II 

108TH CONGRESS 

2D SESSION S. 2877 

To reduce the special allowance for loans from the proceeds of tax exempt 

issues, and to provide additional loan forgiveness for teachers who teach 

mathematics, science, or special education. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 30, 2004 

Mr. GREGG (for himself, Mr. BOND, and Mr. GRAHAM of South Carolina) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To reduce the special allowance for loans from the proceeds 

of tax exempt issues, and to provide additional loan 

forgiveness for teachers who teach mathematics, science, 

or special education. 

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 ‘‘Taxpayer-Teacher Pro5 tection Act of 2004’’. 
2 

•S 2877 IS 

1 SEC. 2. REDUCTION OF THE SPECIAL ALLOWANCE FOR 

2 LOANS FROM THE PROCEEDS OF TAX EX3 EMPT ISSUES. 

4 Section 438(b)(2)(B) of the Higher Education Act of 

5 1965 (20 U.S.C. 1087–1(b)(2)(B)) is amended— 

6 (1) in clause (i), by striking ‘‘this division’’ and 

7 inserting ‘‘this clause’’; 

8 (2) in clause (ii), by striking ‘‘division (i) of this 

9 subparagraph’’ and inserting ‘‘clause (i) of this sub10 paragraph’’; 

11 (3) in clause (iv), by inserting ‘‘or refunded on 

12 or after October 1, 2004 and before October 1, 

13 2005,’’ after ‘‘October 1, 1993,’’; and 

14 (4) by adding at the end the following new 

15 clause: 

16 ‘‘(v) Notwithstanding clauses (i) and 

17 (ii), the quarterly rate of the special allow18 ance shall be the rate determined under 

19 subparagraph (A), (E), (F), (G), (H), or 

20 (I) of this paragraph, or paragraph (4), as 

21 the case may be, for a holder of loans 

22 that— 

23 ‘‘(I) were made or purchased 

24 with funds— 

25 ‘‘(aa) obtained from the 

26 issuance of obligations the in-
3 

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1 come from which is excluded 

2 from gross income under the In3 ternal Revenue Code of 1986 and 

4 which obligations were originally 

5 issued before October 1, 1993; or 

6 ‘‘(bb) obtained from collec7 tions or default reimbursements 

8 on, or interests or other income 

9 pertaining to, eligible loans made 

10 or purchased with funds de11 scribed in division (aa), or from 

12 income on the investment of such 

13 funds; and 

14 ‘‘(II) were— 

15 ‘‘(aa) financed by such an 

16 obligation that has matured, or 

17 been retired or defeased; 

18 ‘‘(bb) refinanced on or after 

19 October 1, 2004 and before Octo20 ber 1, 2005, with funds obtained 

21 from a source other than funds 

22 described in subclause (I) of this 

23 clause; or 

24 ‘‘(cc) sold or transferred to 

25 any other holder on or after Oc-
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1 tober 1, 2004 and before October 

2 1, 2005.’’. 

3 SEC. 3. LOAN FORGIVENESS FOR TEACHERS. 

4 (a) IMPLEMENTING HIGHLY QUALIFIED TEACHER

5 REQUIREMENTS.— 

6 (1) AMENDMENTS.— 

7 (A) FFEL LOANS.—Section 428J(b)(1) of 

8 the Higher Education Act of 1965 (20 U.S.C. 

9 1078–10(b)(1)) is amended— 

10 (i) in subparagraph (A), by inserting 

11 ‘‘and’’ after the semicolon; and 

12 (ii) by striking subparagraphs (B) and 

13 (C) and inserting the following: 

14 ‘‘(B) if employed as an elementary school 

15 or secondary school teacher, is highly qualified 

16 as defined in section 9101 of the Elementary 

17 Secondary Education Act of 1965; and’’. 

18 (B) DIRECT LOANS.—Section 460(b)(1)(A) 

19 of the Higher Education Act of 1965 (20 

20 U.S.C. 1087j(b)(1)(A)) is amended— 

21 (i) in clause (i), by inserting ‘‘and’’ 

22 after the semicolon; and 

23 (ii) by striking clauses (ii) and (iii) 

24 and inserting the following: 
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1 ‘‘(ii) if employed as an elementary 

2 school or secondary school teacher, is high3 ly qualified as defined in section 9101 of 

4 the Elementary and Secondary Education 

5 Act of 1965; and’’. 

6 (2) TRANSITION RULE.— 

7 (A) RULE.—The amendments made by 

8 paragraph (1) of this subsection to sections 

9 428J(b)(1) and 460(b)(1)(A) of the Higher 

10 Education Act of 1965 shall not be applied to 

11 disqualify any individual who, before the date of 

12 enactment of this Act, commenced service that 

13 met and continues to meet the requirements of 

14 such sections as such sections were in effect on 

15 the day before the date of enactment of this 

16 Act. 

17 (B) RULE NOT APPLICABLE TO INCREASED

18 QUALIFIED LOAN AMOUNTS.—Subparagraph 

19 (A) of this paragraph shall not apply for pur20 poses of obtaining increased qualified loan 

21 amounts under sections 428J(c)(3) and 

22 460(c)(3) of the Higher Education Act of 1965 

23 as added by subsection (b) of this section. 

24 (b) ADDITIONAL AMOUNTS ELIGIBLE TO BE RE25 PAID.— 
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1 (1) FFEL LOANS.—Section 428J(c) of the 

2 Higher Education Act of 1965 (20 U.S.C. 1078– 

3 10(c)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(3) ADDITIONAL AMOUNTS FOR TEACHERS IN

6 MATHEMATICS, SCIENCE, OR SPECIAL EDUCATION.— 

7 Notwithstanding the amount specified in paragraph 

8 (1), the aggregate amount that the Secretary shall 

9 repay under this section shall be not more than 

10 $17,500 in the case of— 

11 ‘‘(A) a secondary school teacher— 

12 ‘‘(i) who meets the requirements of 

13 subsection (b); and 

14 ‘‘(ii) whose qualifying employment for 

15 purposes of such subsection is teaching 

16 mathematics or science on a full-time 

17 basis; and 

18 ‘‘(B) an elementary school or secondary 

19 school teacher— 

20 ‘‘(i) who meets the requirements of 

21 subsection (b); 

22 ‘‘(ii) whose qualifying employment for 

23 purposes of such subsection is as a special 

24 education teacher whose primary responsi25 bility is to provide special education to 
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1 children with disabilities (as those terms 

2 are defined in section 602 of the Individ3 uals with Disabilities Education Act); and 

4 ‘‘(iii) who, as certified by the chief ad5 ministrative officer of the public or non6 profit private elementary school or sec7 ondary school in which the borrower is em8 ployed, is teaching children with disabilities 

9 that corresponds with the borrower’s spe10 cial education training and has dem11 onstrated knowledge and teaching skills in 

12 the content areas of the elementary school 

13 or secondary school curriculum that the 

14 borrower is teaching.’’. 

15 (2) DIRECT LOANS.—Section 460(c) of the 

16 Higher Education Act of 1965 (20 U.S.C. 1087j(c)) 

17 is amended by adding at the end the following: 

18 ‘‘(3) ADDITIONAL AMOUNTS FOR TEACHERS IN

19 MATHEMATICS, SCIENCE, OR SPECIAL EDUCATION.— 

20 Notwithstanding the amount specified in paragraph 

21 (1), the aggregate amount that the Secretary shall 

22 cancel under this section shall be not more than 

23 $17,500 in the case of— 

24 ‘‘(A) a secondary school teacher— 
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1 ‘‘(i) who meets the requirements of 

2 subsection (b)(1); and 

3 ‘‘(ii) whose qualifying employment for 

4 purposes of such subsection is teaching 

5 mathematics or science on a full-time 

6 basis; and 

7 ‘‘(B) an elementary school or secondary 

8 school teacher— 

9 ‘‘(i) who meets the requirements of 

10 subsection (b)(1); 

11 ‘‘(ii) whose qualifying employment for 

12 purposes of such subsection is as a special 

13 education teacher whose primary responsi14 bility is to provide special education to 

15 children with disabilities (as those terms 

16 are defined in section 602 of the Individ17 uals with Disabilities Education Act); and 

18 ‘‘(iii) who, as certified by the chief ad19 ministrative officer of the public or non20 profit private elementary school or sec21 ondary school in which the borrower is em22 ployed, is teaching children with disabilities 

23 that corresponds with the borrower’s spe24 cial education training and has dem25 onstrated knowledge and teaching skills in 
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1 the content areas of the elementary school 

2 or secondary school curriculum that the 

3 borrower is teaching.’’. 

4 (3) EFFECTIVE DATE.—The amendments made 

5 by this subsection shall apply only with respect to el6 igible individuals who are new borrowers on or after 

7 October 1, 1998, and before October 1, 2005. 

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