II 

112TH CONGRESS 

2D SESSION S. 2194 

To award grants in order to establish longitudinal personal college readiness 

and savings online platforms for low-income students. 

IN THE SENATE OF THE UNITED STATES 

MARCH 15, 2012 

Mr. COONS (for himself, Mr. RUBIO, and Mr. BINGAMAN) introduced the following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

To award grants in order to establish longitudinal personal 

college readiness and savings online platforms for lowincome students. 

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 of 2012’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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

2 low-income families will graduate from an institution 

3 of higher education before reaching the age of 24. 

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

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

6 barrier for many low-income students and students 

7 who would be in the first generation in their families 

8 to attend an institution of higher education. 

9 (3) According to Public Agenda, most young 

10 adults give secondary school counselors fair or poor 

11 ratings for advice about attending an institution of 

12 higher education, including advice about how to de13 cide what institution of higher education to attend, 

14 how to pay for higher education, what careers to 

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

16 education. 

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

18 the Free Application for Federal Student Aid 

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

20 would qualify for a Federal Pell Grant. 

21 (5) During the last 2 decades, costs of attend22 ing institutions of higher education have increased 

23 dramatically, but need-based financial aid has not 

24 kept pace with such increasing costs. 


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1 (6) In the 1990–1991 school year, the max2 imum Federal Pell Grant covered 45 percent of the 

3 average cost of attendance at a public 4-year institu4 tion of higher education (including tuition, fees, 

5 room, and board), but in the 2010–2011 school year, 

6 the maximum Federal Pell Grant covered only 34 

7 percent of such cost. 

8 (7) Parental and youth college savings are 

9 strong predictors of a youth’s expectations about at10 tendance at an institution of higher education. 

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

12 than $35,000 a year are saving for their child’s edu13 cation at an institution of higher education. 

14 (9) According to the Center for Social Develop15 ment, ‘‘wilt’’ occurs when a young person who ex16 pects to graduate from a 4-year institution of higher 

17 education has not yet attended such institution by 

18 the ages of 19 to 22. 

19 (10) Children who have savings dedicated for 

20 attendance at an institution of higher education are 

21 4 times more likely to attend a 4-year institution of 

22 higher education and avoid ‘‘wilt.’’ 

23 SEC. 3. DEFINITIONS. 

24 In this Act: 


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1 (1) ESEA DEFINITIONS.—The terms ‘‘local 

2 educational agency’’, ‘‘parent’’, ‘‘State educational 

3 agency’’, and ‘‘Secretary’’ shall have the meanings 

4 given the terms in section 9101 of the Elementary 

5 and Secondary Education Act of 1965 (20 U.S.C. 

6 7801) and the term ‘‘charter school’’ shall have the 

7 meaning given the term in section 5210 of such Act. 

8 (2) AMERICAN DREAM ACCOUNT.—The term 

9 ‘‘American Dream Account’’ means a personal on10 line account for low-income students that monitors 

11 higher education readiness and includes a college 

12 savings account. 

13 (3) APPROPRIATE COMMITTEES OF CON14 GRESS.—The term ‘‘appropriate committees of Con15 gress’’ means the Committee on Health, Education, 

16 Labor, and Pensions, the Committee on Appropria17 tions, and the Committee on Finance of the Senate, 

18 and the Committee on Education and the Work19 force, the Committee on Appropriations, and the 

20 Committee on Ways and Means of the House of 

21 Representatives, as well as any other Committee of 

22 the Senate or House of Representatives that the 

23 Secretary determines appropriate. 


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1 (4) COLLEGE SAVINGS ACCOUNT.—The term 

2 ‘‘college savings account’’ means a savings account 

3 that— 

4 (A) provides some tax-preferred accumula5 tion; 

6 (B) is widely available (such as Qualified 

7 Tuition Programs under section 529 of the In8 ternal Revenue Code of 1986 or Coverdell Edu9 cation Savings Accounts under section 530 of 

10 the Internal Revenue Code of 1986); and 

11 (C) contains funds that may be used only 

12 for the costs associated with attending an insti13 tution of higher education, including— 

14 (i) tuition and fees; 

15 (ii) room and board; 

16 (iii) textbooks; 

17 (iv) supplies and equipment; and 

18 (v) Internet access. 

19 (5) DUAL ENROLLMENT PROGRAM.—The term 

20 ‘‘dual enrollment program’’ means an academic pro21 gram through which a secondary school student is 

22 able simultaneously to earn credit toward a sec23 ondary school diploma and a postsecondary degree 

24 or credential. 


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1 (6) ELIGIBLE ENTITY.—The term ‘‘eligible enti2 ty’’ means— 

3 (A) a State educational agency; 

4 (B) a local educational agency; 

5 (C) a charter school; 

6 (D) an institution of higher education; 

7 (E) a nonprofit organization; 

8 (F) an entity with demonstrated experience 

9 in educational savings or in assisting low-in10 come students to prepare for, and attend, an in11 stitution of higher education; or 

12 (G) a consortium of 2 or more of the enti13 ties described in subparagraphs (A) through 

14 (F). 

15 (7) INSTITUTION OF HIGHER EDUCATION.—The 

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

17 meaning given the term in section 101(a) of the 

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

19 (8) LOW-INCOME STUDENT.—The term ‘‘low-in20 come student’’ means a student who is eligible to re21 ceive a free or reduced price lunch under the Rich22 ard B. Russell National School Lunch Act (42 

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


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1 SEC. 4. GRANT PROGRAM. 

2 (a) PROGRAM AUTHORIZED.—The Secretary is au3 thorized to award grants, on a competitive basis, to eligible 

4 entities to enable such eligible entities to establish and ad5 minister American Dream Accounts for a group of low6 income students. 

7 (b) RESERVATION.—From the amount appropriated 

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

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

10 out the evaluation activities described in section 7(a). 

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

12 shall be for a period of not more than 3 years. The Sec13 retary may extend such grant for an additional 2-year pe14 riod if the Secretary determines that the eligible entity has 

15 demonstrated significant progress, based on the factors 

16 described in section 5(b)(10). 

17 SEC. 5. APPLICATIONS; PRIORITY. 

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

19 grant under this Act shall submit an application to the 

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

21 such information as the Secretary may require. 

22 (b) CONTENTS.—At a minimum, the application de23 scribed in subsection (a) shall include the following: 

24 (1) A description of the characteristics of a 

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

26 students who— 


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1 (A) are, at the time of the application, at2 tending a grade not higher than grade 9; and 

3 (B) will, under the grant, receive an Amer4 ican Dream Account. 

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

6 engage, and provide support (such as tutoring and 

7 mentoring for students, and training for teachers 

8 and other stakeholders) either online or in person, 

9 to— 

10 (A) the students in the group described in 

11 paragraph (1); 

12 (B) the family members and teachers of 

13 such students; and 

14 (C) other stakeholders such as school ad15 ministrators and school counselors. 

16 (3) An identification of partners who will assist 

17 the eligible entity in establishing and sustaining 

18 American Dream Accounts. 

19 (4) A description of what experience the eligible 

20 entity or the eligible entity’s partners have in man21 aging college savings accounts, preparing low-income 

22 students for postsecondary education, managing on23 line systems, and teaching financial literacy. 

24 (5) A demonstration that the eligible entity has 

25 sufficient resources to provide an initial deposit into 


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1 the college savings account portion of each American 

2 Dream Account. 

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

4 help increase the value of the college savings account 

5 portion of each American Dream Account, such as 

6 by providing matching funds or incentives for aca7 demic achievement. 

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

9 notify each participating student in the group de10 scribed in paragraph (1), on a semiannual basis, of 

11 the current balance and status of the student’s col12 lege savings account portion of the student’s Amer13 ican Dream Account. 

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

15 will monitor participating students in the group de16 scribed in paragraph (1) to ensure that each stu17 dent’s American Dream Account will be maintained 

18 if a student in such group changes schools before 

19 graduating from secondary school. 

20 (9) A plan that describes how the American 

21 Dream Accounts will be managed for not less than 

22 1 year after a majority of the students in the group 

23 described in paragraph (1) graduate from secondary 

24 school. 


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

2 encourage students in the group described in para3 graph (1) who fail to graduate from secondary 

4 school to continue their education. 

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

6 evaluate the grant program, including by collecting, 

7 as applicable, the following data about the students 

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

9 grant period, and, if sufficient grant funds are avail10 able, after the grant period: 

11 (A) Attendance rates. 

12 (B) Progress reports. 

13 (C) Grades and course selections. 

14 (D) The student graduation rate, as de15 fined in section 1111 (b)(2)(C)(vi) of the Ele16 mentary and Secondary Education Act of 1965 

17 (20 U.S.C. 6311(b)(2)(C)(vi)). 

18 (E) Rates of student completion of the 

19 Free Application for Federal Student Aid de20 scribed in section 483 of the Higher Education 

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

22 (F) Rates of enrollment in an institution of 

23 higher education. 

24 (G) Rates of completion at an institution 

25 of higher education. 


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

2 funds in the college savings account portion of the 

3 American Dream Accounts that are dedicated to 

4 participating students described in paragraph (1) 

5 who have not matriculated at an institution of high6 er education at the time of the conclusion of the pe7 riod of American Dream Account management de8 scribed in paragraph (8). 

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

10 ensure that funds in the college savings account por11 tion of the American Dream Accounts will not make 

12 families ineligible for public assistance. 

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

14 ensure that participating students described in para15 graph (1) will have access to the Internet. 

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

17 the Secretary shall give priority to applications from eligi18 ble entities that— 

19 (1) are described in section 3(6)(G); 

20 (2) serve the largest number of low-income stu21 dents; or 

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

23 subparagraphs (A) or (B) of section 3(6), provide 

24 opportunities for participating students described in 


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1 paragraph (1) to participate in a dual enrollment 

2 program at no cost to the student. 

3 SEC. 6. AUTHORIZED ACTIVITIES. 

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

5 grant under this Act shall use such grant funds to estab6 lish an American Dream Account for each participating 

7 student described in section 5(b)(1), which will be used 

8 to— 

9 (1) open a college savings account for such stu10 dent; 

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

12 which— 

13 (A) shall include monitoring student data 

14 relating to— 

15 (i) grades and course selections; 

16 (ii) progress reports; and 

17 (iii) attendance and disciplinary 

18 records; and 

19 (B) may also include monitoring student 

20 data relating to a broad range of information, 

21 provided by teachers and family members, re22 lated to postsecondary education readiness, ac23 cess, and completion; 


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1 (3) provide opportunities for such students, ei2 ther online or in person, to learn about financial lit3 eracy, including by— 

4 (A) assisting such students in financial 

5 planning for enrollment in an institution of 

6 higher education; and 

7 (B) assisting such students in identifying 

8 and applying for financial aid (such as loans, 

9 grants, and scholarships) for an institution of 

10 higher education; 

11 (4) provide opportunities for such students, ei12 ther online or in person, to learn about preparing for 

13 enrollment in an institution of higher education, in14 cluding by providing instruction to students about— 

15 (A) choosing the appropriate courses to 

16 prepare for postsecondary education; 

17 (B) applying to an institution of higher 

18 education; 

19 (C) building a student portfolio, which may 

20 be used when applying to an institution of high21 er education; 

22 (D) selecting an institution of higher edu23 cation; 


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

2 postsecondary program of education or a career 

3 path; and 

4 (F) adapting to life at an institution of 

5 higher education; and 

6 (5) provide opportunities for such students, ei7 ther online or in person, to identify skills or inter8 ests, including career interests. 

9 (b) ACCESS TO AMERICAN DREAM ACCOUNT.— 

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

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

12 laws and regulations relating to privacy of informa13 tion and the privacy of children, an eligible entity 

14 that receives a grant under this Act shall allow vest15 ed stakeholders, as described in paragraph (2), to 

16 have secure access, through the Internet, to an 

17 American Dream Account. 

18 (2) VESTED STAKEHOLDERS.—The vested 

19 stakeholders that an eligible entity shall permit to 

20 access an American Dream Account are individuals 

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

22 counselors at an institution of higher education, 

23 school administrators, or other individuals) that are 

24 designated, in accordance with the Family Edu25 cational Rights and Privacy Act of 1974 (20 U.S.C. 


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1 1232g), by the parent of a participating student in 

2 whose name such American Dream Account is held, 

3 as having permission to access the account. A stu4 dent’s parent may withdraw such designation from 

5 an individual at any time. 

6 (3) EXCEPTION FOR COLLEGE SAVINGS AC7 COUNT.—An eligible entity that receives a grant 

8 under this Act shall not be required to give vested 

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

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

11 American Dream Account. 

12 (4) ADULT STUDENTS.—Notwithstanding para13 graphs (1), (2), and (3), if a participating student 

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

15 grant under this Act shall not provide access to such 

16 participating student’s American Dream Account 

17 without the student’s consent, in accordance with 

18 the Family Educational Rights and Privacy Act of 

19 1974 (20 U.S.C. 1232g). 

20 (5) INPUT OF STUDENT INFORMATION.—Stu21 dent data collected pursuant to subsection (a)(2)(A) 

22 shall be entered into an American Dream Account 

23 only by a school administrator or such administra24 tor’s designee. 


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1 (c) PROHIBITION ON USE OF STUDENT INFORMA2 TION.—An eligible entity that receives a grant under this 

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

4 the purpose of soliciting, advertising, or marketing any fi5 nancial or non-financial consumer product or service that 

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

7 person. 

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

9 An eligible entity shall not use grant funds provided under 

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

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

12 SEC. 7. REPORTS AND EVALUATIONS. 

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

14 Secretary has disbursed grants under this Act, and annu15 ally thereafter until each grant disbursed under section 4 

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

17 to the appropriate committees of Congress, which shall in18 clude an evaluation of the effectiveness of the grant pro19 gram established under this Act. 

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

21 (a) shall— 

22 (1) list the grants that have been awarded 

23 under section 4(a); 


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

2 American Dream Account established through a 

3 grant awarded under section 4(a); 

4 (3) provide data (including the interest accrued 

5 on college savings accounts that are part of an 

6 American Dream Account) in the aggregate, regard7 ing students who have an American Dream Account 

8 established through a grant awarded under section 

9 4(a), as compared to similarly situated students who 

10 do not have an American Dream Account; 

11 (4) identify best practices developed by the eli12 gible entities receiving grants under this Act; 

13 (5) identify any issues related to student pri14 vacy and stakeholder accessibility to American 

15 Dream Accounts; 

16 (6) provide feedback from participating stu17 dents and the parents of such students about the 

18 grant program, including— 

19 (A) the impact of the program; 

20 (B) aspects of the program that are suc21 cessful; 

22 (C) aspects of the program that are not 

23 successful; and 

24 (D) any other data required by the Sec25 retary; and 


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1 (7) provide recommendations for expanding the 

2 American Dream Accounts program. 

3 SEC. 8. ELIGIBILITY TO RECEIVE FEDERAL STUDENT FI4 NANCIAL AID. 

5 Notwithstanding any other provision of law, any 

6 funds that are in the college savings account portion of 

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

8 student’s eligibility to receive Federal student financial 

9 aid, including any Federal student financial aid under the 

10 Higher Education Act of 1965 (20 U.S.C. 1001), and 

11 shall not be considered in determining the amount of any 

12 such Federal student aid. 

13 SEC. 9. AUTHORIZATION OF APPROPRIATIONS. 

14 There are authorized to be appropriated to carry out 

15 this Act $3,000,000 for fiscal year 2012, from existing 

16 Department of Education funds, and such sums as may 

17 be necessary for each subsequent fiscal year. 

18 SEC. 10. CONFORMING AMENDMENT. 

19 Section 480(j) of the Higher Education Act of 1965 

20 (20 U.S.C. 1087vv(j)) is amended by adding at the end 

21 the following: 

22 ‘‘(5) Notwithstanding paragraph (1), amounts 

23 made available under the college savings account 

24 portion of an American Dream Account under the 

25 American Dream Accounts Act of 2012 shall not be 


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1 treated as estimated financial assistance for pur2 poses of section 471(3).’’. 

Æ 


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