103D CONGRESS

1ST SESSION S. 1507

AN ACT

To make technical amendments to the Higher EduEducation Act of 1965, and for other purposes. cation Amendments of 1992 and the Higher
103D CONGRESS

1ST SESSION S. 1507

AN ACT

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’’.
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1 (b) REFERENCES.—Except as otherwise expressly

2 provided, whenever in this Act an amendment or repeal

3 is expressed in terms of an amendment to, or repeal of,

4 a section or other provision, the reference shall be consid5 ered to be made to a section or other provision of the

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

7 SEC. 2. EFFECTIVE DATE FOR PELL GRANTS FOR INCAR8 CERATED INDIVIDUALS.

9 Section 410 of the Higher Education Amendments of

10 1992 (20 U.S.C. 1070a note) is amended—

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

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

13 (2) by inserting after paragraph (1) the follow14 ing new paragraph:

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

16 401(b)(8)(B), relating to Federal Pell Grants for in17 carcerated individuals, shall apply to the awarding of

18 Federal Pell Grants for periods of enrollment on or

19 after July 1, 1996;’’.

20 SEC. 3. BASIC EDUCATIONAL OPPORTUNITY GRANTS.

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

22 1070a(a)(1)) is amended by inserting ‘‘, except that this

23 sentence shall not be construed to limit the authority of

24 the Secretary to place an institution on a reimbursement

25 system of payment’’ before the period.
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1 SEC. 4. EARLY INTERVENTION APPLICATION.

2 Section 404G (20 U.S.C. 1070a–27) is amended—

3 (1) in the first sentence, by striking ‘‘an appro4 priation’’ and inserting ‘‘to be appropriated’’; and

5 (2) by striking the second sentence.

6 SEC. 5. INTEREST RATES FOR NEW BORROWERS AFTER OC7 TOBER 1, 1992.

8 The matter preceding subparagraph (A) of section

9 427A(e)(1) (20 U.S.C. 1077a(e)(1)) is amended by insert10 ing ‘‘(other than a loan made, insured or guaranteed

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

12 SEC. 6. FORBEARANCE CLARIFICATION.

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

14 1078(c)(3)(A)) is amended by striking ‘‘for the benefit of

15 the student borrower serving in a medical or dental intern16 ship or residency program’’.

17 SEC. 7. UNSUBSIDIZED LOAN INTEREST RATES.

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

19 8(e)(4)) is amended by striking ‘‘427A(e)’’ and inserting

20 ‘‘427A’’.

21 SEC. 8. PRESERVATION OF BORROWER CLAIMS AS DE22 FENSES.

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

24 1082(m)(1)) is amended by adding at the end the follow25 ing new subparagraph:
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1 ‘‘(E) PRESERVATION OF BORROWER CLAIMS AS

2 DEFENSES.—

3 ‘‘(i) The promissory note prescribed by the

4 Secretary shall include the following provision:

5 ‘‘ ‘ANY HOLDER OF THIS NOTE IS SUBJECT

6 TO ALL CLAIMS AND DEFENSES WHICH I COULD

7 ASSERT AGAINST THE SCHOOL IF (1) THIS LOAN

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

9 OF THIS LOAN ARE USED TO PAY TUITION AND

10 CHARGES OF A SCHOOL THAT REFERS LOAN AP11 PLICANTS TO THE LENDER, OR THAT IS AFFILI12 ATED WITH THE LENDER BY COMMON CON13 TROL, CONTRACT OR BUSINESS ARRANGEMENT.

14 MY RECOVERY UNDER THIS PROVISION SHALL

15 NOT EXCEED THE AMOUNT I PAID ON THIS

16 LOAN.’

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

18 ‘‘(I) an institution shall be considered

19 to refer loan applicants to a particular

20 lender if the institution urges, suggests, or

21 otherwise recommends that loan applicants

22 borrow from the lender and the lender is

23 on notice of such recommendation by the

24 institution at the time the loan is made,

25 unless the institution does no more than
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1 identify the lender as an available source

2 of student loans; and

3 ‘‘(II) a business arrangement exists if

4 the lender and the institution agree to en5 gage in cooperative activity with regard to

6 the making of loans for students in attend7 ance at the institution, except for activity

8 specifically and expressly required by this

9 Act or regulations issued by the Secretary.

10 ‘‘(iii) Notwithstanding the provisions of

11 section 433.2 of title 16, Code of Federal Regu12 lations, the provisions of clauses (i) and (ii)

13 shall apply to all loans made, insured or guar14 anteed under this part.’’.

15 SEC. 9. COHORT DEFAULT RATE.

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

17 (1) many institutions of higher education with

18 high cohort default rates have avoided or sought to

19 avoid loss of eligibility under the Federal Family

20 Education Loan Program by alleging improper serv21 icing or collection of the defaulted loans taken into

22 account in determining their default rates;

23 (2) institutions of higher education bear a fair

24 share of the blame for the increased level of defaults

25 in such program;
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1 (3) since a borrower remains responsible for

2 paying on a loan even if there is improper loan serv3 icing or collection it would not be fair to forgive the

4 institution of higher education for the default based

5 on such errors, and exclusion of such loans would re6 sult in a misleading cohort default rate which is not

7 reflective of the institution’s performance;

8 (4) providing institutions of higher education

9 with access to servicing or collection records relating

10 to loans taken into account in determining the insti11 tution’s cohort default rate, for the purpose of ap12 pealing the loss of eligibility, would frustrate the

13 statutory purpose of reducing student loan defaults

14 because collection and review of the records could

15 not be completed within the statutory time frames

16 for such review; and

17 (5) it is unnecessary to afford institutions of

18 higher education such access to loan records because

19 the statutory threshold percentages for loss of eligi20 bility due to high cohort default rates are substan21 tially above the preferred level of such rates for eligi22 ble institutions.

23 (b) SIMPLIFICATION OF DEFINITION OF COHORT DE24 FAULT RATE.—Subparagraph (B) of section 435(m)(1)

25 (20 U.S.C. 1085(m)(1)(B)) is amended by striking all be-
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1 ginning with ‘‘, and,’’ through ‘‘calculation of the cohort

2 default rate’’.

3 (c) EFFECTIVE DATE AND SAVINGS PROVISION.—

4 (1) EFFECTIVE DATE.—The amendment made

5 by subsection (b) shall be effective on the date of en6 actment of this Act and shall apply to all determina7 tions made by the Secretary under section

8 435(m)(1)(B) of the Higher Education Act of 1965

9 on or after that date, including determinations made

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

11 Secretary made determinations under such section

12 prior to such date.

13 (2) SAVINGS PROVISION.—The amendment

14 made by subsection (b) shall not affect a determina15 tion of institutional eligibility made before the date

16 of enactment of this Act.

17 SEC. 10. FEDERAL WORK-STUDY PROGRAMS.

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

19 2753(b)(5) is amended to read as follows:

20 ‘‘(5) provide that the Federal share of the com21 pensation of students employed in the work-study

22 program in accordance with the agreement shall not

23 exceed 75 percent for academic year 1993–1994 and

24 succeeding academic years, except that the Federal

25 share may exceed such amounts of such compensa-
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1 tion if the Secretary determines, pursuant to regula2 tions promulgated by the Secretary establishing ob3 jective criteria for such determinations, that a Fed4 eral share in excess of such amounts is required in

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

6 SEC. 11. COST OF ATTENDANCE.

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

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

9 the semicolon;

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

11 and inserting ‘‘; and’’; and

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

13 paragraph:

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

15 part B or D of this title (or on whose behalf the par16 ent of such student receives a loan under section

17 428B or part D), an allowance for the actual cost

18 of any loan fee, origination fee, or insurance pre19 mium charged to such student or such parent on

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

21 premium charged by the Secretary, eligible lender,

22 or guaranty agency making or insuring such loan, as

23 the case may be.’’.

24 SEC. 12. CLARIFICATION REGARDING IRS FILINGS.

25 Section 479 (20 U.S.C. 1087ss) is amended—
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1 (1) in subsection (b)(3)—

2 (A) in subparagraph (A), by inserting ‘‘(in3 cluding any prepared or electronic version of

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

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

6 ‘‘(including any prepared or electronic version

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

8 (2) in subsection (c)—

9 (A) by amending subparagraph (A) of

10 paragraph (1) to read as follows:

11 ‘‘(A) the student’s parents were not re12 quired to file an income tax return under sec13 tion 6012(a)(1) of the Internal Revenue Code

14 of 1986; and’’; and

15 (B) by amending subparagraph (A) of

16 paragraph (2) to read as follows:

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

18 spouse, if any) was not required to file an in19 come tax return under section 6012(a)(1) of the

20 Internal Revenue Code of 1986; and’’.

21 SEC. 13. DISCRETION OF STUDENT FINANCIAL AID OFFI22 CER.

23 Section 479A (20 U.S.C. 1087tt) is amended by add24 ing at the end the following new subsection:
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1 ‘‘(c) ADJUSTMENTS FOR SPECIAL CIR2 CUMSTANCES.—

3 ‘‘(1) IN GENERAL.—A student financial aid ad4 ministrator shall be considered to be making an ad5 justment for special circumstances in accordance

6 with subsection (a) if—

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

8 ‘‘(i) such student received a Federal

9 Pell Grant as a dependent student in aca10 demic year 1992–1993 and the amount of

11 such student’s Federal Pell Grant for aca12 demic year 1993–1994 is at least $500

13 less than the amount of such student’s

14 Federal Pell Grant for academic year

15 1992–1993; and

16 ‘‘(ii) the decrease described in clause

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

18 determination of such student’s need for

19 assistance in accordance with this part

20 that is attributable to the enactment of the

21 Higher Education Amendments of 1992;

22 and

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

24 student—
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1 ‘‘(i) such student received a Federal

2 Pell Grant as a single independent student

3 in academic year 1992–1993 and qualified

4 as an independent student in accordance

5 with section 480(d) for academic year

6 1993–1994, and the amount of such stu7 dent’s Federal Pell Grant for academic

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

9 the amount of such student’s Federal Pell

10 Grant for academic year 1992–1993; and

11 ‘‘(ii) the decrease described in clause

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

13 determination of such student’s need for

14 assistance in accordance with this part

15 that is attributable to the enactment of the

16 Higher Education Amendments of 1992.

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

18 shall not make an adjustment for special cir19 cumstances pursuant to this subsection in an

20 amount that exceeds one-half of the difference be21 tween the amount of a student’s Federal Pell Grant

22 for academic year 1992–1993 and the amount of

23 such student’s Federal Pell Grant for academic year

24 1993–1994.
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1 ‘‘(3) ACADEMIC YEAR LIMITATION.—A financial

2 aid administrator only shall make adjustments under

3 this subsection for Federal Pell Grants awarded for

4 academic years 1993–1994, 1994–1995, and 1995–

5 1996.

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

7 subsection shall only be made in fiscal year 1993 if

8 an Act that contains an appropriation for fiscal year

9 1993 to carry out this subsection is enacted on or

10 after the date of enactment of the Higher Education

11 Technical Amendments of 1993.’’.

12 SEC. 14. CORRESPONDENCE RULE WAIVER.

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

14 1088(a)(3)(B)) is amended by inserting ‘‘, except that the

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

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

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

18 awards a bachelor’s or associate’s degree to be in compli19 ance with the provisions of this subparagraph’’ before the

20 semicolon.

21 SEC. 15. WAIVER OF ABILITY TO BENEFIT RULE FOR CER22 TAIN SCHOOLS.

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

24 1088(a)(3)(D)) is amended by inserting ‘‘, except that the

25 Secretary, for good cause as determined by the Secretary,
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1 may deem an institution that has entered into a contract

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

3 students described in section 484(d) to be in compliance

4 with the provisions of this subparagraph’’ before the pe5 riod.

6 SEC. 16. DEFINITION OF ACADEMIC YEAR.

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

8 1088(d)(2)) is amended by inserting ‘‘, except that the

9 Secretary may waive the 30-week requirement described

10 in this paragraph for good cause as determined by the Sec11 retary’’ before the period.

12 SEC. 17. TREATMENT OF UNCOMPENSATED FINANCIAL AID

13 APPLICATION PREPARERS.

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

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

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

17 compensation from an applicant or an applicant’s family

18 for the purpose of preparing such financial aid application,

19 and nothing in this paragraph shall be construed to re20 quire an individual who does not receive such compensa21 tion to include such information on such application’’.

22 SEC. 18. STUDENT ELIGIBILITY FOR FORMER TRUST TERRI23 TORIES.

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

25 1091(a)(4)(B)) is amended by inserting ‘‘, except that the
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1 provisions of this subparagraph shall not apply to students

2 from the Republic of the Marshall Islands, the Federated

3 States of Micronesia, or the Republic of Palau’’ after

4 ‘‘number’’.

5 SEC. 19. DISCLOSURE OF COMPLETION OR GRADUATION

6 RATE.

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

8 1092(a)(3)(A) is amended by striking ‘‘beginning on July

9 1, 1993, and each year’’ and inserting ‘‘within 270 days

10 after the date on which the Secretary issues final regula11 tions implementing the provisions of this paragraph and

12 each July 1’’.

13 SEC. 20. INDEPENDENCE OF ACCREDITING AGENCIES.

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

15 1099b(a)(3)(A)) is amended by striking ‘‘subparagraph

16 (A) of paragraph (2)’’ and inserting ‘‘clause (i) of para17 graph (2)(A)’’.

18 SEC. 21. OPERATING PROCEDURES FOR ACCREDITING

19 AGENCIES.

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

21 (20 U.S.C. 1099b(c)(1)) is amended by inserting ‘‘deter22 mining an institution of higher education’s eligibility to

23 participate in programs under’’ after ‘‘purpose of’’.
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1 SEC. 22. FINANCIAL RESPONSIBILITY STANDARDS.

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

3 is amended—

4 (1) in paragraph (3)—

5 (A) in the matter preceding subparagraph

6 (A)—

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

8 ‘‘shall’’; and

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

10 year or 4-year program of instruction for

11 which the institution awards an associate’s

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

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

14 as follows:

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

16 the Secretary from an independent certified

17 public accountant that certifies that the institu18 tion has sufficient resources to ensure against

19 the precipitous closure of such institution, in20 cluding the ability to meet all of such institu21 tion’s financial obligations (including refunds of

22 institutional charges and repayments to the

23 Secretary for liabilities and debts incurred in

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

25 and
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1 (2) by adding at the end the following new

2 paragraph:

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

4 subsection the Secretary shall establish financial re5 sponsibility standards that include requiring an in6 stitution of higher education to maintain an asset7 to-liability ratio of 1:1.

8 ‘‘(B) For the purpose of computing an asset-to9 liability ratio described in subparagraph (A) and

10 paragraph (2), an institution—

11 ‘‘(i) may count as a current asset the eq12 uity (the difference between book cost and the

13 mortgage owed) in facilities (land and build14 ings) owned and occupied by such institution

15 and used to provide education and training

16 services described in such institution’s official

17 publications;

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

19 recertification under this section, shall take into

20 consideration the depreciation and current value

21 of such facilities determined in accordance with

22 a professional appraisal; and

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

24 equity value and the current value of such fa25 cilities.’’.
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1 SEC. 23. NATIONAL BOARD FOR PROFESSIONAL TEACHING

2 STANDARDS.

3 Section 551 (20 U.S.C. 1107) is amended—

4 (1) in paragraph (1) of subsection (b), by strik5 ing ‘‘the Federal share of’’;

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

7 striking ‘‘share of the cost of the activities of the

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

9 subsection (f) are’’; and

10 (3) by amending subsection (f) to read as fol11 lows:

12 ‘‘(f) MATCHING FUNDS REQUIREMENT.—

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

14 provide financial assistance under this subpart to

15 the Board unless the Board agrees to expend non16 Federal contributions equal to $1 for every $1 of the

17 Federal funds provided pursuant to such financial

18 assistance.

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

20 non-Federal contributions described in paragraph

21 (1)—

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

23 raised by the Board on or after January 1,

24 1987; and

25 ‘‘(B) may be used for outreach, implemen26 tation, administration, operation, and other
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1 costs associated with the development and im2 plementation of national teacher assessment

3 and certification procedures under this sub4 part.’’.

5 SEC. 24. COOPERATIVE EDUCATION.

6 The matter preceding paragraph (1) of section

7 802(b) (20 U.S.C. 1133a(b)(1)) is amended by inserting

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

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

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

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

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

13 of the Higher Education Amendments of 1992, operating

14 a cooperative education program under such section pur15 suant to a multiyear award. Of the remainder of the

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

17 year’’.

18 SEC. 25. PACIFIC REGIONAL EDUCATIONAL LABORATORY.

19 The matter preceding paragraph (1) of section

20 101A(b) of the Carl D. Perkins Vocational and Applied

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

22 amended—

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

24 Pacific Education, Honolulu, Hawaii, or its succes25 sor entity as the Pacific regional educational labora-
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1 tory’’ and inserting ‘‘Pacific Regional Educational

2 Laboratory, Honolulu, Hawaii’’; and

3 (2) by inserting ‘‘or provide direct services re4 garding’’ after ‘‘grants for’’.

5 SEC. 26. DISTRIBUTION OF FUNDS TO POSTSECONDARY

6 AND ADULT PROGRAMS.

7 Section 232 of the Carl D. Perkins Vocational and

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

9 amended—

10 (1) in subsection (a)—

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

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

13 (B) in the second sentence—

14 (i) by inserting ‘‘or consortium’’ be15 fore ‘‘shall’’; and

16 (ii) by inserting ‘‘or consortium’’ be17 fore ‘‘in the preceding’’;

18 (2) in subsection (b)—

19 (A) in paragraph (1), by inserting ‘‘or con20 sortia’’ after ‘‘institutions’’; and

21 (B) in the matter preceding subparagraph

22 (A) of paragraph (2), by inserting ‘‘or consor23 tia’’ after ‘‘institutions’’; and

24 (3) in subsection (c)—
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1 (A) in paragraph (1), by inserting ‘‘or con2 sortium’’ after ‘‘institution’’; and

3 (B) in paragraph (2), by inserting ‘‘or con4 sortia’’ after ‘‘institutions’’.

5 SEC. 27. GRADUATE PROGRAMS.

6 Notwithstanding any other provision of law, if an in7 dividual received multiyear fellowship assistance under

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

9 of 1965 in fiscal year 1992, then the Secretary of Edu10 cation shall apply the provisions of such parts (as such

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

12 of the duration of such multiyear fellowship assistance.

13 SEC. 28. PATRICIA ROBERTS HARRIS FELLOWSHIP PRO14 GRAM.

15 The Secretary of Education may use funds made

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

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

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

19 individuals eligible for multiyear fellowship assistance
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1 under part B (as such part was in effect on July 22, 1992)

2 in fiscal year 1993.

Passed the Senate October 7 (legislative day, September 27), 1993.

Attest:

Secretary.
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