I

103RD CONGRESS

1ST SESSION H. R. 29

To authorize loans for study at nonprofit institutions of higher education.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. SMITH of Iowa introduced the following bill; which was referred to the

Committee on Education and Labor

A BILL

To authorize loans for study at nonprofit institutions of

higher education.

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

3 FINDINGS AND DECLARATION OF POLICY

4 SEC. 2. The Congress hereby finds that the security

5 and welfare of the United States requires that this and

6 future generations of American youth be assured ample

7 opportunity for the fullest development of their intellectual

8 capacities, and that this opportunity will be jeopardized

9 unless the financial barrier against youth of college ability

10 obtaining a higher education can be overcome. It shall be

11 the policy of the United States that no high school grad-
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1 uate who can secure admission to an institution of higher

2 education shall be denied an opportunity to attend such

3 institution as a result of inadequate financial resources

4 and that it is incumbent upon the Nation to take positive

5 and immediate action to meet these needs through a pro6 gram providing loans for young people who need financial

7 assistance for post high school education or training.

8 TITLE I—LOANS FOR COLLEGE STUDENTS

9 AGREEMENTS WITH INSTITUTIONS

10 SEC. 101. (a) The Secretary of Education is author11 ized to enter into an agreement with any institution of

12 higher education which desires to participate in a program

13 making financial loans to students. Such payments to in14 stitutions shall be made during the period beginning Octo15 ber 1, 1993, and ending September 30, 1999, but no such

16 loan shall cover any period after September 30, 2000.

17 (b) An agreement between the Secretary and an insti18 tution of higher education for making such loans shall—

19 (1) provide that funds paid to the institution

20 under this Act will be used solely to make loans to

21 students in such institution;

22 (2) provide that (A) no loan made to a recipient

23 under this Act will cover more than two academic

24 years, and (B) the amount of each such loan will be

25 determined in the case of each recipient thereof with
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1 respect to each academic year in which such recipi2 ent receives such a loan, except that no such recipi3 ent shall receive more than $6,000 under the provi4 sions of this Act in any academic year of under5 graduate enrollment; or $8,500 in any academic year

6 of graduate enrollment;

7 (3) provide that the average loan per recipient

8 for undergraduate students shall not exceed $4,500

9 and for graduate students shall not exceed $6,000

10 per academic year and shall be reduced proportion11 ately for those students enrolled in such institution

12 on less than a full-time basis;

13 (4) provide that payments under such loan will

14 continue only during such periods as the recipient is

15 in good standing at the institution;

16 (5) provide that each recipient of such a loan

17 for the first and second academic years of under18 graduate study must be selected solely on the basis

19 of his being (A) capable of doing at least satisfactory

20 academic work in the course of study which he will

21 pursue in such institution, (B) in need of the

22 amount of such loan in order to pursue a course of

23 study in such institution and without reasonable ex24 pectation of obtaining grant assistance from any

25 other source sufficient to enable him to undertake
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1 such course of study, and (C) of good character,

2 with an earnest desire to obtain an education at an

3 institution of higher education;

4 (6) provide that at the completion of the second

5 academic year, if such recipient has maintained good

6 standing during the first and second academic years

7 and would be unable to pursue a course of study in

8 such institution during the third and fourth aca9 demic years without such a loan, the institution in

10 which such recipient enrolls for the third academic

11 year is authorized to award an additional loan for

12 the third and fourth academic years;

13 (7) include such provisions and be supported by

14 such assurances as the Secretary may determine to

15 be necessary to assure that there will be no reduc16 tion of the amount of student financial assistance of17 fered by the institution from its own resources as a

18 result of participation in the program under this

19 Act;

20 (8) include such other provisions as the Sec21 retary may determine to be necessary to protect the

22 financial interest of the United States and promote

23 the purposes of this Act and as are agreed to by the

24 Secretary and the institution;
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1 (9) provide that the institution will secure the

2 proper execution of such documents by a recipient of

3 a loan as are necessary to assure repayment of such

4 loans in accordance with the provisions of section

5 103 of this Act;

6 (10) provide that the liability to repay any such

7 loan shall be cancelled upon the death of the bor8 rower or if he becomes permanently and totally dis9 abled; and

10 (11) provide that such a loan by an institution

11 for any year shall be made in such installments as

12 will reasonably protect against the disbursement of

13 funds to cover expenses for any period after a recipi14 ent of a loan has failed to maintain a satisfactory

15 standing at such institution.

16 PAYMENTS TO INSTITUTIONS

17 SEC. 102. (a) Sums appropriated under this Act for

18 any fiscal year shall be available in accordance with agree19 ments between the Secretary and the institution of higher

20 education for payment of contributions which together

21 with the repayment of loans to the institutions shall be

22 used for the establishment and maintenance of a Federal

23 student loan fund at each institution. The Federal con24 tribution to an institution shall be paid to it from time

25 to time in such sums as the Secretary shall determine will
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1 not result in unnecessary accumulation in the Federal stu2 dent loan fund of such institution established pursuant to

3 this Act. Payments allotted to such institutions for loans

4 for graduate students shall not be used to provide loans

5 for undergraduate students and payments made to provide

6 loans for undergraduate students shall not be used to pro7 vide loans for graduate students.

8 (b) If the amount appropriated for any fiscal year

9 is less than the aggregate of amounts authorized to be

10 paid under subsection (a) for such year, the amount au11 thorized to be paid under such subsection to each institu12 tion of higher education with which the Secretary has an

13 agreement under the Act shall be reduced in proportion

14 to the student enrollments in each institution for such year

15 so that the aggregate of such amounts does not exceed

16 the amount appropriated for such year.

17 REPAYMENTS OF LOANS

18 SEC. 103. Each year beginning with the second tax19 able year that a scholar who received a loan under this

20 Act is no longer a bona fide students of an accredited in21 stitution of higher education and working toward a degree,

22 the recipient shall pay to the Secretary a sum equal to

23 5 per centum of his personal net taxable income, as de24 fined or determined by section 63 of the 1986 Internal

25 Revenue Code, as amended, from sources other than pay
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1 for military service. Said sums to be paid each year until

2 the total of the sums received by the student without inter3 est is repaid. The Secretary shall issue such regulations

4 as are reasonably necessary to assure receipt of necessary

5 documents and information to secure such payments and

6 such required documents and assurances shall be secured

7 prior to payment of an individual loan.

8 The recipient shall be given an alternative of repaying

9 each year 10 per centum of the total of the sums received

10 by the student and such payments shall begin with the

11 second calendar year in which the student is no longer

12 a bona fide student of an accredited institution of higher

13 education for a period of six or more months and working

14 toward a degree.

15 Any sums due and unpaid shall bear interest

16 compounded annually at the annual rate the Secretary de17 termines to be 2 per centum more than the average inter18 est rate paid on new issues of obligations of the United

19 States for each calendar year such sums are due and

20 owing.

21 APPROPRIATIONS

22 SEC. 104. In order to carry out the provisions of this

23 Act, there are hereby authorized to be appropriated such

24 sums as may be necessary to effectuate the purposes of

25 this Act for fiscal year 1994 and each fiscal year there-
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1 after through fiscal year 1999. Sums appropriated pursu2 ant to the preceding sentence for fiscal years shall remain

3 available for the award of financial assistance loans under

4 this Act until the close of the fiscal year succeeding the

5 fiscal year for which they were appropriated.

6 TITLE II—DEFINITIONS AND OTHER

7 PROVISIONS APPLICABLE TO ENTIRE ACT

8 DEFINITIONS

9 SEC. 201. As used in this Act—

10 (a) The term ‘‘institution of higher education’’ means

11 a pubic or other nonprofit educational institution in any

12 State which—

13 (1) admits as regular students only individuals

14 having a certificate of graduation from a high

15 school, or the recognized equivalent of such a certifi16 cate;

17 (2) is legally authorized within such State to

18 provide a program of education beyond high school;

19 (3) provides an educational program for which

20 it awards a degree, or provides not less than a two21 year program which is acceptable for full credit to22 ward such a degree; and

23 (4) is accredited by a nationally recognized ac24 crediting agency or association listed by the Sec25 retary pursuant to this paragraph or, if not so ac-
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1 credited, is an institution whose credits are accepted,

2 on transfer, by not less than three institutions which

3 are so accredited, for credit on the same basis as if

4 transferred from an institution so accredited or is an

5 institution which the Secretary determines provides

6 an educational program at least equal to the pro7 gram provided by at least three accredited institu8 tions. For the purposes of this paragraph the Sec9 retary shall publish a list of nationally accrediting

10 agencies or associations which he determines to be

11 reliable authorities as to the quality of education or

12 training offered.

13 (b) The term ‘‘high school’’ does not include any

14 grade beyond grade 12.

15 (c) The term ‘‘nonprofit educational institution’’

16 means an educational institution owned and operated by

17 one or more corporations or associations no part of the

18 net earnings of which inures, or may lawfully inure, to

19 the benefit of any private shareholder or individual.

20 (d) The term ‘‘public educational institution’’ does

21 not include a school or institution of any agency of the

22 United States.

23 (e) The term ‘‘State’’ includes, in addition to the sev24 eral States, the District of Columbia, the Commonwealth
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1 of Puerto Rico, the Virgin Islands, Guam, and American

2 Samoa.

3 (f) the term ‘‘Secretary’’ means the United States

4 Secretary of Education.

5 FEDERAL ADMINISTRATION

6 SEC. 202. (a) The Secretary may delegate any of his

7 functions under this Act, except the making of regulations,

8 or determining the accrediting of institutions to any offi9 cer or employee of the Department of Education.

10 (b) In administering the provisions of this Act for

11 which he is responsible, the Secretary is authorized to uti12 lize the services and facilities of any agency of the Federal

13 Government and of any other public or nonprofit agency

14 or institution in accordance with appropriate agreements,

15 and to pay for such services either in advance or by way

16 of reimbursement, as may be agreed upon.

17 (c) The Secretary, may appoint one or more advisory

18 committees to advise and consult with the Secretary with

19 respect to the administration of any of his functions under

20 this Act. Members of any such committee, while attending

21 conferences or meetings of the committee, shall be entitled

22 to receive compensation at a rate to be fixed by the Sec23 retary but not to exceed $150 per diem, and while away

24 from their homes or regular places of business they may

25 be allowed travel expenses, including per diem in lieu of
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1 subsistence, as authorized by law (5 U.S.C. 5703) for per2 sons in the Government service employed intermittently.

3 The provisions of General Education Provisions Act shall

4 apply to members of such committees.

5 METHOD OF PAYMENT TO INSTITUTIONS

6 SEC. 203. Payments under this Act to any individual

7 or to any State or Federal agency, institution of higher

8 education, or any other organization, may be made in in9 stallments, and in advance or by way of reimbursement,

10 and with necessary adjustments on account of overpay11 ments or underpayments.

12 ADMINISTRATIVE APPROPRIATIONS AUTHORIZED

13 SEC. 204. There are hereby authorized to be appro14 priated for the fiscal year ending September 30, 1994, and

15 for each fiscal year thereafter through fiscal year 1999,

16 such sums as may be necessary for the cost of administer17 ing the provisions of this Act.

18 SEC. 205. Nothing contained in this Act shall be con19 strued as authorizing a department, agency, officer, or

20 employee of the United States to exercise any direction,

21 supervision, or control over, or impose any requirements

22 or condition with respect to, the personnel, curriculum,

23 methods of instruction, or administration of any edu24 cational institution.
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1 TITLE III—NATIONAL STUDY

2 SEC. 301. (a) The Secretary shall undertake a study

3 to determine the extent to which the provisions of this Act

4 can reasonably replace various other Federal grants or as5 sistance programs.

6 (b) The Secretary shall submit a report of his find7 ings made pursuant to the study carried out under this

8 section, together with such recommendations as he may

9 deem appropriate, to the President and the Congress with10 in two years after the date of the enactment of this sec11 tion.

12 SEC. 302. This Act shall be cited as the ‘‘Federal

13 Student Loan Act’’.

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