for ALL college students. In short, reconciliation served its deficit reduction purpose— 

and then some. The reconciliation bill in this Congress only produced $750 million for deficit reduction. 

The Committee, under the reconciliation process in the 109th Congress, made $20 billion worth of changes to the student loan 

programs that eliminated wasteful federal subsidies and reduced 

the potential for fraud and abuse in the programs. For example, 

the Committee permanently prohibited the creation of new loans 

through certain tax-exempt bonds issued from 1980–1993 that 

guarantee a 9.5 percent yield to lenders. The Committee also increased risk sharing on the part of private lenders in the Federal 

Family Education Loan (FFEL) program by decreasing the percentage that a lender will receive when a borrower defaults on a stuVerDate Aug 31 2005 07:14 Jun 26, 2007 Jkt 059006 PO 00000 Frm 00139 Fmt 6604 Sfmt 6604 E:\HR\OC\HR210.XXX HR210

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dent loan. Finally, the Committee supported a provision in the Deficit Reduction Act (DRA) that moved the administrative portion of 

the section 458 account from a mandatory spending account to a 

discretionary spending account. 

The billions in savings to the American taxpayer were achieved 

at the same time the Committee expanded benefits for ALL students and made changes that ensured students would be able to 

pay for their college education. Building upon the President’s FY 

2006 budget request the Committee, under Republican leadership, 

expanded loan limits for first year, second year, and graduate students. For the first time ever, graduate students would be able to 

access Federal PLUS loans, which permit borrowers to borrow up 

to the cost of attendance. In addition, the Committee reduced fees 

paid by students from up to four percent to just one percent over 

the five year period. 

While making it clear that decisions over school curricula are 

best made by State and local authorities, the Committee also included a program to provide additional grant funds to Pell-eligible, 

high achieving college students. The Academic Competitiveness 

Grant (ACG) program provides first year college students who completed a rigorous high school curriculum at a public or private high 

school an extra $750 in grant aid; second year college students who 

completed a rigorous high school curriculum at a public or private 

high school receive $1,300 in additional grant aid. The National 

Science and Mathematics Access to Retain Talent (SMART) Grants 

of up to $4,000 go to third and fourth year students who are majoring in math, science, or certain foreign languages. 

Finally, the Deficit Reduction Act included a provision to make 

permanent provisions included in the Taxpayer-Teacher Protection 

Act of 2004 that would more than triple the amount of student loan 

forgiveness available to highly qualified math, science, and special 

education teachers. The increase from $5,000 to $17,500 in loan 

forgiveness for these qualified educators was based on a proposal 

from President Bush’s FY 2005 budget request. 

The changes made last Congress resulted in more financial aid 

being available to students today than at any time in history. 

In sum, under Republican leadership, the Committee used the 

reconciliation process for the purpose it was intended—to reduce 

the federal deficit. Unfortunately, the Committee, under Democrat 

leadership, has subverted the original intent of the reconciliation 

process and abused the process to shield the billions of new entitlement spending included in the bill. This point is made clear by the 

fact that the Committee on Education and Labor was the only 

Committee given a reconciliation instruction in the Budget Resolution. In fact, during the budget debate in the Senate, Budget Committee Chairman Conrad called the House instruction a ‘‘stalkinghorse for a significant expansion of spending.’’ The reconciliation 

process has been clearly abused here. The process was meant for 

deficit reduction, not as a backdoor way to spend billions of dollars 

on new programs. 

NEW ENTITLEMENT SPENDING

The Democrat-led student loan bill, the College Cost Reduction 

Act, finds $19 billion in savings within higher education programs 


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over the next five years. In the last Congress, two-thirds of our 

budget reconciliation savings went towards deficit reduction and 

one-third went toward increasing student benefits like higher loan 

limits, more grant aid for low-income, high-achieving students, and 

loan forgiveness for high-demand teachers. And while this bill does 

some of the same, it also targets new aid toward those who already 

have graduated and to institutions of higher education. These are 

examples of misplaced priorities; student aid is intended to go to 

students. 

The bill then spends almost all of the $19 billion on new entitlement spending, including nine new entitlement programs, most of 

which does not even further the goals of college access and persistence. 

For example, the bill spends less than one-third of the savings 

on the Pell Grant program. Instead, the money is spent on assisting those who have already taken advantage of government subsidies and graduated from college and new programs aimed at institutions rather than students. In contrast, the defeated Republican substitute would have spent $12 billion on increasing the Pell 

Grant. Assuming the House stands behind the maximum Pell 

Grant award included in the Labor/HHS/Education Appropriations 

bill, this infusion of funds would increase the maximum Pell Grant 

to $5,050 in the 2008–2009 academic year and raise it to $5,450 by 

the 2012–2013 academic year. The Republican substitute would 

have increased the Pell Grant without creating a maze of new rules 

and regulations for students, parents, and institutions to navigate. 

The most expensive provision in the bill reduces interest rates 

for a subsection of borrowers—individuals that received subsidized 

loans for their undergraduate education. The interest rate is slowly 

phased down to 3.4 percent for a five year period. The 3.4 percent 

is only in effect for one year before it jumps back up to 6.8 percent. 

Democrats claim that a typical borrower would save $4,400 over 

the life of the loan due to the interest rate cut. It is impossible for 

a borrower to save that much under this bill. In order to save the 

full $4,400, the 3.4 percent rate must stay in effect for years at a 

time—and they must consolidate their loans and stretch out repayment over 15 years. In reality, a college freshman in the fall of 

2012—when the rate is at 3.4 percent—would only end up saving 

$6.42 per month once he or she begins repaying the student loan. 

Worse yet, these new benefits would not be aimed at a single college student. By definition, they are intended for those already 

have graduated from college. Republicans, in contrast, believe benefits should be aimed squarely at those attending or hoping to attend college. 

The bill also establishes another repayment program for borrowers, costing almost $1 billion to U.S. taxpayers. This proposal 

caps a borrower’s monthly repayment amount at 15 percent of the 

borrower’s discretionary income. The student loan programs already have four different repayment options and the ability to 

enter into deferment or forbearance during times of financial distress. Borrowers are able to switch between plans to ensure that 

they are repaying their loans in a manner that suits their current 

financial situation. A new repayment plan will only add confusion 

and complication to an already complex program. 


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Finally, the bill spends over $1.6 billion of new entitlement 

spending in providing aid to institutions without the accountability 

provided by the annual appropriations process. This represents a 

major policy shift in how mandatory funds are spent. The federal 

government historically reserves entitlement funding streams for 

programs that provide a direct benefit to an individual—such as a 

Social Security check, Medicare benefit, or a student loan. These 

benefits are portable and can be used by the individual wherever 

they live or to purchase services. The creation of new entitlement 

spending to an institution of higher education takes the spending 

of taxpayer dollars outside the purview and oversight conducted by 

the Appropriations Committee and a steady flow of funds goes to 

institutions regardless of the need or the quality of the program 

that is being funded. The country’s debt is already fueled primarily 

by the skyrocketing growth in entitlement spending. If this growth 

in spending continues, it will be more difficult for future generations to continue to enjoy the same standard of living that we enjoy 

today. 

LEVEL OF CUTS

The reconciliation bill voted on in Committee threatens the stability of the Federal Family Education Loan (FFEL) program. Just 

last Congress, the Committee cut approximately $20 billion from 

the student loan program in the DRA. Just two short years later, 

the Committee, under Democrat leadership, is cutting an additional $19 billion from the FFEL program. The Committee took 

this action without even allowing enough time to pass to analyze 

the impact of the changes that took place in the DRA. Not one 

hearing has taken place on the impact of the DRA from last Congress or on the impact of additional cuts proposed in this legislation. In addition, the bill was only introduced one day prior to the 

markup, leaving very little time for Members and others to understand the true impact of the cuts. 

Republicans believe that the private-market student loan program can withstand the level of the cuts included in the DRA, even 

though that substantial reduction in subsidies paid to student loan 

providers participating in the FFEL program could lead to some reduced access to loans. However, additional cuts to student loan providers should have been more carefully studied if the Committee 

intended to ensure a viable FFEL program for students and institutions of higher education across the country who count on the 

FFEL program for their student loans. 

A more reasonable alternative would have been to accept the Republican substitute. This bill would have trimmed the subsidies 

provided to student loan providers in the FFEL program while 

maintaining the stability of the program, thereby ensuring that 

competition between the FFEL program and the government-run 

Direct Loan program continues in the future. Specifically, the Republican substitute would have adopted the same cut to lender insurance rates, saved the federal government $11 billion through 

lower special allowance payments, and saved $2.8 billion through 

restructuring the manner in which guaranty agencies are reimbursed for their administrative and collection activities. 


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One additional area that provides several Republicans with some 

concern is the amendment offered during the markup to require a 

study of market mechanisms that could then be used to determine 

lender returns when making student loans. The study would specifically look at the use of auctions and provide for a test of the 

most promising models. The Department of Education did a market 

mechanisms study several years ago with the Government Accountability Office and others which did not find auctions to be a workable mechanism for administering the student loan program. While 

another look at the issue may shed new light on the subject, we 

should not assume that a new study will necessarily result in a different determination. An auction system may further complicate 

the federal student loan programs, particularly for institutions. In 

addition, under an auction system students lose their right to 

choose a lender, something Republicans have been fighting to protect in many of the proposals that have been introduced in the 

past. If students have no right to pick their lender, competition in 

the student loan program and the benefits that competition brings 

are lost altogether. 

CONCLUSION

Committee Republicans appreciated the inclusive nature of the 

process that went into developing this bill and hope that the Committee can work together as this legislation moves to the House 

Floor. However, Republicans continue to have major concerns about 

the use of the reconciliation process to legislate significant cuts to 

the FFEL program and extravagant new entitlement spending. 

Had this legislation taken a more reasonable approach to reducing 

subsidies and spending more of the money saved on actual students, rather than college graduates and institutions, there may 

well have been a different result. The cuts made in this bill threaten the stability of the FFEL program, a program that has been successful, competitive and is the program of choice for almost 80 percent of student loan borrowers in this country. Committee Republicans fear that this bill, if left unchanged, will force smaller lenders out of the business, reduce competition, and eliminate student 

benefits. Students should be the main focus of the student aid proposals the Committee puts forward, but in the end, they will lose 

if this bill is passed in its current form. It is our hope that serving 

students and ensuring the stability of both of the student loan programs is the goal of the bill as it moves to the House Floor. 

HOWARD P. MCKEON. 

PETE HOEKSTRA. 

MARK SOUDER. 

JUDY BIGGERT. 

TODD R. PLATTS. 

RIC KELLER. 

JOE WILSON. JOHN KLINE. K. MARCHANT. C.W. BOUSTANY, JR. VIRGINIA FOXX. ROB BISHOP. 


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DAVID DAVIS. TIM WALBERG. 

Æ 


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