II 

115TH CONGRESS 

1ST SESSION S. 1205 

To authorize the establishment of American Dream Accounts. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2017 

Mr. COONS (for himself and Mr. RUBIO) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL 

To authorize the establishment of American Dream Accounts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Dream Ac5 counts Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Only 9.8 out of every 100 individuals from 

9 low-income families will graduate from an institution 

10 of higher education before reaching the age of 24. 


sradovich on DSK3GMQ082PROD with BILLS
2 

•S 1205 IS

1 (2) Lack of knowledge about how to apply to, 

2 and pay for, an institution of higher education is a 

3 barrier for many low-income students and students 

4 who would be in the first generation in their families 

5 to attend an institution of higher education. 

6 (3) According to Public Agenda, most young 

7 adults give secondary school counselors fair or poor 

8 ratings for advice about attending an institution of 

9 higher education, including advice about how to de10 cide what institution of higher education to attend, 

11 how to pay for higher education, what careers to 

12 pursue, and how to apply to an institution of higher 

13 education. 

14 (4) More than 1,700,000 students fail to file 

15 the Free Application for Federal Student Aid 

16 (FAFSA), and about one-third of such students 

17 would qualify for a Federal Pell Grant. 

18 (5) During the last 2 decades, costs of attend19 ing institutions of higher education have increased 

20 dramatically, but need-based financial aid has not 

21 kept pace with such increasing costs. 

22 (6) CollegeBoard reports that the maximum 

23 Federal Pell Grant covered 87 percent of the aver24 age tuition and fees for a public 4-year institution 


sradovich on DSK3GMQ082PROD with BILLS
3 

•S 1205 IS

1 of higher education in academic year 2003–2004 but 

2 only 60 percent in academic year 2016–2017. 

3 (7) Parental and youth college savings are 

4 strong predictors of a youth’s expectations about at5 tendance at an institution of higher education. 

6 (8) Only 32 percent of parents who earn less 

7 than $35,000 a year are saving for their child’s edu8 cation at an institution of higher education. 

9 (9) According to the Center for Social Develop10 ment, ‘‘wilt’’ occurs when a young person who ex11 pects to graduate from a 4-year institution of higher 

12 education has not yet attended such institution by 

13 the ages of 19 to 22. 

14 (10) Children who have savings dedicated for 

15 attendance at an institution of higher education are 

16 4 times more likely to attend a 4-year institution of 

17 higher education and avoid ‘‘wilt’’. 

18 (11) In 2013, only 2.5 percent of all families 

19 had a 529 college savings account and the majority 

20 of these families had higher incomes. Only 0.3 per21 cent of families with incomes in the 0–49.9 per22 centile had a 529 college savings account. 

23 (12) According to the Center for Social Devel24 opment, compared to those without college savings, 

25 children from low- and moderate-income households 


sradovich on DSK3GMQ082PROD with BILLS
4 

•S 1205 IS

1 with college savings from $1 to $499 were more 

2 than three times more likely to attend college and 

3 more than four times more likely to graduate from 

4 college. 

5 SEC. 3. DEFINITIONS. 

6 In this Act: 

7 (1) AMERICAN DREAM ACCOUNT.—The term 

8 ‘‘American Dream Account’’ means a personal on9 line account for low-income students that monitors 

10 higher education readiness and includes a college 

11 savings account. 

12 (2) APPROPRIATE COMMITTEES OF CON13 GRESS.—The term ‘‘appropriate committees of Con14 gress’’ means the Committee on Health, Education, 

15 Labor, and Pensions, the Committee on Appropria16 tions, and the Committee on Finance of the Senate, 

17 and the Committee on Education and the Work18 force, the Committee on Appropriations, and the 

19 Committee on Ways and Means of the House of 

20 Representatives, as well as any other committee of 

21 the Senate or House of Representatives that the 

22 Secretary determines appropriate. 

23 (3) CHARTER SCHOOL.—The term ‘‘charter 

24 school’’ has the meaning given such term in section 


sradovich on DSK3GMQ082PROD with BILLS
5 

•S 1205 IS

1 4310 of the Elementary and Secondary Education 

2 Act of 1965 (20 U.S.C. 7221i). 

3 (4) COLLEGE SAVINGS ACCOUNT.—The term 

4 ‘‘college savings account’’ means a trust created or 

5 organized exclusively for the purpose of paying the 

6 qualified expenses of only an individual who, when 

7 the trust is created or organized, has not obtained 

8 18 years of age, if the written governing instrument 

9 creating the trust contains the following require10 ments: 

11 (A) The trustee is a federally insured fi12 nancial institution, or a State insured financial 

13 institution if a federally insured financial insti14 tution is not available. 

15 (B) The assets of the trust will be invested 

16 in accordance with the direction of the indi17 vidual or of a parent or guardian of the indi18 vidual, after consultation with the entity pro19 viding the initial contribution to the trust or, if 

20 applicable, a matching or other contribution for 

21 the individual. 

22 (C) The assets of the trust will not be 

23 commingled with other property except in a 

24 common trust fund or common investment 

25 fund. 


sradovich on DSK3GMQ082PROD with BILLS
6 

•S 1205 IS

1 (D) Any amount in the trust that is attrib2 utable to an account seed or matched deposit 

3 may be paid or distributed from the trust only 

4 for the purpose of paying qualified expenses of 

5 the individual. 

6 (5) DUAL OR CONCURRENT ENROLLMENT PRO7 GRAM.—The term ‘‘dual or concurrent enrollment 

8 program’’ has the meaning given such term in sec9 tion 8101 of the Elementary and Secondary Edu10 cation Act of 1965 (20 U.S.C. 7801). 

11 (6) EARLY COLLEGE HIGH SCHOOL.—The term 

12 ‘‘early college high school’’ has the meaning given 

13 such term in section 8101 of the Elementary and 

14 Secondary Education Act of 1965 (20 U.S.C. 7801). 

15 (7) ELIGIBLE ENTITY.—The term ‘‘eligible enti16 ty’’ means— 

17 (A) a State educational agency; 

18 (B) a local educational agency, including a 

19 charter school that operates as its own local 

20 educational agency; 

21 (C) a charter management organization or 

22 charter school authorizer; 

23 (D) an institution of higher education or a 

24 Tribal College or University; 

25 (E) a nonprofit organization; 


sradovich on DSK3GMQ082PROD with BILLS
7 

•S 1205 IS

1 (F) an entity with demonstrated experience 

2 in educational savings or in assisting low-in3 come students to prepare for, and attend, an in4 stitution of higher education; 

5 (G) a consortium of 2 or more of the enti6 ties described in subparagraphs (A) through 

7 (F); or 

8 (H) a consortium of 1 or more of the enti9 ties described in subparagraphs (A) through 

10 (F) and a public school, a charter school, a 

11 school operated by the Bureau of Indian Af12 fairs, or a tribally controlled school. 

13 (8) INSTITUTION OF HIGHER EDUCATION.—The 

14 term ‘‘institution of higher education’’ has the 

15 meaning given such term in section 101(a) of the 

16 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 

17 (9) LOCAL EDUCATIONAL AGENCY.—The term 

18 ‘‘local educational agency’’ has the meaning given 

19 such term in section 8101 of the Elementary and 

20 Secondary Education Act of 1965 (20 U.S.C. 7801). 

21 (10) LOW-INCOME STUDENT.—The term ‘‘low22 income student’’ means a student who is eligible to 

23 receive a free or reduced price lunch under the Rich24 ard B. Russell National School Lunch Act (42 

25 U.S.C. 1751 et seq.). 


sradovich on DSK3GMQ082PROD with BILLS
8 

•S 1205 IS

1 (11) PARENT.—The term ‘‘parent’’ has the 

2 meaning given such term in section 8101 of the Ele3 mentary and Secondary Education Act of 1965 (20 

4 U.S.C. 7801). 

5 (12) QUALIFIED EXPENSES.—The term ‘‘quali6 fied expenses’’ means, with respect to an individual, 

7 expenses that— 

8 (A) are incurred after the individual re9 ceives a secondary school diploma or its recog10 nized equivalent; and 

11 (B) are associated with attending an insti12 tution of higher education, including— 

13 (i) tuition and fees; 

14 (ii) room and board; 

15 (iii) textbooks; 

16 (iv) supplies and equipment; and 

17 (v) Internet access. 

18 (13) SECRETARY.—The term ‘‘Secretary’’ 

19 means the Secretary of Education. 

20 (14) STATE EDUCATIONAL AGENCY.—The term 

21 ‘‘State educational agency’’ has the meaning given 

22 such term in section 8101 of the Elementary and 

23 Secondary Education Act of 1965 (20 U.S.C. 7801). 

24 (15) TRIBAL COLLEGE OR UNIVERSITY.—The 

25 term ‘‘Tribal College or University’’ has the meaning 


sradovich on DSK3GMQ082PROD with BILLS
9 

•S 1205 IS

1 given such term in section 316(b) of the Higher 

2 Education Act of 1965 (20 U.S.C. 1059c(b)). 

3 (16) TRIBALLY CONTROLLED SCHOOL.—The 

4 term ‘‘tribally controlled school’’ has the meaning 

5 given such term in section 5212 of the Tribally Con6 trolled Schools Act of 1988 (25 U.S.C. 2511). 

7 SEC. 4. GRANT PROGRAM. 

8 (a) PROGRAM AUTHORIZED.—The Secretary is au9 thorized to award grants, on a competitive basis, to eligible 

10 entities to enable such eligible entities to establish and ad11 minister American Dream Accounts for a group of low12 income students. 

13 (b) RESERVATION.—From the amounts appropriated 

14 each fiscal year to carry out this Act, the Secretary shall 

15 reserve not more than 5 percent of such amount to carry 

16 out the evaluation activities described in section 7. 

17 (c) DURATION.—A grant awarded under this Act 

18 shall be for a period of not more than 3 years. The Sec19 retary may extend such grant for an additional 2-year pe20 riod if the Secretary determines that the eligible entity has 

21 demonstrated significant progress, based on the factors 

22 described in section 5(b)(11). 

23 SEC. 5. APPLICATIONS; PRIORITY. 

24 (a) IN GENERAL.—Each eligible entity desiring a 

25 grant under this Act shall submit an application to the 


sradovich on DSK3GMQ082PROD with BILLS
10 

•S 1205 IS

1 Secretary at such time, in such manner, and containing 

2 such information as the Secretary may require. 

3 (b) CONTENTS.—At a minimum, the application de4 scribed in subsection (a) shall include the following: 

5 (1) A description of the characteristics of a 

6 group of not less than 30 low-income public school 

7 students who— 

8 (A) are, at the time of the application, at9 tending a grade not higher than grade 9; and 

10 (B) will, under the grant, receive an Amer11 ican Dream Account. 

12 (2) A description of how the eligible entity will 

13 engage, and provide support (such as tutoring and 

14 mentoring for students, and training for teachers 

15 and other stakeholders) either online or in person, 

16 to— 

17 (A) the students in the group described in 

18 paragraph (1); 

19 (B) the family members and teachers of 

20 such students; and 

21 (C) other stakeholders such as school ad22 ministrators and school counselors. 

23 (3) An identification of partners who will assist 

24 the eligible entity in establishing and sustaining 

25 American Dream Accounts. 


sradovich on DSK3GMQ082PROD with BILLS
11 

•S 1205 IS

1 (4) A description of what experience the eligible 

2 entity or the partners of the eligible entity have in 

3 managing college savings accounts, preparing low-in4 come students for postsecondary education, man5 aging online systems, and building financial capa6 bility. 

7 (5) A demonstration that the eligible entity has 

8 sufficient resources to provide an initial deposit into 

9 the college savings account portion of each American 

10 Dream Account. 

11 (6) A description of how the eligible entity will 

12 help increase the value of the college savings account 

13 portion of each American Dream Account, such as 

14 by providing matching funds or incentives for aca15 demic achievement. 

16 (7) A description of how the eligible entity will 

17 notify each participating student in the group de18 scribed in paragraph (1), on a semiannual basis, of 

19 the current balance and status of the college savings 

20 account portion of the American Dream Account of 

21 the student. 

22 (8) A plan that describes how the eligible entity 

23 will monitor participating students in the group de24 scribed in paragraph (1) to ensure that the Amer25 ican Dream Account of each student will be mainVerDate Sep 11 2014 20:23 May 31, 2017 Jkt 069200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205

sradovich on DSK3GMQ082PROD with BILLS
12 

•S 1205 IS

1 tained if a student in such group changes schools be2 fore graduating from secondary school. 

3 (9) A plan that describes how the American 

4 Dream Accounts will be managed for not less than 

5 1 year after a majority of the students in the group 

6 described in paragraph (1) graduate from secondary 

7 school. 

8 (10) A description of how the eligible entity will 

9 encourage students in the group described in para10 graph (1) who fail to graduate from secondary 

11 school to continue their education. 

12 (11) A description of how the eligible entity will 

13 evaluate the grant program, including by collecting, 

14 as applicable, the following data about the students 

15 in the group described in paragraph (1) during the 

16 grant period, or until the time of graduation from a 

17 secondary school, whichever comes first, and, if suf18 ficient grant funds are available, after the grant pe19 riod: 

20 (A) Attendance rates. 

21 (B) Progress reports. 

22 (C) Grades and course selections. 

23 (D) The four-year adjusted cohort gradua24 tion rate, as defined in section in section 8101 


sradovich on DSK3GMQ082PROD with BILLS
13 

•S 1205 IS

1 of the Elementary and Secondary Education 

2 Act of 1965 (20 U.S.C. 7801). 

3 (E) Rates of student completion of the 

4 Free Application for Federal Student Aid de5 scribed in section 483 of the Higher Education 

6 Act of 1965 (20 U.S.C. 1090). 

7 (F) Rates of enrollment in an institution of 

8 higher education. 

9 (G) Rates of completion at an institution 

10 of higher education. 

11 (12) A description of what will happen to the 

12 funds in the college savings account portion of the 

13 American Dream Accounts that are dedicated to 

14 participating students described in paragraph (1) 

15 who have not matriculated at an institution of high16 er education at the time of the conclusion of the pe17 riod of American Dream Account management de18 scribed in paragraph (9), including how the eligible 

19 entity will give students this information. 

20 (13) A description of how the eligible entity will 

21 ensure that participating students described in para22 graph (1) will have access to the Internet. 

23 (14) A description of how the eligible entity will 

24 take into consideration how funds in the college sav25 ings account portion of American Dream Accounts 


sradovich on DSK3GMQ082PROD with BILLS
14 

•S 1205 IS

1 will affect participating families’ eligibility for public 

2 assistance. 

3 (c) PRIORITY.—In awarding grants under this Act, 

4 the Secretary shall give priority to applications from eligi5 ble entities that— 

6 (1) are described in subparagraph (G) or (H) of 

7 section 3(7); 

8 (2) serve the largest number of low-income stu9 dents; 

10 (3) in the case of an eligible entity described in 

11 subparagraph (A) or (B) of section 3(7), provide op12 portunities for participating students described in 

13 subsection (b)(1) to participate in a dual or concur14 rent enrollment program or early college high school 

15 program at no cost to the student or the student’s 

16 family; or 

17 (4) as of the time of application, have been 

18 awarded a grant under chapter 2 of subpart 2 of 

19 part A of title IV of the Higher Education Act of 

20 1965 (20 U.S.C. 1070a–21 et seq.) (commonly re21 ferred to as the ‘‘GEAR UP program’’). 

22 SEC. 6. AUTHORIZED ACTIVITIES. 

23 (a) IN GENERAL.—An eligible entity that receives a 

24 grant under this Act shall use such grant funds to estabVerDate Sep 11 2014 20:23 May 31, 2017 Jkt 069200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205

sradovich on DSK3GMQ082PROD with BILLS
15 

•S 1205 IS

1 lish an American Dream Account for each participating 

2 student described in section 5(b)(1), that will be used to— 

3 (1) open a college savings account for such stu4 dent; 

5 (2) monitor the progress of such student online, 

6 which— 

7 (A) shall include monitoring student data 

8 relating to— 

9 (i) grades and course selections; 

10 (ii) progress reports; and 

11 (iii) attendance and disciplinary 

12 records; and 

13 (B) may also include monitoring student 

14 data relating to a broad range of information, 

15 provided by teachers and family members, re16 lated to postsecondary education readiness, ac17 cess, and completion; 

18 (3) provide opportunities for such students, ei19 ther online or in person, to build financial capability, 

20 including by— 

21 (A) assisting such students in financial 

22 planning for enrollment in an institution of 

23 higher education; 

24 (B) assisting such students in identifying 

25 and applying for financial aid (such as loans, 


sradovich on DSK3GMQ082PROD with BILLS
16 

•S 1205 IS

1 grants, and scholarships) for an institution of 

2 higher education; and 

3 (C) enhancing student understanding of 

4 consumer, economic, and personal finance con5 cepts; 

6 (4) provide opportunities for such students, ei7 ther online or in person, to learn about preparing for 

8 enrollment in an institution of higher education, in9 cluding by providing instruction to students about— 

10 (A) choosing the appropriate courses to 

11 prepare for postsecondary education; 

12 (B) applying to an institution of higher 

13 education; 

14 (C) building a student portfolio, which may 

15 be used when applying to an institution of high16 er education; 

17 (D) selecting an institution of higher edu18 cation; 

19 (E) choosing a major for the student’s 

20 postsecondary program of education or a career 

21 path; and 

22 (F) adapting to life at an institution of 

23 higher education; and 


sradovich on DSK3GMQ082PROD with BILLS
17 

•S 1205 IS

1 (5) provide opportunities for such students, ei2 ther online or in person, to identify skills or inter3 ests, including career interests. 

4 (b) ACCESS TO AMERICAN DREAM ACCOUNT.— 

5 (1) IN GENERAL.—Subject to paragraphs (3) 

6 and (4), and in accordance with applicable Federal 

7 laws and regulations relating to privacy of informa8 tion and the privacy of children, an eligible entity 

9 that receives a grant under this Act shall allow vest10 ed stakeholders, as described in paragraph (2), to 

11 have secure access, through an Internet website, to 

12 an American Dream Account. 

13 (2) VESTED STAKEHOLDERS.—The vested 

14 stakeholders that an eligible entity shall permit to 

15 access an American Dream Account are individuals 

16 (such as the student’s teachers, school counselors, 

17 school administrators, or other individuals) that are 

18 designated, in accordance with section 444 of the 

19 General Education Provisions Act (20 U.S.C. 1232g, 

20 commonly known as the ‘‘Family Educational Rights 

21 and Privacy Act of 1974’’), by the parent of a par22 ticipating student in whose name such American 

23 Dream Account is held, as having permission to ac24 cess the account. A student’s parent may withdraw 

25 such designation from an individual at any time. 


sradovich on DSK3GMQ082PROD with BILLS
18 

•S 1205 IS

1 (3) EXCEPTION FOR COLLEGE SAVINGS AC2 COUNT.—An eligible entity that receives a grant 

3 under this Act shall not be required to give vested 

4 stakeholders, as described in paragraph (2), access 

5 to the college savings account portion of a student’s 

6 American Dream Account. 

7 (4) ADULT STUDENTS.—Notwithstanding para8 graphs (1), (2), and (3), if a participating student 

9 is age 18 or older, an eligible entity that receives a 

10 grant under this Act shall not provide access to such 

11 participating student’s American Dream Account 

12 without the student’s consent, in accordance with 

13 section 444 of the General Education Provisions Act 

14 (20 U.S.C. 1232g, commonly known as the ‘‘Family 

15 Educational Rights and Privacy Act of 1974’’). 

16 (5) INPUT OF STUDENT INFORMATION.—Stu17 dent data collected pursuant to subsection (a)(2)(A) 

18 shall be entered into an American Dream Account 

19 only by a school administrator or the designee of 

20 such administrator. 

21 (c) PROHIBITION ON USE OF STUDENT INFORMA22 TION.—An eligible entity that receives a grant under this 

23 Act shall not use any student-level information or data for 

24 the purpose of soliciting, advertising, or marketing any fi25 nancial or non-financial consumer product or service that 


sradovich on DSK3GMQ082PROD with BILLS
19 

•S 1205 IS

1 is offered by such eligible entity, or on behalf of any other 

2 person. 

3 (d) PROHIBITION ON THE USE OF GRANT FUNDS.— 

4 An eligible entity shall not use grant funds provided under 

5 this Act to provide the initial deposit into a college savings 

6 account portion of a student’s American Dream Account. 

7 SEC. 7. REPORTS AND EVALUATIONS. 

8 (a) IN GENERAL.—Not later than 1 year after the 

9 Secretary has disbursed grants under this Act, and annu10 ally thereafter until each grant disbursed under this Act 

11 has ended, the Secretary shall prepare and submit a report 

12 to the appropriate committees of Congress, which shall in13 clude an evaluation of the effectiveness of the grant pro14 gram established under this Act, including in building fi15 nancial capability. 

16 (b) CONTENTS.—The report described in subsection 

17 (a) shall— 

18 (1) list the grants that have been awarded 

19 under section 4(a); 

20 (2) include the number of students who have an 

21 American Dream Account established through a 

22 grant awarded under section 4(a); 

23 (3) provide data (including the interest accrued 

24 on college savings accounts that are part of an 

25 American Dream Account) in the aggregate, regardVerDate Sep 11 2014 20:23 May 31, 2017 Jkt 069200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S1205.IS S1205

sradovich on DSK3GMQ082PROD with BILLS
20 

•S 1205 IS

1 ing students who have an American Dream Account 

2 established through a grant awarded under section 

3 4(a), as compared to similarly situated students who 

4 do not have an American Dream Account; 

5 (4) identify best practices developed by the eli6 gible entities receiving grants under this Act; 

7 (5) identify any issues related to student pri8 vacy and stakeholder accessibility to American 

9 Dream Accounts; 

10 (6) provide feedback from participating stu11 dents and the parents of such students about the 

12 grant program, including— 

13 (A) the impact of the program; 

14 (B) aspects of the program that are suc15 cessful; 

16 (C) aspects of the program that are not 

17 successful; and 

18 (D) any other data required by the Sec19 retary; and 

20 (7) provide recommendations for expanding the 

21 American Dream Accounts program. 

22 SEC. 8. ELIGIBILITY TO RECEIVE FEDERAL STUDENT FI23 NANCIAL AID. 

24 Notwithstanding any other provision of law, any 

25 funds that are in the college savings account portion of 


sradovich on DSK3GMQ082PROD with BILLS
21 

•S 1205 IS

1 a student’s American Dream Account shall not affect such 

2 student’s eligibility to receive Federal student financial 

3 aid, including any Federal student financial aid under the 

4 Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), 

5 and shall not be considered in determining the amount of 

6 any such Federal student aid. 

7 SEC. 9. AUTHORIZATION OF APPROPRIATIONS. 

8 There are authorized to be appropriated to carry out 

9 this Act such sums as may be necessary for fiscal year 

10 2018 and each of the 4 succeeding fiscal years. 

Æ 


sradovich on DSK3GMQ082PROD with BILLS