II 

112TH CONGRESS 

2D SESSION S. 2834 

To amend the Higher Education Act of 1965 to extend the reduced interest 

rate for Federal Direct Stafford Loans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 7, 2012 

Mr. BROWN of Massachusetts introduced the following bill; which was read 

twice and referred to the Committee on Homeland Security and Governmental Affairs 

A BILL 

To amend the Higher Education Act of 1965 to extend 

the reduced interest rate for Federal Direct Stafford 

Loans, 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. 

4 This Act may be cited as the ‘‘Subsidized Stafford 

5 Loan Reduced Interest Rate Extension Act of 2012’’. 


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1 TITLE I—EXTENSION OF 

2 REDUCED INTEREST RATE 

3 SEC. 101. INTEREST RATE EXTENSION. 

4 Section 455(b)(7)(D) of the Higher Education Act of 

5 1965 (20 U.S.C. 1087e(b)(7)(D)) is amended— 

6 (1) in the matter preceding clause (i), by strik7 ing ‘‘and before July 1, 2012,’’ and inserting ‘‘and 

8 before July 1, 2013,’’; and 

9 (2) in clause (v), by striking ‘‘and before July 

10 1, 2012,’’ and inserting ‘‘and before July 1, 2013,’’. 

11 TITLE II—IMPROPER PAYMENTS 

12 ELIMINATION AND RECOVERY 

13 IMPROVEMENT 

14 SEC. 201. SHORT TITLE. 

15 This title may be cited as the ‘‘Improper Payments 

16 Elimination and Recovery Improvement Act of 2012’’. 

17 SEC. 202. DEFINITION. 

18 In this title, the term ‘‘agency’’ means an executive 

19 agency defined under section 105 of title 5, United States 

20 Code. 

21 SEC. 203. IMPROVING THE DETERMINATION OF IMPROPER 

22 PAYMENTS BY FEDERAL AGENCIES. 

23 (a) IN GENERAL.—The Director of the Office of 

24 Management and Budget shall on an annual basis— 


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1 (1) identify a list of high-priority Federal pro2 grams for greater levels of oversight and review— 

3 (A) in which the highest dollar value or 

4 majority of governmentwide improper payments 

5 occur; or 

6 (B) for which there is a higher risk of im7 proper payments; 

8 (2) in coordination with the agency responsible 

9 for administering the high-priority program— 

10 (A) establish semi-annual or quarterly tar11 gets and actions for reducing improper pay12 ments associated with each high-priority pro13 gram; or 

14 (B) if such targets are in effect on the 

15 date of enactment of this Act, establish supple16 mental targets; and 

17 (3) determine the entities that have received the 

18 greatest amount of improper payments (or, if im19 proper payments are identified solely on the basis of 

20 a sample, the entities that have received the greatest 

21 amount of improper payments in the applicable sam22 ple). 

23 (b) REPORT ON HIGH-DOLLAR IMPROPER PAY24 MENTS.— 


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1 (1) IN GENERAL.—Subject to Federal privacy 

2 policies and to the extent permitted by law, each 

3 agency on a quarterly basis shall submit to the In4 spector General of that agency, and make available 

5 to the public (including availability through the 

6 Internet), a report on any high-dollar improper pay7 ments identified by the agency. 

8 (2) CONTENTS.—Each report under this sub9 section— 

10 (A) shall describe— 

11 (i) any action the agency— 

12 (I) has taken or plans to take to 

13 recover improper payments; and 

14 (II) intends to take to prevent 

15 future improper payments; and 

16 (B) shall not include any referrals the 

17 agency made or anticipates making to the De18 partment of Justice, or any information pro19 vided in connection with such referrals. 

20 (3) AVAILABILITY OF INFORMATION TO INSPEC21 TOR GENERAL.—Paragraph (2)(B) shall not prohibit 

22 any referral or information being made available to 

23 an Inspector General as otherwise provided by law. 


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1 (4) ASSESSMENT.—After the review of each re2 port under this subsection, the Inspector General 

3 shall— 

4 (A) assess the level of risk associated with 

5 the applicable program and the quality of the 

6 improper payment estimates and methodology 

7 of the agency; 

8 (B) determine the extent of additional 

9 oversight or financial controls warranted to 

10 identify and prevent improper payments; and 

11 (C) provide the head of the agency with 

12 any recommendations, for modifying any plans 

13 of the agency, including improvements for im14 proper payments determination and estimation 

15 methodology. 

16 (c) IMPROVED ESTIMATES.— 

17 (1) IN GENERAL.—Not later than 180 days 

18 after the date of enactment of this Act, the Director 

19 of the Office of Management and Budget shall pro20 vide guidance to agencies for improving the esti21 mates of improper payments under the Improper 

22 Payments Information Act of 2002 (31 U.S.C. 3321 

23 note). 

24 (2) GUIDANCE.—Guidance under this sub25 section shall— 


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1 (A) strengthen the estimation process of 

2 agencies by reviewing the underlying validity of 

3 payments to ensure amounts being billed are 

4 proper; and 

5 (B) include— 

6 (i) access to more complete data as 

7 part of reviews; 

8 (ii) ending reliance on self-reporting 

9 of improper payments as a replacement for 

10 estimates, and relying on the development 

11 of a robust process to estimate and iden12 tify improper payments across the agency; 

13 (iii) all overpayments in the improper 

14 payments estimate, regardless of whether 

15 improperly paid funds have been or are 

16 being recovered; 

17 (iv) ensuring that— 

18 (I) the review of payments to em19 ployees shall include analysis of em20 ployee data, including pay grade data, 

21 locality pay, and other factors that af22 fect pay; and 

23 (II) reviews address high-risk or 

24 high-dollar personnel payments, inVerDate Mar 15 2010 03:50 May 09, 2012 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2834.IS S2834

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1 cluding travel, pay, and purchase 

2 cards; 

3 (v) reassessing high-risk programs to 

4 better reflect the unique processes, proce5 dures, and risks of improper payments, in6 cluding assessments for each program to 

7 reflect different risk components and bet8 ter direct corrective actions; and 

9 (vi) confirming that inter-agency 

10 transfers are proper using a methodology 

11 comparable to that used to assess program 

12 level improper payments. 

13 SEC. 204. IMPROPER PAYMENTS INFORMATION. 

14 Section 2(a)(3)(A)(ii) of the Improper Payments In15 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

16 by striking ‘‘with respect to fiscal years following Sep17 tember 30th of a fiscal year beginning before fiscal year 

18 2013 as determined by the Office of Management and 

19 Budget’’ and inserting ‘‘with respect to fiscal year 2014 

20 and each fiscal year thereafter’’. 

21 SEC. 205. DO NOT PAY INITIATIVE. 

22 (a) PREPAYMENT AND PREAWARD PROCEDURES.— 

23 (1) IN GENERAL.—Each agency shall review 

24 prepayment and preaward procedures and ensure 

25 that a thorough review of available databases with 


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1 relevant information on eligibility occurs to deter2 mine program or award eligibility and prevent im3 proper payments before the release of any Federal 

4 funds, to the extent permitted by law. 

5 (2) DATABASES.—At a minimum, each agency 

6 shall, before payment and award, check the following 

7 databases (if applicable and permitted by law) to 

8 verify eligibility: 

9 (A) The Death Master File of the Social 

10 Security Administration. 

11 (B) The General Services Administration’s 

12 Excluded Parties List System. 

13 (C) The Debt Check Database of the De14 partment of the Treasury. 

15 (D) The Credit Alert System or Credit 

16 Alert Interactive Voice Response System of the 

17 Department of Housing and Urban Develop18 ment. 

19 (E) The List of Excluded Individuals/Enti20 ties of the Office of Inspector General of the 

21 Department of Health and Human Services. 

22 (b) DO NOT PAY LIST.— 

23 (1) ESTABLISHMENT.—There is established the 

24 Do Not Pay List which shall consist of— 


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1 (A) the databases described under sub2 section (a)(2); and 

3 (B) any other database designated by the 

4 Director of the Office of Management and 

5 Budget in consultation with agencies. 

6 (2) OTHER DATABASES.—In making designa7 tions of other databases under paragraph (1)(B), the 

8 Director of the Office of Management and Budget 

9 shall consider— 

10 (A) any database that assists in preventing 

11 improper payments; and 

12 (B) the database of incarcerated individ13 uals established under subsection (f). 

14 (3) ACCESS AND REVIEW BY AGENCIES.—For 

15 purposes of identifying and preventing improper 

16 payment, each agency shall have access to, and use 

17 of, the Do Not Pay List to determine payment or 

18 award eligibility when the Director of the Office of 

19 Management and Budget determines the Do Not 

20 Pay List is appropriately established for the agency. 

21 (4) PAYMENT OTHERWISE REQUIRED.—When 

22 using the Do Not Pay List, an agency shall recog23 nize that there may be circumstances under which 

24 the law requires a payment or award to be made to 


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1 a recipient, regardless of whether that recipient is on 

2 the Do Not Pay List. 

3 (c) DATABASE INTEGRATION PLAN.—Not later than 

4 60 days after the date of enactment of this Act, the Direc5 tor of the Office of Management and Budget shall provide 

6 to the Congress a plan for— 

7 (1) inclusion of other databases on the Do Not 

8 Pay List; 

9 (2) to the extent permitted by law, agency ac10 cess to the Do Not Pay List; and 

11 (3) the multilateral data use agreements de12 scribed under subsection (e). 

13 (d) INITIAL WORKING SYSTEM.— 

14 (1) ESTABLISHMENT.—Not later than 90 days 

15 after the date of enactment of this Act, the Director 

16 of the Office of Management and Budget shall es17 tablish a working system for prepayment and 

18 preaward review that includes the Do Not Pay List 

19 as described under this section. 

20 (2) INITIAL SYSTEM.—The working system es21 tablished under paragraph (1)— 

22 (A) may be located within an appropriate 

23 agency; 

24 (B) shall include not less than 3 agencies; 


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1 (C) shall include fraud and improper pay2 ments detection through predictive modeling 

3 and other analytic technologies and other tech4 niques; and 

5 (D) may provide for the use of commercial 

6 database sources, commercial analysis, and 

7 other functionality for payment or award re8 views, as determined appropriate by the Direc9 tor of the Office of Management and Budget 

10 for verifying Federal data. 

11 (3) APPLICATION TO ALL AGENCIES.—Not later 

12 than January 1, 2013, each agency shall review all 

13 payments and awards for all programs of that agen14 cy through the system established under this sub15 section. 

16 (e) MULTILATERAL DATA USE AGREEMENTS.— 

17 (1) IN GENERAL.—Not later than 60 days after 

18 the date of enactment of this Act, the Director of 

19 the Office of Management and Budget shall develop 

20 a plan to establish a multilateral data use agreement 

21 authority to carry out this section, including access 

22 to databases such as the New Hire Database under 

23 section 453(j) of the Social Security Act (42 U.S.C. 

24 653(j)). 

25 (2) GENERAL PROTOCOLS AND SECURITY.— 


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1 (A) IN GENERAL.—The multilateral data 

2 use agreements shall be consistent with proto3 cols to ensure the secure transfer and storage 

4 of any data provided to another entity or indi5 vidual— 

6 (i) under the provisions of, or amend7 ments made by, this section; and 

8 (ii) consistent with applicable informa9 tion, privacy, security, and disclosure laws, 

10 including— 

11 (I) the regulations promulgated 

12 under the Health Insurance Port13 ability and Accountability Act of 1996 

14 and section 552a of title 5, United 

15 States Code; and 

16 (II) subject to any information 

17 systems security requirements under 

18 such laws or otherwise required by the 

19 Director of the Office of Management 

20 and Budget. 

21 (B) CONSULTATION.—The Director of the 

22 Office of Management and Budget shall consult 

23 with— 


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1 (i) the Council of Inspectors General 

2 on Integrity and Efficiency before imple3 menting this paragraph; and 

4 (ii) the Secretary of Health and 

5 Human Services, the Social Security Ad6 ministrator, and the head of any other 

7 agency, as appropriate. 

8 (f) DEVELOPMENT AND ACCESS TO A DATABASE OF

9 INCARCERATED INDIVIDUALS.— 

10 (1) IN GENERAL.—The Attorney General shall 

11 develop and maintain a database of individuals in12 carcerated at Federal and State facilities. 

13 (2) AVAILABILITY AND UPDATE.—The database 

14 developed under this subsection shall be— 

15 (A) available to agencies to carry out this 

16 section and prevent waste, fraud, and abuse; 

17 and 

18 (B) updated no less frequently than on a 

19 weekly basis. 

20 (g) PLAN TO IMPROVE THE SOCIAL SECURITY AD21 MINISTRATION DEATH MASTER FILE.— 

22 (1) ESTABLISHMENT.—In conjunction with the 

23 Commissioner of Social Security and in consultation 

24 with stakeholders and the States, the Director of the 

25 Office of Management and Budget, shall establish a 


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1 plan for improving the quality and timeliness of 

2 death data maintained by the Social Security Ad3 ministration, including death information reported to 

4 the Commissioner under section 205(r) of the Social 

5 Security Act (42 U.5.C. 405(r)). 

6 (2) ACTIONS UNDER PLAN.—The plan estab7 lished under this subsection shall include actions 

8 agencies are required to take to— 

9 (A) increase the quality and frequency of 

10 access; 

11 (B) achieve a goal of at least daily access 

12 as appropriate; and 

13 (C) provide for all States to use modern, 

14 electronic means for providing data. 

15 (3) REPORT.—Not later than 120 days after 

16 the date of enactment of this Act, the Director of 

17 the Office of Management and Budget shall submit 

18 a report to Congress on the plan established under 

19 this subsection, including recommended legislation. 

20 SEC. 206. IMPROVING RECOVERY OF IMPROPER PAYMENTS. 

21 (a) IN GENERAL.—The Director of the Office of 

22 Management and Budget shall determine— 

23 (1) current and historical rates and amounts of 

24 recovery of improper payments (or, in cases in which 

25 improper payments are identified solely on the basis 


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1 of a sample, recovery rates and amounts estimated 

2 on the basis of the applicable sample), including spe3 cific information of amounts and payments recovered 

4 by recovery audit contractors; and 

5 (2) targets for recovering improper payments, 

6 including specific information on amounts and pay7 ments recovered by recovery audit contractors. 

8 (b) RECOVERY AUDIT CONTRACTOR PROGRAMS.— 

9 (1) ESTABLISHMENT.—Not later than 90 days 

10 after the date of enactment of this Act, the Director 

11 of the Office of Management and Budget shall es12 tablish a plan for no less than 10 Recovery Audit 

13 Contracting programs for the purpose of identifying 

14 and recovering overpayments and underpayments in 

15 10 agencies. 

16 (2) REVIEW OF COMMERCIAL PAYMENTS.—Of 

17 the programs established under this subsection, 5 

18 programs shall review commercial payments by an 

19 agency. 

20 (3) DURATION.—Any program established 

21 under this subsection shall terminate not more than 

22 3 years after the date on which the program is es23 tablished. 

24 (4) REPORTS.— 


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1 (A) IN GENERAL.—Not later than 3 

2 months after the completion of a program, the 

3 head of the agency conducting the program 

4 shall submit a report on the program to Con5 gress. 

6 (B) CONTENTS.—Each report under this 

7 paragraph shall include— 

8 (i) a description of the impact of the 

9 program on savings and recoveries; and 

10 (ii) such recommendations as the head 

11 of the agency considers appropriate on ex12 tending or expanding the program. 

Æ 


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