Calendar No. 218

103D CONGRESS

1ST SESSION S. 1507

A BILL

To make technical amendments to the Higher EduEducation Act of 1965, and for other purposes. cation Amendments of 1992 and the Higher

SEPTEMBER 30 (legislative day, SEPTEMBER 27), 1993

Read twice and ordered to be placed on the calendar
II

Calendar No. 218

103D CONGRESS

1ST SESSION S. 1507

To make technical amendments to the Higher Education Amendments of

1992 and the Higher Education Act of 1965, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 30 (legislative day, SEPTEMBER 27), 1993

Mr. PELL (for himself and Mr. JEFFORDS) introduced the following bill; which

was read twice and ordered to be placed on the calendar

A BILL

To make technical amendments to the Higher Education

Amendments of 1992 and the Higher Education Act

of 1965, and for other purposes.

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; REFERENCES.

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

5 ‘‘Higher Education Technical Amendments Act of 1993’’.

6 (b) REFERENCES.—Except as otherwise expressly

7 provided, whenever in this Act an amendment or repeal

8 is expressed in terms of an amendment to, or repeal of,
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1 a section or other provision, the reference shall be consid2 ered to be made to a section or other provision of the

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

4 SEC. 2. EFFECTIVE DATE FOR PELL GRANTS FOR INCAR5 CERATED INDIVIDUALS.

6 Section 410 of the Higher Education Amendments of

7 1992 (20 U.S.C. 1070a note) is amended—

8 (1) by redesignating paragraphs (2) and (3) as

9 paragraphs (3) and (4), respectively; and

10 (2) by inserting after paragraph (1) the follow11 ing new paragraph:

12 ‘‘(2) that the changes made in section

13 401(b)(8)(B), relating to Federal Pell Grants for in14 carcerated individuals, shall apply to the awarding of

15 Federal Pell Grants for periods of enrollment on or

16 after July 1, 1996;’’.

17 SEC. 3. BASIC EDUCATIONAL OPPORTUNITY GRANTS.

18 The second sentence of section 401(a)(1) (20 U.S.C.

19 1070a(a)(1)) is amended by inserting ‘‘, except that this

20 sentence shall not be construed to limit the authority of

21 the Secretary to place an institution on a reimbursement

22 system of payment’’ before the period.

23 SEC. 4. EARLY INTERVENTION APPLICATION.

24 Section 404G (20 U.S.C. 1070a–27) is amended—
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1 (1) in the first sentence, by striking ‘‘an appro2 priation’’ and inserting ‘‘to be appropriated’’; and

3 (2) by striking the second sentence.

4 SEC. 5. INTEREST RATES FOR NEW BORROWERS AFTER OC5 TOBER 1, 1992.

6 The matter preceding subparagraph (A) of section

7 427A(e)(1) (20 U.S.C. 1077a(e)(1)) is amended by insert8 ing ‘‘(other than a loan made, insured or guaranteed

9 under section 428A)’’ after ‘‘this part’’.

10 SEC. 6. FORBEARANCE CLARIFICATION.

11 Subparagraph (A) of section 428(c)(3) (20 U.S.C.

12 1078(c)(3)(A)) is amended by striking ‘‘for the benefit of

13 the student borrower serving in a medical or dental intern14 ship or residency program’’.

15 SEC. 7. UNSUBSIDIZED LOAN INTEREST RATES.

16 Paragraph (4) of section 428H(e) (20 U.S.C. 1978–

17 8(e)(4)) is amended by striking ‘‘427A(e)’’ and inserting

18 ‘‘427A’’.

19 SEC. 8. PRESERVATION OF BORROWER CLAIMS AS DE20 FENSES.

21 Paragraph (1) of section 432(m) (20 U.S.C.

22 1082(m)(1)) is amended by adding at the end the follow23 ing new subparagraph:

24 ‘‘(E) PRESERVATION OF BORROWER CLAIMS AS

25 DEFENSES.—
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1 ‘‘(i) The promissory note prescribed by the

2 Secretary shall include the following provision:

3 ‘‘ ‘ANY HOLDER OF THIS NOTE IS SUBJECT

4 TO ALL CLAIMS AND DEFENSES WHICH I COULD

5 ASSERT AGAINST THE SCHOOL IF (1) THIS LOAN

6 IS MADE BY THE SCHOOL OR (2) THE PROCEEDS

7 OF THIS LOAN ARE USED TO PAY TUITION AND

8 CHARGES OF A SCHOOL THAT REFERS LOAN AP9 PLICANTS TO THE LENDER, OR THAT IS AFFILI10 ATED WITH THE LENDER BY COMMON CON11 TROL, CONTRACT OR BUSINESS ARRANGEMENT.

12 MY RECOVERY UNDER THIS PROVISION SHALL

13 NOT EXCEED THE AMOUNT I PAID ON THIS

14 LOAN.’

15 ‘‘(ii) For purposes of this subparagraph—

16 ‘‘(I) an institution shall be considered

17 to refer loan applicants to a particular

18 lender if the institution urges, suggests, or

19 otherwise recommends that loan applicants

20 borrow from the lender and the lender is

21 on notice of such recommendation by the

22 institution at the time the loan is made,

23 unless the institution does no more than

24 identify the lender as an available source

25 of student loans; and
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1 ‘‘(II) a business arrangement exists if

2 the lender and the institution agree to en3 gage in cooperative activity with regard to

4 the making of loans for students in attend5 ance at the institution, except for activity

6 specifically and expressly required by this

7 Act or regulations issued by the Secretary.

8 ‘‘(iii) Notwithstanding the provisions of

9 section 433.2 of title 16, Code of Federal Regu10 lations, the provisions of clauses (i) and (ii)

11 shall apply to all loans made, insured or guar12 anteed under this part.’’.

13 SEC. 9. COHORT DEFAULT RATE.

14 (a) FINDINGS.—The Congress finds that—

15 (1) many institutions of higher education with

16 high cohort default rates have avoided or sought to

17 avoid loss of eligibility under the Federal Family

18 Education Loan Program by alleging improper serv19 icing or collection of the defaulted loans taken into

20 account in determining their default rates;

21 (2) institutions of higher education bear a fair

22 share of the blame for the increased level of defaults

23 in such program;

24 (3) since a borrower remains responsible for

25 paying on a loan even if there is improper loan serv-
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1 icing or collection it would not be fair to forgive the

2 institution of higher education for the default based

3 on such errors, and exclusion of such loans would re4 sult in a misleading cohort default rate which is not

5 reflective of the institution’s performance;

6 (4) providing institutions of higher education

7 with access to servicing or collection records relating

8 to loans taken into account in determining the insti9 tution’s cohort default rate, for the purpose of ap10 pealing the loss of eligibility, would frustrate the

11 statutory purpose of reducing student loan defaults

12 because collection and review of the records could

13 not be completed within the statutory time frames

14 for such review; and

15 (5) it is unnecessary to afford institutions of

16 higher education such access to loan records because

17 the statutory threshold percentages for loss of eligi18 bility due to high cohort default rates are substan19 tially above the preferred level of such rates for eligi20 ble institutions.

21 (b) SIMPLIFICATION OF DEFINITION OF COHORT DE22 FAULT RATE.—Subparagraph (B) of section 435(m)(1)

23 (20 U.S.C. 1085(m)(1)(B)) is amended by striking all be24 ginning with ‘‘, and,’’ through ‘‘calculation of the cohort

25 default rate’’.
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1 (c) EFFECTIVE DATE AND SAVINGS PROVISION.—

2 (1) EFFECTIVE DATE.—The amendment made

3 by subsection (b) shall be effective on the date of en4 actment of this Act and shall apply to all determina5 tions made by the Secretary under section

6 435(m)(1)(B) of the Higher Education Act of 1965

7 on or after that date, including determinations made

8 on or after such date for fiscal years for which the

9 Secretary made determinations under such section

10 prior to such date.

11 (2) SAVINGS PROVISION.—The amendment

12 made by subsection (b) shall not affect a determina13 tion of institutional eligibility made before the date

14 of enactment of this Act.

15 SEC. 10. FEDERAL WORK-STUDY PROGRAMS.

16 Paragraph (5) of section 443(b) (20 U.S.C.

17 2753(b)(5) is amended to read as follows:

18 ‘‘(5) provide that the Federal share of the com19 pensation of students employed in the work-study

20 program in accordance with the agreement shall not

21 exceed 75 percent for academic year 1993–1994 and

22 succeeding academic years, except that the Federal

23 share may exceed such amounts of such compensa24 tion if the Secretary determines, pursuant to regula25 tions promulgated by the Secretary establishing ob-
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1 jective criteria for such determinations, that a Fed2 eral share in excess of such amounts is required in

3 furtherance of the purpose of this part;’’.

4 SEC. 11. COST OF ATTENDANCE.

5 Section 472 (20 U.S.C. 1087ll) is amended—

6 (1) in paragraph (10), by striking ‘‘and’’ after

7 the semicolon;

8 (2) in paragraph (11), by striking the period

9 and inserting ‘‘; and’’; and

10 (3) by adding at the end the following new

11 paragraph:

12 ‘‘(12) for a student who receives a loan under

13 part B or D of this title (or on whose behalf the par14 ent of such student receives a loan under section

15 428B or part D), an allowance for the actual cost

16 of any loan fee, origination fee, or insurance pre17 mium charged to such student or such parent on

18 such loan, or the average cost of any such fee or

19 premium charged by the Secretary, eligible lender,

20 or guaranty agency making or insuring such loan, as

21 the case may be.’’.

22 SEC. 12. CLARIFICATION REGARDING IRS FILINGS.

23 Section 479 (20 U.S.C. 1087ss) is amended—

24 (1) in subsection (b)(3)—
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1 (A) in subparagraph (A), by inserting ‘‘(in2 cluding any prepared or electronic version of

3 such form)’’ before ‘‘required’’; and

4 (B) in subparagraph (B), by inserting

5 ‘‘(including any prepared or electronic version

6 of such return)’’ before ‘‘required’’; and

7 (2) in subsection (c)—

8 (A) by amending subparagraph (A) of

9 paragraph (1) to read as follows:

10 ‘‘(A) the student’s parents were not re11 quired to file an income tax return under sec12 tion 6012(a)(1) of the Internal Revenue Code

13 of 1986; and’’; and

14 (B) by amending subparagraph (A) of

15 paragraph (2) to read as follows:

16 ‘‘(A) the student (and the student’s

17 spouse, if any) was not required to file an in18 come tax return under section 6012(a)(1) of the

19 Internal Revenue Code of 1986; and’’.

20 SEC. 13. DISCRETION OF STUDENT FINANCIAL AID OFFI21 CER.

22 Section 479A (20 U.S.C. 1087tt) is amended by add23 ing at the end the following new subsection:

24 ‘‘(c) ADJUSTMENTS FOR SPECIAL CIR25 CUMSTANCES.—
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1 ‘‘(1) IN GENERAL.—A student financial aid ad2 ministrator shall be considered to be making an ad3 justment for special circumstances in accordance

4 with subsection (a) if—

5 ‘‘(A) in the case of a dependent student—

6 ‘‘(i) such student received a Federal

7 Pell Grant as a dependent student in aca8 demic year 1992–1993 and the amount of

9 such student’s Federal Pell Grant for aca10 demic year 1993–1994 is at least $500

11 less than the amount of such student’s

12 Federal Pell Grant for academic year

13 1992–1993; and

14 ‘‘(ii) the decrease described in clause

15 (i) is the direct result of a change in the

16 determination of such student’s need for

17 assistance in accordance with this part

18 that is attributable to the enactment of the

19 Higher Education Amendments of 1992;

20 and

21 ‘‘(B) in the case of a single independent

22 student—

23 ‘‘(i) such student received a Federal

24 Pell Grant as a single independent student

25 in academic year 1992–1993 and qualified
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1 as an independent student in accordance

2 with section 480(d) for academic year

3 1993–1994, and the amount of such stu4 dent’s Federal Pell Grant for academic

5 year 1993–1994 is at least $500 less than

6 the amount of such student’s Federal Pell

7 Grant for academic year 1992–1993; and

8 ‘‘(ii) the decrease described in clause

9 (i) is the direct result of a change in the

10 determination of such student’s need for

11 assistance in accordance with this part

12 that is attributable to the enactment of the

13 Higher Education Amendments of 1992.

14 ‘‘(2) AMOUNT.—A financial aid administrator

15 shall not make an adjustment for special cir16 cumstances pursuant to this subsection in an

17 amount that exceeds one-half of the difference be18 tween the amount of a student’s Federal Pell Grant

19 for academic year 1992–1993 and the amount of

20 such student’s Federal Pell Grant for academic year

21 1993–1994.

22 ‘‘(3) ACADEMIC YEAR LIMITATION.—A financial

23 aid administrator only shall make adjustments under

24 this subsection for Federal Pell Grants awarded for
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1 academic years 1993–1994, 1994–1995, and 1995–

2 1996.

3 ‘‘(4) SPECIAL RULE.—Adjustments under this

4 subsection shall only be made in fiscal year 1993 if

5 an Act that contains an appropriation for fiscal year

6 1993 to carry out this subsection is enacted on or

7 after the date of enactment of the Higher Education

8 Technical Amendments of 1993.’’.

9 SEC. 14. CORRESPONDENCE RULE WAIVER.

10 Subparagraph (B) of section 481(a)(3) (20 U.S.C.

11 1088(a)(3)(B)) is amended by inserting ‘‘, except that the

12 Secretary, for good cause as determined by the Secretary,

13 may deem a nonprofit institution that provides a 4-year

14 or 2-year program of instruction for which such institution

15 awards a bachelor’s or associate’s degree to be in compli16 ance with the provisions of this subparagraph’’ before the

17 semicolon.

18 SEC. 15. WAIVER OF ABILITY TO BENEFIT RULE FOR CER19 TAIN SCHOOLS.

20 Subparagraph (D) of section 481(a)(3) (20 U.S.C.

21 1088(a)(3)(D)) is amended by inserting ‘‘, except that the

22 Secretary, for good cause as determined by the Secretary,

23 may deem an institution that has entered into a contract

24 with a Federal, State or local government entity to serve

25 students described in section 484(d) to be in compliance
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1 with the provisions of this subparagraph’’ before the pe2 riod.

3 SEC. 16. DEFINITION OF ACADEMIC YEAR.

4 Paragraph (2) of section 481(d) (20 U.S.C.

5 1088(d)(2)) is amended by inserting ‘‘, except that the

6 Secretary may waive the 30-week requirement described

7 in this paragraph for good cause as determined by the Sec8 retary’’ before the period.

9 SEC. 17. TREATMENT OF UNCOMPENSATED FINANCIAL AID

10 APPLICATION PREPARERS.

11 Subsection (f) of section 483 (20 U.S.C. 1090(f)) is

12 amended by striking ‘‘the preparer of such financial aid

13 application’’ and inserting ‘‘any individual who receives

14 compensation from an applicant or an applicant’s family

15 for the purpose of preparing such financial aid application,

16 and nothing in this paragraph shall be construed to re17 quire an individual who does not receive such compensa18 tion to include such information on such application’’.

19 SEC. 18. STUDENT ELIGIBILITY FOR FORMER TRUST TERRI20 TORIES.

21 Subparagraph (B) of section 484(a)(4) (20 U.S.C.

22 1091(a)(4)(B)) is amended by inserting ‘‘, except that the

23 provisions of this subparagraph shall not apply to students

24 from the Republic of the Marshall Islands, the Federated
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1 States of Micronesia, or the Republic of Palau’’ after

2 ‘‘number’’.

3 SEC. 19. DISCLOSURE OF COMPLETION OR GRADUATION

4 RATE.

5 Subparagraph (A) of section 485(a)(3) (20 U.S.C.

6 1092(a)(3)(A) is amended by striking ‘‘beginning on July

7 1, 1993, and each year’’ and inserting ‘‘within 270 days

8 after the date on which the Secretary issues final regula9 tions implementing the provisions of this paragraph and

10 each July 1’’.

11 SEC. 20. INDEPENDENCE OF ACCREDITING AGENCIES.

12 Subparagraph (A) of section 496(a)(3) (20 U.S.C.

13 1099b(a)(3)(A)) is amended by striking ‘‘subparagraph

14 (A) of paragraph (2)’’ and inserting ‘‘clause (i) of para15 graph (2)(A)’’.

16 SEC. 21. OPERATING PROCEDURES FOR ACCREDITING

17 AGENCIES.

18 The matter preceding paragraph (1) of section 496(c)

19 (20 U.S.C. 1099b(c)(1)) is amended by inserting ‘‘deter20 mining an institution of higher education’s eligibility to

21 participate in programs under’’ after ‘‘purpose of’’.

22 SEC. 22. FINANCIAL RESPONSIBILITY STANDARDS.

23 Subsection (c) of section 498 (20 U.S.C. 1099c(c))

24 is amended—

25 (1) in paragraph (3)—
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1 (A) in the matter preceding subparagraph

2 (A)—

3 (i) by striking ‘‘may’’ and inserting

4 ‘‘shall’’; and

5 (ii) by inserting ‘‘that provides a 2-

6 year or 4-year program of instruction for

7 which the institution awards an associate’s

8 or bachelor’s degree’’ before ‘‘to be’’; and

9 (B) by amending subparagraph (C) to read

10 as follows:

11 ‘‘(C) such institution submits a report to

12 the Secretary from an independent certified

13 public accountant that certifies that the institu14 tion has sufficient resources to ensure against

15 the precipitous closure of such institution, in16 cluding the ability to meet all of such institu17 tion’s financial obligations (including refunds of

18 institutional charges and repayments to the

19 Secretary for liabilities and debts incurred in

20 programs administered by the Secretary); or’’;

21 and

22 (2) by adding at the end the following new

23 paragraph:

24 ‘‘(6)(A) In carrying out the provisions of this

25 subsection the Secretary shall establish financial re-
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1 sponsibility standards that include requiring an in2 stitution of higher education to maintain an asset3 to-liability ratio of 1:1.

4 ‘‘(B) For the purpose of computing an asset-to5 liability ratio described in subparagraph (A) and

6 paragraph (2), an institution—

7 ‘‘(i) may count as a current asset the eq8 uity (the difference between book cost and the

9 mortgage owed) in facilities (land and build10 ings) owned and occupied by such institution

11 and used to provide education and training

12 services described in such institution’s official

13 publications;

14 ‘‘(ii) in the case of an application for

15 recertification under this section, shall take into

16 consideration the depreciation and current value

17 of such facilities determined in accordance with

18 a professional appraisal; and

19 ‘‘(iii) shall use the lesser value between the

20 equity value and the current value of such fa21 cilities.’’.

22 SEC. 23. NATIONAL BOARD FOR PROFESSIONAL TEACHING

23 STANDARDS.

24 Section 551 (20 U.S.C. 1107) is amended—
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1 (1) in paragraph (1) of subsection (b), by strik2 ing ‘‘the Federal share of’’;

3 (2) in subparagraph (B) of subsection (e)(1), by

4 striking ‘‘share of the cost of the activities of the

5 Board is’’ and inserting ‘‘contributions described in

6 subsection (f) are’’; and

7 (3) by amending subsection (f) to read as fol8 lows:

9 ‘‘(f) MATCHING FUNDS REQUIREMENT.—

10 ‘‘(1) IN GENERAL.—The Secretary shall not

11 provide financial assistance under this subpart to

12 the Board unless the Board agrees to expend non13 Federal contributions equal to $1 for every $1 of the

14 Federal funds provided pursuant to such financial

15 assistance.

16 ‘‘(2) NON-FEDERAL CONTRIBUTIONS.—The

17 non-Federal contributions described in paragraph

18 (1)—

19 ‘‘(A) may include all non-Federal funds

20 raised by the Board on or after January 1,

21 1987; and

22 ‘‘(B) may be used for outreach, implemen23 tation, administration, operation, and other

24 costs associated with the development and im25 plementation of national teacher assessment
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1 and certification procedures under this sub2 part.’’.

3 SEC. 24. COOPERATIVE EDUCATION.

4 The matter preceding paragraph (1) of section

5 802(b) (20 U.S.C. 1133a(b)(1)) is amended by inserting

6 ‘‘the Secretary shall reserve such amount as is necessary

7 to make payments in such fiscal year, in accordance with

8 section 802 of the Higher Education Act of 1965 (as such

9 Act was in effect on July 22, 1992) to each institution

10 of higher education that was, on the date of enactment

11 of the Higher Education Amendments of 1992, operating

12 a cooperative education program under such section pur13 suant to a multiyear award. Of the remainder of the

14 amount appropriated in such fiscal year’’ after ‘‘fiscal

15 year’’.

16 SEC. 25. PACIFIC REGIONAL EDUCATIONAL LABORATORY.

17 The matter preceding paragraph (1) of section

18 101A(b) of the Carl D. Perkins Vocational and Applied

19 Technology Education Act (20 U.S.C. 2311a(b)) is

20 amended—

21 (1) by striking ‘‘Center for the Advancement of

22 Pacific Education, Honolulu, Hawaii, or its succes23 sor entity as the Pacific regional educational labora24 tory’’ and inserting ‘‘Pacific Regional Educational

25 Laboratory, Honolulu, Hawaii’’; and
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1 (2) by inserting ‘‘or provide direct services re2 garding’’ after ‘‘grants for’’.

3 SEC. 26. DISTRIBUTION OF FUNDS TO POSTSECONDARY

4 AND ADULT PROGRAMS.

5 Section 232 of the Carl D. Perkins Vocational and

6 Applied Technology Education Act (20 U.S.C. 2341a) is

7 amended—

8 (1) in subsection (a)—

9 (A) in the first sentence, by inserting ‘‘or

10 consortia thereof’’ before ‘‘within’’; and

11 (B) in the second sentence—

12 (i) by inserting ‘‘or consortium’’ be13 fore ‘‘shall’’; and

14 (ii) by inserting ‘‘or consortium’’ be15 fore ‘‘in the preceding’’;

16 (2) in subsection (b)—

17 (A) in paragraph (1), by inserting ‘‘or con18 sortia’’ after ‘‘institutions’’; and

19 (B) in the matter preceding subparagraph

20 (A) of paragraph (2), by inserting ‘‘or consor21 tia’’ after ‘‘institutions’’; and

22 (3) in subsection (c)—

23 (A) in paragraph (1), by inserting ‘‘or con24 sortium’’ after ‘‘institution’’; and
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1 (B) in paragraph (2), by inserting ‘‘or con2 sortia’’ after ‘‘institutions’’.

3 SEC. 27. GRADUATE PROGRAMS.

4 Notwithstanding any other provision of law, if an in5 dividual received multiyear fellowship assistance under

6 part B, C, or D of title IX of the Higher Education Act

7 of 1965 in fiscal year 1992, then the Secretary of Edu8 cation shall apply the provisions of such parts (as such

9 parts were in effect on July 22, 1992) for the remainder

10 of the duration of such multiyear fellowship assistance.

11 SEC. 28. PATRICIA ROBERTS HARRIS FELLOWSHIP PRO12 GRAM.

13 The Secretary of Education may use funds made

14 available to carry out part B of title IX of the Higher

15 Education Act of 1965 (20 U.S.C. 1134d et seq.) for fiscal

16 year 1994 to carry out the provisions of section 27 for

17 individuals eligible for multiyear fellowship assistance

18 under part B (as such part was in effect on July 22, 1992)

19 in fiscal year 1993.

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