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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6 Enrolled Bill (ENR)]

        H.R.6

                       One Hundred Fifth Congress

                                 of the

                        United States of America

                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight

                                 An Act

 
 To extend the authorization of programs under the Higher Education Act 
                    of 1965, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Higher Education 
Amendments of 1998''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. General effective date.

                       TITLE I--GENERAL PROVISIONS

Sec. 101. Revision of title I.
Sec. 102. Conforming amendments.

                        TITLE II--TEACHER QUALITY

Sec. 201. Teacher quality enhancement grants.

                      TITLE III--INSTITUTIONAL AID

Sec. 301. Transfers and redesignations.
Sec. 302. Findings.
Sec. 303. Strengthening institutions.
Sec. 304. Strengthening HBCU's.
Sec. 305. Endowment challenge grants.
Sec. 306. HBCU capital financing.
Sec. 307. Minority science and engineering improvement program.
Sec. 308. General provisions.

                      TITLE IV--STUDENT ASSISTANCE

                       Part A--Grants to Students

Sec. 401. Federal Pell Grants.
Sec. 402. Federal TRIO programs.
Sec. 403. Gear up program.
Sec. 404. Academic achievement incentive scholarships.
Sec. 405. Repeals.
Sec. 406. Federal supplemental educational opportunity grants.
Sec. 407. Leveraging educational assistance partnership program.
Sec. 408. Special programs for students whose families are engaged in 
          migrant and seasonal farmwork.
Sec. 409. Robert C. Byrd Honors Scholarship Program.
Sec. 410. Child care access means parents in school.
Sec. 410A. Learning anytime anywhere partnerships.

              Part B--Federal Family Education Loan Program

Sec. 411. Limitation repealed.
Sec. 412. Advances to reserve funds.
Sec. 413. Guaranty agency reforms.
Sec. 414. Scope and duration of Federal loan insurance program.
Sec. 415. Limitations on individual federally insured loans and Federal 
          loan insurance.
Sec. 416. Applicable interest rates.
Sec. 417. Federal payments to reduce student interest costs.
Sec. 418. Voluntary flexible agreements with guaranty agencies.
Sec. 419. Federal PLUS loans.
Sec. 420. Federal consolidation loans.
Sec. 421. Default reduction program.
Sec. 422. Requirements for disbursements of student loans.
Sec. 423. Unsubsidized loans.
Sec. 424. Loan forgiveness for teachers.
Sec. 425. Loan forgiveness for child care providers.
Sec. 426. Notice to Secretary and payment of loss.
Sec. 427. Legal powers and responsibilities.
Sec. 428. Student loan information by eligible lenders.
Sec. 429. Definitions.
Sec. 430. Delegation of functions.
Sec. 431. Discharge.
Sec. 432. Debt management options.
Sec. 433. Special allowances.
Sec. 434. Federal family education loan insurance fund.

                   Part C--Federal Work-study Programs

Sec. 441. Authorization of appropriations; community services.
Sec. 442. Allocation of funds.
Sec. 443. Grants for Federal work-study programs.
Sec. 444. Flexible use of funds.
Sec. 445. Work colleges.

           Part D--William D. Ford Federal Direct Loan Program

Sec. 451. Selection of institutions.
Sec. 452. Terms and conditions.
Sec. 453. Contracts.
Sec. 454. Funds for administrative expenses.
Sec. 455. Authority to sell loans.
Sec. 456. Loan cancellation for teachers.

                      Part E--Federal Perkins Loans

Sec. 461. Authorization of appropriations.
Sec. 462. Allocation of funds.
Sec. 463. Agreements with institutions of higher education.
Sec. 464. Terms of loans.
Sec. 465. Cancellation for public service.
Sec. 466. Distribution of assets from student loan funds.
Sec. 467. Perkins Loan Revolving Fund.

                          Part F--Need Analysis

Sec. 471. Cost of attendance.
Sec. 472. Data elements.
Sec. 473. Family contribution for dependent students.
Sec. 474. Family contribution for independent students without 
          dependents other than a spouse.
Sec. 475. Family contribution for independent students with dependents 
          other than a spouse.
Sec. 476. Regulations; updated tables and amounts.
Sec. 477. Simplified needs test; zero expected family contribution.
Sec. 478. Discretion of student financial aid administrators.
Sec. 479. Treatment of other financial assistance.
Sec. 480. Clerical amendments.
Sec. 480A. Effective dates.

                       Part G--General Provisions

Sec. 481. Master calendar.
Sec. 482. Forms and regulations.
Sec. 483. Student eligibility.
Sec. 484. State court judgments.
Sec. 485. Institutional refunds.
Sec. 486. Institutional and financial assistance information for 
          students.
Sec. 487. National student loan data system.
Sec. 488. Distance education demonstration programs.
Sec. 489. Program participation agreements.
Sec. 490. Regulatory relief and improvement.
Sec. 490A. Garnishment requirements.
Sec. 490B. Administrative subpoena authority.
Sec. 490C. Advisory Committee on Student Financial Assistance.
Sec. 490D. Meetings and negotiated rulemaking.
Sec. 490E. Year 2000 requirements at the Department of Education.
Sec. 490F. Procedures for cancellations and deferments for eligible 
          disabled veterans.

                        Part H--Program Integrity

Sec. 491. State role and responsibilities.
Sec. 492. Accrediting agency recognition.
Sec. 493. Eligibility and certification procedures.
Sec. 494. Program review and data.
Sec. 495. Review of regulations.

                    TITLE V--DEVELOPING INSTITUTIONS

Sec. 501. Establishment of new title V.

               TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

Sec. 601. International and foreign language studies.
Sec. 602. Business and international education programs.
Sec. 603. Institute for International Public Policy.
Sec. 604. General provisions.

       TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

Sec. 701. Revision of title VII.
Sec. 702. Repeals.

           TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                             Part A--Studies

Sec. 801. Study of market mechanisms in Federal student loan programs.
Sec. 802. Study of the feasibility of alternative financial instruments 
          for determining lender yields.
Sec. 803. Student-related debt study required.
Sec. 804. Study of transfer of credits.
Sec. 805. Study of opportunities for participation in athletics 
          programs.
Sec. 806. Study of the effectiveness of cohort default rates for 
          institutions with few student loan borrowers.

              Part B--Advanced Placement Incentive Program

Sec. 810. Advanced placement incentive program.

               Part C--Community Scholarship Mobilization

Sec. 811. Short title.
Sec. 812. Findings.
Sec. 813. Definitions.
Sec. 814. Purpose; endowment grant authority.
Sec. 815. Grant agreement and requirements.
Sec. 816. Authorization of appropriations.

Part D--Grants to States for Workplace and Community Transition Training 
                    for Incarcerated Youth Offenders

Sec. 821. Grants to States for workplace and community transition 
          training for incarcerated youth offenders.

    Part E--Grants to Combat Violent Crimes Against Women on Campuses

Sec. 826. Grants to combat violent crimes against women on campuses.
Sec. 827. Study of institutional procedures to report sexual assaults.

 Part F--Improving United States Understanding of Science, Engineering, 
                       and Technology in East Asia

Sec. 831. Improving United States understanding of science, engineering, 
          and technology in East Asia.

                      Part G--Olympic Scholarships

Sec. 836. Extension of authorization.

                      Part H--Underground Railroad

Sec. 841. Underground Railroad educational and cultural program.

                 Part I--Summer Travel and Work Programs

Sec. 846. Authority to administer summer travel and work programs.

                 Part J--Web-based Education Commission

Sec. 851. Short title; definitions.
Sec. 852. Establishment of Web-Based Education Commission.
Sec. 853. Duties of the Commission.
Sec. 854. Powers of the Commission.
Sec. 855. Commission personnel matters.
Sec. 856. Termination of the Commission.
Sec. 857. Authorization of appropriations.

                          Part K--Miscellaneous

Sec. 861. Education-welfare study.
Sec. 862. Release of conditions, covenants, and reversionary interests, 
          Guam Community College conveyance, Barrigada, Guam.
Sec. 863. Sense of Congress regarding good character.
Sec. 864. Educational merchandise licensing codes of conduct.

                   TITLE IX--AMENDMENTS TO OTHER LAWS

   Part A--Extension and Revision of Indian Higher Education Programs

Sec. 901. Tribally controlled colleges and universities.
Sec. 902. Reauthorization of Navajo Community College Act.

                      Part B--Education of the Deaf

Sec. 911. Short title.
Sec. 912. Elementary and secondary education programs.
Sec. 913. Agreement with Gallaudet University.
Sec. 914. Agreement for the National Technical Institute for the Deaf.
Sec. 915. Definitions.
Sec. 916. Gifts.
Sec. 917. Reports.
Sec. 918. Monitoring, evaluation, and reporting.
Sec. 919. Federal endowment programs.
Sec. 920. Scholarship program.
Sec. 921. Oversight and effect of agreements.
Sec. 922. International students.
Sec. 923. Research priorities.
Sec. 924. National Study on the Education of the Deaf.
Sec. 925. Authorization of appropriations.

                Part C--United States Institute of Peace

Sec. 931. Authorities of the United States Institute of Peace.

              Part D--Voluntary Retirement Incentive Plans

Sec. 941. Voluntary retirement incentive plans.

           Part E--General Education Provisions Act Amendment

Sec. 951. Amendment to Family Educational Rights and Privacy Act of 
          1974.
Sec. 952. Alcohol or drug possession disclosure.

    Part F--Liaison for Proprietary Institutions of Higher Education

Sec. 961. Liaison for proprietary institutions of higher education.

                  Part G--Amendments to Other Statutes

Sec. 971. Nondischareability of certain claims for educational benefits 
          provided to obtain higher education.
Sec. 972. GNMA guarantee fee.

                             Part H--Repeals

Sec. 981. Repeals.
Sec. 982. Repeals of previous higher education amendments provisions.

SEC. 2. REFERENCES.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.).

SEC. 3. GENERAL EFFECTIVE DATE.

    Except as otherwise provided in this Act or the amendments made by 
this Act, the amendments made by this Act shall take effect on October 
1, 1998.

                      TITLE I--GENERAL PROVISIONS

SEC. 101. REVISION OF TITLE I.

    (a) General Provisions.--Title I (20 U.S.C. 1001 et seq.) is 
amended to read as follows:

                     ``TITLE I--GENERAL PROVISIONS

                         ``PART A--DEFINITIONS

``SEC. 101. GENERAL DEFINITION OF INSTITUTION OF HIGHER EDUCATION.

    ``(a) Institution of Higher Education.--For purposes of this Act, 
other than title IV, the term `institution of higher education' means 
an educational institution in any State that--
        ``(1) admits as regular students only persons having a 
    certificate of graduation from a school providing secondary 
    education, or the recognized equivalent of such a certificate;
        ``(2) is legally authorized within such State to provide a 
    program of education beyond secondary education;
        ``(3) provides an educational program for which the institution 
    awards a bachelor's degree or provides not less than a 2-year 
    program that is acceptable for full credit toward such a degree;
        ``(4) is a public or other nonprofit institution; and
        ``(5) is accredited by a nationally recognized accrediting 
    agency or association, or if not so accredited, is an institution 
    that has been granted preaccreditation status by such an agency or 
    association that has been recognized by the Secretary for the 
    granting of preaccreditation status, and the Secretary has 
    determined that there is satisfactory assurance that the 
    institution will meet the accreditation standards of such an agency 
    or association within a reasonable time.
    ``(b) Additional Institutions Included.--For purposes of this Act, 
other than title IV, the term `institution of higher education' also 
includes--
        ``(1) any school that provides not less than a 1-year program 
    of training to prepare students for gainful employment in a 
    recognized occupation and that meets the provision of paragraphs 
    (1), (2), (4), and (5) of subsection (a); and
        ``(2) a public or nonprofit private educational institution in 
    any State that, in lieu of the requirement in subsection (a)(1), 
    admits as regular students persons who are beyond the age of 
    compulsory school attendance in the State in which the institution 
    is located.
    ``(c) List of Accrediting Agencies.--For purposes of this section 
and section 102, the Secretary shall publish a list of nationally 
recognized accrediting agencies or associations that the Secretary 
determines, pursuant to subpart 2 of part H of title IV, to be reliable 
authority as to the quality of the education or training offered.

``SEC. 102. DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES 
              OF TITLE IV PROGRAMS.

    ``(a) Definition of Institution of Higher Education for Purposes of 
Title IV Programs.--
        ``(1) Inclusion of additional institutions.--Subject to 
    paragraphs (2) through (4) of this subsection, the term 
    `institution of higher education' for purposes of title IV 
    includes, in addition to the institutions covered by the definition 
    in section 101--
            ``(A) a proprietary institution of higher education (as 
        defined in subsection (b) of this section);
            ``(B) a postsecondary vocational institution (as defined in 
        subsection (c) of this section); and
            ``(C) only for the purposes of part B of title IV, an 
        institution outside the United States that is comparable to an 
        institution of higher education as defined in section 101 and 
        that has been approved by the Secretary for the purpose of part 
        B of title IV.
        ``(2) Institutions outside the united states.--
            ``(A) In general.--For the purpose of qualifying as an 
        institution under paragraph (1)(C), the Secretary shall 
        establish criteria by regulation for the approval of 
        institutions outside the United States and for the 
        determination that such institutions are comparable to an 
        institution of higher education as defined in section 101. In 
        the case of a graduate medical or veterinary school outside the 
        United States, such criteria shall include a requirement that a 
        student attending such school outside the United States is 
        ineligible for loans made, insured, or guaranteed under part B 
        unless--
                ``(i)(I) at least 60 percent of those enrolled in, and 
            at least 60 percent of the graduates of, the graduate 
            medical school outside the United States were not persons 
            described in section 484(a)(5) in the year preceding the 
            year for which a student is seeking a loan under part B of 
            title IV; and
                ``(II) at least 60 percent of the individuals who were 
            students or graduates of the graduate medical school 
            outside the United States (both nationals of the United 
            States and others) taking the examinations administered by 
            the Educational Commission for Foreign Medical Graduates 
            received a passing score in the year preceding the year for 
            which a student is seeking a loan under part B of title IV; 
            or
                ``(ii) the institution has a clinical training program 
            that was approved by a State as of January 1, 1992, or the 
            institution's students complete their clinical training at 
            an approved veterinary school located in the United States.
            ``(B) Advisory panel.--
                ``(i) In general.--For the purpose of qualifying as an 
            institution under paragraph (1)(C) of this subsection, the 
            Secretary shall establish an advisory panel of medical 
            experts that shall--

                    ``(I) evaluate the standards of accreditation 
                applied to applicant foreign medical schools; and
                    ``(II) determine the comparability of those 
                standards to standards for accreditation applied to 
                United States medical schools.

                ``(ii) Special rule.--If the accreditation standards 
            described in clause (i) are determined not to be 
            comparable, the foreign medical school shall be required to 
            meet the requirements of section 101.
            ``(C) Failure to release information.--The failure of an 
        institution outside the United States to provide, release, or 
        authorize release to the Secretary of such information as may 
        be required by subparagraph (A) shall render such institution 
        ineligible for the purpose of part B of title IV.
            ``(D) Special rule.--If, pursuant to this paragraph, an 
        institution loses eligibility to participate in the programs 
        under title IV, then a student enrolled at such institution 
        may, notwithstanding such loss of eligibility, continue to be 
        eligible to receive a loan under part B while attending such 
        institution for the academic year succeeding the academic year 
        in which such loss of eligibility occurred.
        ``(3) Limitations based on course of study or enrollment.--An 
    institution shall not be considered to meet the definition of an 
    institution of higher education in paragraph (1) if such 
    institution--
            ``(A) offers more than 50 percent of such institution's 
        courses by correspondence, unless the institution is an 
        institution that meets the definition in section 521(4)(C) of 
        the Carl D. Perkins Vocational and Applied Technology Education 
        Act;
            ``(B) enrolls 50 percent or more of the institution's 
        students in correspondence courses, unless the institution is 
        an institution that meets the definition in such section, 
        except that the Secretary, at the request of such institution, 
        may waive the applicability of this subparagraph to such 
        institution for good cause, as determined by the Secretary in 
        the case of an institution of higher education that provides a 
        2- or 4-year program of instruction (or both) for which the 
        institution awards an associate or baccalaureate degree, 
        respectively;
            ``(C) has a student enrollment in which more than 25 
        percent of the students are incarcerated, except that the 
        Secretary may waive the limitation contained in this 
        subparagraph for a nonprofit institution that provides a 2- or 
        4-year program of instruction (or both) for which the 
        institution awards a bachelor's degree, or an associate's 
        degree or a postsecondary diploma, respectively; or
            ``(D) has a student enrollment in which more than 50 
        percent of the students do not have a secondary school diploma 
        or its recognized equivalent, and does not provide a 2- or 4-
        year program of instruction (or both) for which the institution 
        awards a bachelor's degree or an associate's degree, 
        respectively, except that the Secretary may waive the 
        limitation contained in this subparagraph if a nonprofit 
        institution demonstrates to the satisfaction of the Secretary 
        that the institution exceeds such limitation because the 
        institution serves, through contracts with Federal, State, or 
        local government agencies, significant numbers of students who 
        do not have a secondary school diploma or its recognized 
        equivalent.
        ``(4) Limitations based on management.--An institution shall 
    not be considered to meet the definition of an institution of 
    higher education in paragraph (1) if--
            ``(A) the institution, or an affiliate of the institution 
        that has the power, by contract or ownership interest, to 
        direct or cause the direction of the management or policies of 
        the institution, has filed for bankruptcy, except that this 
        paragraph shall not apply to a nonprofit institution, the 
        primary function of which is to provide health care educational 
        services (or an affiliate of such an institution that has the 
        power, by contract or ownership interest, to direct or cause 
        the direction of the institution's management or policies) that 
        files for bankruptcy under chapter 11 of title 11, United 
        States Code, between July 1, 1998, and December 1, 1998; or
            ``(B) the institution, the institution's owner, or the 
        institution's chief executive officer has been convicted of, or 
        has pled nolo contendere or guilty to, a crime involving the 
        acquisition, use, or expenditure of funds under title IV, or 
        has been judicially determined to have committed fraud 
        involving funds under title IV.
        ``(5) Certification.--The Secretary shall certify an 
    institution's qualification as an institution of higher education 
    in accordance with the requirements of subpart 3 of part H of title 
    IV.
        ``(6) Loss of eligibility.--An institution of higher education 
    shall not be considered to meet the definition of an institution of 
    higher education in paragraph (1) if such institution is removed 
    from eligibility for funds under title IV as a result of an action 
    pursuant to part H of title IV.
    ``(b) Proprietary Institution of Higher Education.--
        ``(1) Principal criteria.--For the purpose of this section, the 
    term `proprietary institution of higher education' means a school 
    that--
            ``(A) provides an eligible program of training to prepare 
        students for gainful employment in a recognized occupation;
            ``(B) meets the requirements of paragraphs (1) and (2) of 
        section 101(a);
            ``(C) does not meet the requirement of paragraph (4) of 
        section 101(a);
            ``(D) is accredited by a nationally recognized accrediting 
        agency or association recognized by the Secretary pursuant to 
        part H of title IV;
            ``(E) has been in existence for at least 2 years; and
            ``(F) has at least 10 percent of the school's revenues from 
        sources that are not derived from funds provided under title 
        IV, as determined in accordance with regulations prescribed by 
        the Secretary.
        ``(2) Additional institutions.--The term `proprietary 
    institution of higher education' also includes a proprietary 
    educational institution in any State that, in lieu of the 
    requirement in paragraph (1) of section 101(a), admits as regular 
    students persons who are beyond the age of compulsory school 
    attendance in the State in which the institution is located.
    ``(c) Postsecondary Vocational Institution.--
        ``(1) Principal criteria.--For the purpose of this section, the 
    term `postsecondary vocational institution' means a school that--
            ``(A) provides an eligible program of training to prepare 
        students for gainful employment in a recognized occupation;
            ``(B) meets the requirements of paragraphs (1), (2), (4), 
        and (5) of section 101(a); and
            ``(C) has been in existence for at least 2 years.
        ``(2) Additional institutions.--The term `postsecondary 
    vocational institution' also includes an educational institution in 
    any State that, in lieu of the requirement in paragraph (1) of 
    section 101(a), admits as regular students persons who are beyond 
    the age of compulsory school attendance in the State in which the 
    institution is located.

``SEC. 103. ADDITIONAL DEFINITIONS.

    ``In this Act:
        ``(1) Combination of institutions of higher education.--The 
    term `combination of institutions of higher education' means a 
    group of institutions of higher education that have entered into a 
    cooperative arrangement for the purpose of carrying out a common 
    objective, or a public or private nonprofit agency, organization, 
    or institution designated or created by a group of institutions of 
    higher education for the purpose of carrying out a common objective 
    on the group's behalf.
        ``(2) Department.--The term `Department' means the Department 
    of Education.
        ``(3) Disability.--The term `disability' has the same meaning 
    given that term under section 3(2) of the Americans With 
    Disabilities Act of 1990.
        ``(4) Elementary school.--The term `elementary school' has the 
    same meaning given that term under section 14101 of the Elementary 
    and Secondary Education Act of 1965.
        ``(5) Gifted and talented.--The term `gifted and talented' has 
    the same meaning given that term under section 14101 of the 
    Elementary and Secondary Education Act of 1965.
        ``(6) Local educational agency.--The term `local educational 
    agency' has the same meaning given that term under section 14101 of 
    the Elementary and Secondary Education Act of 1965.
        ``(7) New borrower.--The term `new borrower' when used with 
    respect to any date means an individual who on that date has no 
    outstanding balance of principal or interest owing on any loan 
    made, insured, or guaranteed under title IV.
        ``(8) Nonprofit.--The term `nonprofit' as applied to a school, 
    agency, organization, or institution means a school, agency, 
    organization, or institution owned and operated by one or more 
    nonprofit corporations or associations, no part of the net earnings 
    of which inures, or may lawfully inure, to the benefit of any 
    private shareholder or individual.
        ``(9) School or department of divinity.--The term `school or 
    department of divinity' means an institution, or a department or a 
    branch of an institution, the program of instruction of which is 
    designed for the education of students--
            ``(A) to prepare the students to become ministers of 
        religion or to enter upon some other religious vocation (or to 
        provide continuing training for any such vocation); or
            ``(B) to prepare the students to teach theological 
        subjects.
        ``(10) Secondary school.--The term `secondary school' has the 
    same meaning given that term under section 14101 of the Elementary 
    and Secondary Education Act of 1965.
        ``(11) Secretary.--The term `Secretary' means the Secretary of 
    Education.
        ``(12) Service-learning.--The term `service-learning' has the 
    same meaning given that term under section 101(23) of the National 
    and Community Service Act of 1990.
        ``(13) Special education teacher.--The term `special education 
    teacher' means teachers who teach children with disabilities as 
    defined in section 602 of the Individuals with Disabilities 
    Education Act.
        ``(14) State educational agency.--The term `State educational 
    agency' has the same meaning given that term under section 14101 of 
    the Elementary and Secondary Education Act of 1965.
        ``(15) State higher education agency.--The term `State higher 
    education agency' means the officer or agency primarily responsible 
    for the State supervision of higher education.
        ``(16) State; freely associated states.--
            ``(A) State.--The term `State' includes, in addition to the 
        several States of the United States, the Commonwealth of Puerto 
        Rico, the District of Columbia, Guam, American Samoa, the 
        United States Virgin Islands, the Commonwealth of the Northern 
        Mariana Islands, and the Freely Associated States.
            ``(B) Freely associated states.--The term `Freely 
        Associated States' means the Republic of the Marshall Islands, 
        the Federated States of Micronesia, and the Republic of Palau.

                ``PART B--ADDITIONAL GENERAL PROVISIONS

``SEC. 111. ANTIDISCRIMINATION.

    ``(a) In General.--Institutions of higher education receiving 
Federal financial assistance may not use such financial assistance, 
directly or indirectly, to undertake any study or project or fulfill 
the terms of any contract containing an express or implied provision 
that any person or persons of a particular race, religion, sex, or 
national origin be barred from performing such study, project, or 
contract, except that nothing in this subsection shall be construed to 
prohibit an institution from conducting objective studies or projects 
concerning the nature, effects, or prevention of discrimination, or to 
have the institution's curriculum restricted on the subject of 
discrimination.
    ``(b) Limitations on Statutory Construction.--Nothing in this Act 
shall be construed to limit the rights or responsibilities of any 
individual under the Americans With Disabilities Act of 1990, the 
Rehabilitation Act of 1973, or any other law.

``SEC. 112. PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS.

    ``(a) Protection of Rights.--It is the sense of Congress that no 
student attending an institution of higher education on a full- or 
part-time basis should, on the basis of participation in protected 
speech or protected association, be excluded from participation in, be 
denied the benefits of, or be subjected to discrimination or official 
sanction under any education program, activity, or division of the 
institution directly or indirectly receiving financial assistance under 
this Act, whether or not such program, activity, or division is 
sponsored or officially sanctioned by the institution.
    ``(b) Construction.--Nothing in this section shall be construed--
        ``(1) to discourage the imposition of an official sanction on a 
    student that has willfully participated in the disruption or 
    attempted disruption of a lecture, class, speech, presentation, or 
    performance made or scheduled to be made under the auspices of the 
    institution of higher education; or
        ``(2) to prevent an institution of higher education from taking 
    appropriate and effective action to prevent violations of State 
    liquor laws, to discourage binge drinking and other alcohol abuse, 
    to protect students from sexual harassment including assault and 
    date rape, to prevent hazing, or to regulate unsanitary or unsafe 
    conditions in any student residence.
    ``(c) Definitions.--For the purposes of this section:
        ``(1) Official sanction.--The term `official sanction'--
            ``(A) means expulsion, suspension, probation, censure, 
        condemnation, reprimand, or any other disciplinary, coercive, 
        or adverse action taken by an institution of higher education 
        or administrative unit of the institution; and
            ``(B) includes an oral or written warning made by an 
        official of an institution of higher education acting in the 
        official capacity of the official.
        ``(2) Protected association.--The term `protected association' 
    means the joining, assembling, and residing with others that is 
    protected under the first and 14th amendments to the Constitution, 
    or would be protected if the institution of higher education 
    involved were subject to those amendments.
        ``(3) Protected speech.--The term `protected speech' means 
    speech that is protected under the first and 14th amendments to the 
    Constitution, or would be protected if the institution of higher 
    education involved were subject to those amendments.

``SEC. 113. TREATMENT OF TERRITORIES AND TERRITORIAL STUDENT 
              ASSISTANCE.

    ``(a) Waiver Authority.--The Secretary is required to waive the 
eligibility criteria of any postsecondary education program 
administered by the Department where such criteria do not take into 
account the unique circumstances in Guam, the United States Virgin 
Islands, American Samoa, the Commonwealth of the Northern Mariana 
Islands, and the Freely Associated States.
    ``(b) Eligibility.--Notwithstanding any other provision of law, an 
institution of higher education that is located in any of the Freely 
Associated States, rather than in another State, shall be eligible, if 
otherwise qualified, for assistance under chapter 1 of subpart 2 of 
part A of title IV. This subsection shall cease to be effective on 
September 30, 2004.

``SEC. 114. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL QUALITY AND 
              INTEGRITY.

    ``(a) Establishment.--There is established in the Department a 
National Advisory Committee on Institutional Quality and Integrity 
(hereafter in this section referred to as the `Committee'), which shall 
be composed of 15 members appointed by the Secretary from among 
individuals who are representatives of, or knowledgeable concerning, 
education and training beyond secondary education, including 
representatives of all sectors and types of institutions of higher 
education (as defined in section 102), to assess the process of 
eligibility and certification of such institutions under title IV and 
the provision of financial aid under title IV.
    ``(b) Terms of Members.--Terms of office of each member of the 
Committee shall be 3 years, except that any member appointed to fill a 
vacancy occurring prior to the expiration of the term for which the 
member's predecessor was appointed shall be appointed for the remainder 
of such term.
    ``(c) Public Notice.--The Secretary shall--
        ``(1) annually publish in the Federal Register a list 
    containing the name of each member of the Committee and the date of 
    the expiration of the term of office of the member; and
        ``(2) publicly solicit nominations for each vacant position or 
    expiring term of office on the Committee.
    ``(d) Functions.--The Committee shall--
        ``(1) advise the Secretary with respect to establishment and 
    enforcement of the standards of accrediting agencies or 
    associations under subpart 2 of part H of title IV;
        ``(2) advise the Secretary with respect to the recognition of a 
    specific accrediting agency or association;
        ``(3) advise the Secretary with respect to the preparation and 
    publication of the list of nationally recognized accrediting 
    agencies and associations;
        ``(4) develop and recommend to the Secretary standards and 
    criteria for specific categories of vocational training 
    institutions and institutions of higher education for which there 
    are no recognized accrediting agencies, associations, or State 
    agencies, in order to establish the eligibility of such 
    institutions on an interim basis for participation in federally 
    funded programs;
        ``(5) advise the Secretary with respect to the eligibility and 
    certification process for institutions of higher education under 
    title IV, together with recommendations for improvements in such 
    process;
        ``(6) advise the Secretary with respect to the relationship 
    between--
            ``(A) accreditation of institutions of higher education and 
        the certification and eligibility of such institutions; and
            ``(B) State licensing responsibilities with respect to such 
        institutions; and
        ``(7) carry out such other advisory functions relating to 
    accreditation and institutional eligibility as the Secretary may 
    prescribe.
    ``(e) Meeting Procedures.--The Committee shall meet not less than 
twice each year at the call of the Chairperson. The date of, and agenda 
for, each meeting of the Committee shall be submitted in advance to the 
Secretary for approval. A representative of the Secretary shall be 
present at all meetings of the Committee.
    ``(f) Report.--Not later than November 30 of each year, the 
Committee shall make an annual report through the Secretary to 
Congress. The annual report shall contain--
        ``(1) a list of the members of the Committee and their 
    addresses;
        ``(2) a list of the functions of the Committee;
        ``(3) a list of dates and places of each meeting during the 
    preceding fiscal year; and
        ``(4) a summary of the activities, findings and recommendations 
    made by the Committee during the preceding fiscal year.
    ``(g) Termination.--The Committee shall cease to exist on September 
30, 2004.

``SEC. 115. STUDENT REPRESENTATION.

    ``The Secretary shall, in appointing individuals to any commission, 
committee, board, panel, or other body in connection with the 
administration of this Act, include individuals who are, at the time of 
appointment, attending an institution of higher education.

``SEC. 116. FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS.

    ``Nothing in this Act or any other Federal law shall be construed 
to prohibit any institution of higher education from requiring a 
student who is a foreign national (and not admitted to permanent 
residence in the United States) to guarantee the future payment of 
tuition and fees to such institution by--
        ``(1) making advance payment of such tuition and fees;
        ``(2) making deposits in an escrow account administered by such 
    institution for such payments; or
        ``(3) obtaining a bond or other insurance that such payments 
    will be made.

``SEC. 117. DISCLOSURES OF FOREIGN GIFTS.

    ``(a) Disclosure Report.--Whenever any institution is owned or 
controlled by a foreign source or receives a gift from or enters into a 
contract with a foreign source, the value of which is $250,000 or more, 
considered alone or in combination with all other gifts from or 
contracts with that foreign source within a calendar year, the 
institution shall file a disclosure report with the Secretary on 
January 31 or July 31, whichever is sooner.
    ``(b) Contents of Report.--Each report to the Secretary required by 
this section shall contain the following:
        ``(1) For gifts received from or contracts entered into with a 
    foreign source other than a foreign government, the aggregate 
    dollar amount of such gifts and contracts attributable to a 
    particular country. The country to which a gift is attributable is 
    the country of citizenship, or if unknown, the principal residence 
    for a foreign source who is a natural person, and the country of 
    incorporation, or if unknown, the principal place of business, for 
    a foreign source which is a legal entity.
        ``(2) For gifts received from or contracts entered into with a 
    foreign government, the aggregate amount of such gifts and 
    contracts received from each foreign government.
        ``(3) In the case of an institution which is owned or 
    controlled by a foreign source, the identity of the foreign source, 
    the date on which the foreign source assumed ownership or control, 
    and any changes in program or structure resulting from the change 
    in ownership or control.
    ``(c) Additional Disclosures for Restricted and Conditional 
Gifts.--Notwithstanding the provisions of subsection (b), whenever any 
institution receives a restricted or conditional gift or contract from 
a foreign source, the institution shall disclose the following:
        ``(1) For such gifts received from or contracts entered into 
    with a foreign source other than a foreign government, the amount, 
    the date, and a description of such conditions or restrictions. The 
    report shall also disclose the country of citizenship, or if 
    unknown, the principal residence for a foreign source which is a 
    natural person, and the country of incorporation, or if unknown, 
    the principal place of business for a foreign source which is a 
    legal entity.
        ``(2) For gifts received from or contracts entered into with a 
    foreign government, the amount, the date, a description of such 
    conditions or restrictions, and the name of the foreign government.
    ``(d) Relation to Other Reporting Requirements.--
        ``(1) State requirements.--If an institution described under 
    subsection (a) is within a State which has enacted requirements for 
    public disclosure of gifts from or contracts with a foreign source 
    that are substantially similar to the requirements of this section, 
    a copy of the disclosure report filed with the State may be filed 
    with the Secretary in lieu of a report required under subsection 
    (a). The State in which the institution is located shall provide to 
    the Secretary such assurances as the Secretary may require to 
    establish that the institution has met the requirements for public 
    disclosure under State law if the State report is filed.
        ``(2) Use of other federal reports.--If an institution receives 
    a gift from, or enters into a contract with, a foreign source, 
    where any other department, agency, or bureau of the executive 
    branch requires a report containing requirements substantially 
    similar to those required under this section, a copy of the report 
    may be filed with the Secretary in lieu of a report required under 
    subsection (a).
    ``(e) Public Inspection.--All disclosure reports required by this 
section shall be public records open to inspection and copying during 
business hours.
    ``(f) Enforcement.--
        ``(1) Court orders.--Whenever it appears that an institution 
    has failed to comply with the requirements of this section, 
    including any rule or regulation promulgated under this section, a 
    civil action may be brought by the Attorney General, at the request 
    of the Secretary, in an appropriate district court of the United 
    States, or the appropriate United States court of any territory or 
    other place subject to the jurisdiction of the United States, to 
    request such court to compel compliance with the requirements of 
    this section.
        ``(2) Costs.--For knowing or willful failure to comply with the 
    requirements of this section, including any rule or regulation 
    promulgated thereunder, an institution shall pay to the Treasury of 
    the United States the full costs to the United States of obtaining 
    compliance, including all associated costs of investigation and 
    enforcement.
    ``(g) Regulations.--The Secretary may promulgate regulations to 
carry out this section.
    ``(h) Definitions.--For the purpose of this section--
        ``(1) the term `contract' means any agreement for the 
    acquisition by purchase, lease, or barter of property or services 
    by the foreign source, for the direct benefit or use of either of 
    the parties;
        ``(2) the term `foreign source' means--
            ``(A) a foreign government, including an agency of a 
        foreign government;
            ``(B) a legal entity, governmental or otherwise, created 
        solely under the laws of a foreign state or states;
            ``(C) an individual who is not a citizen or a national of 
        the United States or a trust territory or protectorate thereof; 
        and
            ``(D) an agent, including a subsidiary or affiliate of a 
        foreign legal entity, acting on behalf of a foreign source;
        ``(3) the term `gift' means any gift of money or property;
        ``(4) the term `institution' means any institution, public or 
    private, or, if a multicampus institution, any single campus of 
    such institution, in any State, that--
            ``(A) is legally authorized within such State to provide a 
        program of education beyond secondary school;
            ``(B) provides a program for which the institution awards a 
        bachelor's degree (or provides not less than a 2-year program 
        which is acceptable for full credit toward such a degree) or 
        more advanced degrees; and
            ``(C) is accredited by a nationally recognized accrediting 
        agency or association and to which institution Federal 
        financial assistance is extended (directly or indirectly 
        through another entity or person), or which institution 
        receives support from the extension of Federal financial 
        assistance to any of the institution's subunits; and
        ``(5) the term `restricted or conditional gift or contract' 
    means any endowment, gift, grant, contract, award, present, or 
    property of any kind which includes provisions regarding--
            ``(A) the employment, assignment, or termination of 
        faculty;
            ``(B) the establishment of departments, centers, research 
        or lecture programs, or new faculty positions;
            ``(C) the selection or admission of students; or
            ``(D) the award of grants, loans, scholarships, 
        fellowships, or other forms of financial aid restricted to 
        students of a specified country, religion, sex, ethnic origin, 
        or political opinion.

``SEC. 118. APPLICATION OF PEER REVIEW PROCESS.

    ``All applications submitted under the provisions of this Act which 
require peer review shall be read by a panel of readers composed of 
individuals selected by the Secretary, which shall include outside 
readers who are not employees of the Federal Government. The Secretary 
shall ensure that no individual assigned under this section to review 
any application has any conflict of interest with regard to that 
application which might impair the impartiality with which that 
individual conducts the review under this section.

``SEC. 119. BINGE DRINKING ON COLLEGE CAMPUSES.

    ``(a) Short Title.--This section may be cited as the `Collegiate 
Initiative To Reduce Binge Drinking and Illegal Alcohol Consumption'.
    ``(b) Sense of Congress.--It is the sense of Congress that, in an 
effort to change the culture of alcohol consumption on college 
campuses, all institutions of higher education should carry out the 
following:
        ``(1) The president of the institution should appoint a task 
    force consisting of school administrators, faculty, students, Greek 
    system representatives, and others to conduct a full examination of 
    student and academic life at the institution. The task force should 
    make recommendations for a broad range of policy and program 
    changes that would serve to reduce alcohol and other drug-related 
    problems. The institution should provide resources to assist the 
    task force in promoting the campus policies and proposed 
    environmental changes that have been identified.
        ``(2) The institution should provide maximum opportunities for 
    students to live in an alcohol-free environment and to engage in 
    stimulating, alcohol-free recreational and leisure activities.
        ``(3) The institution should enforce a `zero tolerance' policy 
    on the illegal consumption of alcohol by students at the 
    institution.
        ``(4) The institution should vigorously enforce the 
    institution's code of disciplinary sanctions for those who violate 
    campus alcohol policies. Students with alcohol or other drug-
    related problems should be referred for assistance, including on-
    campus counseling programs if appropriate.
        ``(5) The institution should adopt a policy to discourage 
    alcoholic beverage-related sponsorship of on-campus activities. It 
    should adopt policies limiting the advertisement and promotion of 
    alcoholic beverages on campus.
        ``(6) The institution should work with the local community, 
    including local businesses, in a `Town/Gown' alliance to encourage 
    responsible policies toward alcohol consumption and to address 
    illegal alcohol use by students.

``SEC. 120. DRUG AND ALCOHOL ABUSE PREVENTION.

    ``(a) Restriction on Eligibility.--Notwithstanding any other 
provision of law, no institution of higher education shall be eligible 
to receive funds or any other form of financial assistance under any 
Federal program, including participation in any federally funded or 
guaranteed student loan program, unless the institution certifies to 
the Secretary that the institution has adopted and has implemented a 
program to prevent the use of illicit drugs and the abuse of alcohol by 
students and employees that, at a minimum, includes--
        ``(1) the annual distribution to each student and employee of--
            ``(A) standards of conduct that clearly prohibit, at a 
        minimum, the unlawful possession, use, or distribution of 
        illicit drugs and alcohol by students and employees on the 
        institution's property or as part of any of the institution's 
        activities;
            ``(B) a description of the applicable legal sanctions under 
        local, State, or Federal law for the unlawful possession or 
        distribution of illicit drugs and alcohol;
            ``(C) a description of the health-risks associated with the 
        use of illicit drugs and the abuse of alcohol;
            ``(D) a description of any drug or alcohol counseling, 
        treatment, or rehabilitation or re-entry programs that are 
        available to employees or students; and
            ``(E) a clear statement that the institution will impose 
        sanctions on students and employees (consistent with local, 
        State, and Federal law), and a description of those sanctions, 
        up to and including expulsion or termination of employment and 
        referral for prosecution, for violations of the standards of 
        conduct required by subparagraph (A); and
        ``(2) a biennial review by the institution of the institution's 
    program to--
            ``(A) determine the program's effectiveness and implement 
        changes to the program if the changes are needed; and
            ``(B) ensure that the sanctions required by paragraph 
        (1)(E) are consistently enforced.
    ``(b) Information Availability.--Each institution of higher 
education that provides the certification required by subsection (a) 
shall, upon request, make available to the Secretary and to the public 
a copy of each item required by subsection (a)(1) as well as the 
results of the biennial review required by subsection (a)(2).
    ``(c) Regulations.--
        ``(1) In general.--The Secretary shall publish regulations to 
    implement and enforce the provisions of this section, including 
    regulations that provide for--
            ``(A) the periodic review of a representative sample of 
        programs required by subsection (a); and
            ``(B) a range of responses and sanctions for institutions 
        of higher education that fail to implement their programs or to 
        consistently enforce their sanctions, including information and 
        technical assistance, the development of a compliance 
        agreement, and the termination of any form of Federal financial 
        assistance.
        ``(2) Rehabilitation program.--The sanctions required by 
    subsection (a)(1)(E) may include the completion of an appropriate 
    rehabilitation program.
    ``(d) Appeals.--Upon determination by the Secretary to terminate 
financial assistance to any institution of higher education under this 
section, the institution may file an appeal with an administrative law 
judge before the expiration of the 30-day period beginning on the date 
such institution is notified of the decision to terminate financial 
assistance under this section. Such judge shall hold a hearing with 
respect to such termination of assistance before the expiration of the 
45-day period beginning on the date that such appeal is filed. Such 
judge may extend such 45-day period upon a motion by the institution 
concerned. The decision of the judge with respect to such termination 
shall be considered to be a final agency action.
    ``(e) Alcohol and Drug Abuse Prevention Grants.--
        ``(1) Program authority.--The Secretary may make grants to 
    institutions of higher education or consortia of such institutions, 
    and enter into contracts with such institutions, consortia, and 
    other organizations, to develop, implement, operate, improve, and 
    disseminate programs of prevention, and education (including 
    treatment-referral) to reduce and eliminate the illegal use of 
    drugs and alcohol and the violence associated with such use. Such 
    grants or contracts may also be used for the support of a higher 
    education center for alcohol and drug abuse prevention that will 
    provide training, technical assistance, evaluation, dissemination, 
    and associated services and assistance to the higher education 
    community as determined by the Secretary and institutions of higher 
    education.
        ``(2) Awards.--Grants and contracts shall be awarded under 
    paragraph (1) on a competitive basis.
        ``(3) Applications.--An institution of higher education, a 
    consortium of such institutions, or another organization that 
    desires to receive a grant or contract under paragraph (1) shall 
    submit an application to the Secretary at such time, in such 
    manner, and containing or accompanied by such information as the 
    Secretary may reasonably require by regulation.
        ``(4) Additional requirements.--
            ``(A) Participation.--In awarding grants and contracts 
        under this subsection the Secretary shall make every effort to 
        ensure--
                ``(i) the equitable participation of private and public 
            institutions of higher education (including community and 
            junior colleges); and
                ``(ii) the equitable geographic participation of such 
            institutions.
            ``(B) Consideration.--In awarding grants and contracts 
        under this subsection the Secretary shall give appropriate 
        consideration to institutions of higher education with limited 
        enrollment.
        ``(5) Authorization of appropriations.--There are authorized to 
    be appropriated to carry out this subsection $5,000,000 for fiscal 
    year 1999 and such sums as may be necessary for each of the 4 
    succeeding fiscal years.
    ``(f) National Recognition Awards.--
        ``(1) Purpose.--It is the purpose of this subsection to provide 
    models of innovative and effective alcohol and drug abuse 
    prevention programs in higher education and to focus national 
    attention on exemplary alcohol and drug abuse prevention efforts.
        ``(2) Awards.--
            ``(A) In general.--The Secretary shall make 5 National 
        Recognition Awards for outstanding alcohol prevention programs 
        and 5 National Recognition Awards for outstanding drug abuse 
        prevention programs, on an annual basis, to institutions of 
        higher education that--
                ``(i) have developed and implemented innovative and 
            effective alcohol prevention programs or drug abuse 
            prevention programs; and
                ``(ii) with respect to an application for an alcohol 
            prevention program award, demonstrate in the application 
            submitted under paragraph (3) that the institution has 
            undertaken efforts designed to change the culture of 
            college drinking consistent with the review criteria 
            described in paragraph (3)(C)(iii).
            ``(B) Ceremony.--The awards shall be made at a ceremony in 
        Washington, D.C.
            ``(C) Document.--The Secretary shall publish a document 
        describing the alcohol and drug abuse prevention programs of 
        institutions of higher education that receive the awards under 
        this subsection and disseminate the document nationally to all 
        public and private secondary school guidance counselors for use 
        by secondary school juniors and seniors preparing to enter an 
        institution of higher education. The document shall be 
        disseminated not later than January 1 of each academic year.
            ``(D) Amount and use.--Each institution of higher education 
        selected to receive an award under this subsection shall 
        receive an award in the amount of $50,000. Such award shall be 
        used for the maintenance and improvement of the institution's 
        outstanding prevention program for the academic year following 
        the academic year for which the award is made.
        ``(3) Application.--
            ``(A) In general.--Each institution of higher education 
        desiring an award under this subsection shall submit an 
        application to the Secretary at such time, in such manner, and 
        accompanied by such information as the Secretary may require. 
        Each such application shall contain--
                ``(i) a clear description of the goals and objectives 
            of the prevention program of the institution;
                ``(ii) a description of program activities that focus 
            on alcohol or drug policy issues, policy development, 
            modification, or refinement, policy dissemination and 
            implementation, and policy enforcement;
                ``(iii) a description of activities that encourage 
            student and employee participation and involvement in 
            activity development and implementation;
                ``(iv) the objective criteria used to determine the 
            effectiveness of the methods used in such programs and the 
            means used to evaluate and improve the programs' efforts;
                ``(v) a description of special initiatives used to 
            reduce high-risk behavior or increase low-risk behavior; 
            and
                ``(vi) a description of coordination and networking 
            efforts that exist in the community in which the 
            institution is located for purposes of such programs.
            ``(B) Application review.--The Secretary shall appoint a 
        committee to review applications submitted under this 
        paragraph. The committee may include representatives of Federal 
        departments or agencies the programs of which include alcohol 
        abuse prevention and education efforts and drug abuse 
        prevention and education efforts, directors or heads (or their 
        representatives) of professional associations that focus on 
        alcohol and drug abuse prevention efforts, and non-Federal 
        scientists who have backgrounds in social science evaluation 
        and research methodology and in education. Decisions of the 
        committee shall be made directly to the Secretary without 
        review by any other entity in the Department.
            ``(C) Review criteria.--The committee described in 
        subparagraph (B) shall develop specific review criteria for 
        reviewing and evaluating applications submitted under this 
        paragraph. The review criteria shall include--
                ``(i) measures of the effectiveness of the program of 
            the institution, that includes changes in the campus 
            alcohol or other drug environment or the climate and 
            changes in alcohol or other drug use before and after the 
            initiation of the program;
                ``(ii) measures of program institutionalization, 
            including--

                    ``(I) an assessment of needs of the institution;
                    ``(II) the institution's alcohol and drug policies, 
                staff and faculty development activities, drug 
                prevention criteria, student, faculty, and campus 
                community involvement; and
                    ``(III) whether the program will be continued after 
                the cessation of Federal funding; and

                ``(iii) with respect to an application for an alcohol 
            prevention program award, criteria for determining whether 
            the institution has policies in effect that--

                    ``(I) prohibit alcoholic beverage sponsorship of 
                athletic events, and prohibit alcoholic beverage 
                advertising inside athletic facilities;
                    ``(II) prohibit alcoholic beverage marketing on 
                campus, which may include efforts to ban alcohol 
                advertising in institutional publications or efforts to 
                prohibit alcohol-related advertisements at campus 
                events;
                    ``(III) establish or expand upon alcohol-free 
                living arrangements for all college students;
                    ``(IV) establish partnerships with community 
                members and organizations to further alcohol prevention 
                efforts on campus and the areas surrounding campus; and
                    ``(V) establish innovative communications programs 
                involving students and faculty in an effort to educate 
                students about alcohol-related risks.

        ``(4) Eligibility.--In order to be eligible to receive a 
    National Recognition Award an institution of higher education 
    shall--
            ``(A) offer an associate or baccalaureate degree;
            ``(B) have established an alcohol abuse prevention and 
        education program or a drug abuse prevention and education 
        program;
            ``(C) nominate itself or be nominated by others, such as 
        professional associations or student organizations, to receive 
        the award; and
            ``(D) not have received an award under this subsection 
        during the 5 academic years preceding the academic year for 
        which the determination is made.
        ``(5) Authorization of appropriations.--
            ``(A) In general.--There is authorized to be appropriated 
        to carry out this subsection $750,000 for fiscal year 1999.
            ``(B) Availability.--Funds appropriated under subparagraph 
        (A) shall remain available until expended.

``SEC. 121. PRIOR RIGHTS AND OBLIGATIONS.

    ``(a) Authorization of Appropriations.--
        ``(1) Pre-1987 parts c and d of title vii.--There are 
    authorized to be appropriated such sums as may be necessary for 
    fiscal year 1999 and for each of the 4 succeeding fiscal years to 
    pay obligations incurred prior to 1987 under parts C and D of title 
    VII, as such parts were in effect before the effective date of the 
    Higher Education Amendments of 1992.
        ``(2) Post-1992 and pre-1998 part c of title vii.--There are 
    authorized to be appropriated such sums as may be necessary for 
    fiscal year 1999 and for each of the 4 succeeding fiscal years to 
    pay obligations incurred prior to the date of enactment of the 
    Higher Education Amendments of 1998 under part C of title VII, as 
    such part was in effect during the period--
            ``(A) after the effective date of the Higher Education 
        Amendments of 1992; and
            ``(B) prior to the date of enactment of the Higher 
        Education Amendments of 1998.
    ``(b) Legal Responsibilities.--
        ``(1) Pre-1987 title vii.--All entities with continuing 
    obligations incurred under parts A, B, C, and D of title VII, as 
    such parts were in effect before the effective date of the Higher 
    Education Amendments of 1992, shall be subject to the requirements 
    of such part as in effect before the effective date of the Higher 
    Education Amendments of 1992.
        ``(2) Post-1992 and pre-1998 part c of title vii.--All entities 
    with continuing obligations incurred under part C of title VII, as 
    such part was in effect during the period--
            ``(A) after the effective date of the Higher Education 
        Amendments of 1992; and
            ``(B) prior to the date of enactment of the Higher 
        Education Amendments of 1998,
    shall be subject to the requirements of such part as such part was 
    in effect during such period.

``SEC. 122. RECOVERY OF PAYMENTS.

    ``(a) Public Benefit.--Congress declares that, if a facility 
constructed with the aid of a grant under part A of title VII as such 
part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of such title as part B was in 
effect prior to the date of enactment of the Higher Education 
Amendments of 1992, is used as an academic facility for 20 years 
following completion of such construction, the public benefit accruing 
to the United States will equal in value the amount of the grant. The 
period of 20 years after completion of such construction shall 
therefore be deemed to be the period of Federal interest in such 
facility for the purposes of such title as so in effect.
    ``(b) Recovery Upon Cessation of Public Benefit.--If, within 20 
years after completion of construction of an academic facility which 
has been constructed, in part with a grant under part A of title VII as 
such part A was in effect prior to the date of enactment of the Higher 
Education Amendments of 1998, or part B of title VII as such part B was 
in effect prior to the date of enactment of the Higher Education 
Amendments of 1992--
        ``(1) the applicant under such parts as so in effect (or the 
    applicant's successor in title or possession) ceases or fails to be 
    a public or nonprofit institution; or
        ``(2) the facility ceases to be used as an academic facility, 
    or the facility is used as a facility excluded from the term 
    `academic facility' (as such term was defined under title VII, as 
    so in effect), unless the Secretary determines that there is good 
    cause for releasing the institution from its obligation,
the United States shall be entitled to recover from such applicant (or 
successor) an amount which bears to the value of the facility at that 
time (or so much thereof as constituted an approved project or 
projects) the same ratio as the amount of Federal grant bore to the 
cost of the facility financed with the aid of such grant. The value 
shall be determined by agreement of the parties or by action brought in 
the United States district court for the district in which such 
facility is situated.
    ``(c) Prohibition on Use for Religion.--Notwithstanding the 
provisions of subsections (a) and (b), no project assisted with funds 
under title VII (as in effect prior to the date of enactment of the 
Higher Education Amendments of 1998) shall ever be used for religious 
worship or a sectarian activity or for a school or department of 
divinity.

                   ``PART C--COST OF HIGHER EDUCATION

``SEC. 131. IMPROVEMENTS IN MARKET INFORMATION AND PUBLIC 
              ACCOUNTABILITY IN HIGHER EDUCATION.

    ``(a) Improved Data Collection.--
        ``(1) Development of uniform methodology.--The Secretary shall 
    direct the Commissioner of Education Statistics to convene a series 
    of forums to develop nationally consistent methodologies for 
    reporting costs incurred by postsecondary institutions in providing 
    postsecondary education.
        ``(2) Redesign of data systems.--On the basis of the 
    methodologies developed pursuant to paragraph (1), the Secretary 
    shall redesign relevant parts of the postsecondary education data 
    systems to improve the usefulness and timeliness of the data 
    collected by such systems.
        ``(3) Information to institutions.--The Commissioner of 
    Education Statistics shall--
            ``(A) develop a standard definition for the following data 
        elements:
                ``(i) tuition and fees for a full-time undergraduate 
            student;
                ``(ii) cost of attendance for a full-time undergraduate 
            student, consistent with the provisions of section 472;
                ``(iii) average amount of financial assistance received 
            by an undergraduate student who attends an institution of 
            higher education, including--

                    ``(I) each type of assistance or benefit described 
                in section 428(a)(2)(C)(i);
                    ``(II) fellowships; and
                    ``(III) institutional and other assistance; and

                ``(iv) number of students receiving financial 
            assistance described in each of subclauses (I), (II), and 
            (III) of clause (iii);
            ``(B) not later than 90 days after the date of enactment of 
        the Higher Education Amendments of 1998, report the definitions 
        to each institution of higher education and within a reasonable 
        period of time thereafter inform the Committee on Labor and 
        Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives of those 
        definitions; and
            ``(C) collect information regarding the data elements 
        described in subparagraph (A) with respect to at least all 
        institutions of higher education participating in programs 
        under title IV, beginning with the information from academic 
        year 2000-2001 and annually thereafter.
    ``(b) Data Dissemination.--The Secretary shall make available the 
data collected pursuant to subsection (a). Such data shall be available 
in a form that permits the review and comparison of the data 
submissions of individual institutions of higher education. Such data 
shall be presented in a form that is easily understandable and allows 
parents and students to make informed decisions based on the costs for 
typical full-time undergraduate students.
    ``(c) Study.--
        ``(1) In general.--The Commissioner of Education Statistics 
    shall conduct a national study of expenditures at institutions of 
    higher education. Such study shall include information with respect 
    to--
            ``(A) the change in tuition and fees compared with the 
        consumer price index and other appropriate measures of 
        inflation;
            ``(B) faculty salaries and benefits;
            ``(C) administrative salaries, benefits and expenses;
            ``(D) academic support services;
            ``(E) research;
            ``(F) operations and maintenance; and
            ``(G) institutional expenditures for construction and 
        technology and the potential cost of replacing instructional 
        buildings and equipment.
        ``(2) Evaluation.--The study shall include an evaluation of--
            ``(A) changes over time in the expenditures identified in 
        paragraph (1);
            ``(B) the relationship of the expenditures identified in 
        paragraph (1) to college costs; and
            ``(C) the extent to which increases in institutional 
        financial aid and tuition discounting practices affect tuition 
        increases, including the demographics of students receiving 
        such discounts, the extent to which financial aid is provided 
        to students with limited need in order to attract a student to 
        a particular institution, and the extent to which Federal 
        financial aid, including loan aid, has been used to offset the 
        costs of such practices.
        ``(3) Final report.--The Commissioner of Education Statistics 
    shall submit a report regarding the findings of the study required 
    by paragraph (1) to the appropriate committees of Congress not 
    later than September 30, 2002.
        ``(4) Higher education market basket.--The Bureau of Labor 
    Statistics, in consultation with the Commissioner of Education 
    Statistics, shall develop a higher education market basket that 
    identifies the items that comprise the costs of higher education. 
    The Bureau of Labor Statistics shall provide a report on the market 
    basket to the Committee on Labor and Human Resources of the Senate 
    and the Committee on Education and the Workforce of the House of 
    Representatives not later than September 30, 2002.
        ``(5) Fines.--In addition to actions authorized in section 
    487(c), the Secretary may impose a fine in an amount not to exceed 
    $25,000 on an institution of higher education for failing to 
    provide the information described in paragraph (1) in a timely and 
    accurate manner, or for failing to otherwise cooperate with the 
    National Center for Education Statistics regarding efforts to 
    obtain data on the cost of higher education under this section and 
    pursuant to the program participation agreement entered into under 
    section 487.
    ``(d) Student Aid Recipient Survey.--(1) The Secretary shall survey 
student aid recipients on a regular cycle, but not less than once every 
3 years--
        ``(A) to identify the population of students receiving Federal 
    student aid;
        ``(B) to determine the income distribution and other 
    socioeconomic characteristics of federally aided students;
        ``(C) to describe the combinations of aid from State, Federal, 
    and private sources received by students from all income groups;
        ``(D) to describe the debt burden of loan recipients and their 
    capacity to repay their education debts; and
        ``(E) to disseminate such information in both published and 
    machine readable form.
    ``(2) The survey shall be representative of full-time and part-
time, undergraduate, graduate, and professional and current and former 
students in all types of institutions, and should be designed and 
administered in consultation with the Congress and the postsecondary 
education community.

 ``PART D--ADMINISTRATIVE PROVISIONS FOR DELIVERY OF STUDENT FINANCIAL 
                               ASSISTANCE

``SEC. 141. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL 
              STUDENT FINANCIAL ASSISTANCE.

    ``(a) Establishment and Purpose.--
        ``(1) Establishment.--There is established in the Department a 
    Performance-Based Organization (hereafter referred to as the `PBO') 
    which shall be a discrete management unit responsible for managing 
    the operational functions supporting the programs authorized under 
    title IV of this Act, as specified in subsection (b).
        ``(2) Purposes.--The purposes of the PBO are--
            ``(A) to improve service to students and other participants 
        in the student financial assistance programs authorized under 
        title IV, including making those programs more understandable 
        to students and their parents;
            ``(B) to reduce the costs of administering those programs;
            ``(C) to increase the accountability of the officials 
        responsible for administering the operational aspects of these 
        programs;
            ``(D) to provide greater flexibility in the management of 
        the operational functions of the Federal student financial 
        assistance programs;
            ``(E) to integrate the information systems supporting the 
        Federal student financial assistance programs;
            ``(F) to implement an open, common, integrated system for 
        the delivery of student financial assistance under title IV; 
        and
            ``(G) to develop and maintain a student financial 
        assistance system that contains complete, accurate, and timely 
        data to ensure program integrity.
    ``(b) General Authority.--
        ``(1) Authority of secretary.--Notwithstanding any other 
    provision of this part, the Secretary shall maintain responsibility 
    for the development and promulgation of policy and regulations 
    relating to the programs of student financial assistance under 
    title IV. In the exercise of its functions, the PBO shall be 
    subject to the direction of the Secretary. The Secretary shall--
            ``(A) request the advice of, and work in cooperation with, 
        the Chief Operating Officer in developing regulations, 
        policies, administrative guidance, or procedures affecting the 
        information systems administered by the PBO, and other 
        functions performed by the PBO;
            ``(B) request cost estimates from the Chief Operating 
        Officer for system changes required by specific policies 
        proposed by the Secretary; and
            ``(C) assist the Chief Operating Officer in identifying 
        goals for the administration and modernization of the delivery 
        system for student financial assistance under title IV.
        ``(2) PBO functions.--Subject to paragraph (1), the PBO shall 
    be responsible for administration of the information and financial 
    systems that support student financial assistance programs 
    authorized under this title, excluding the development of policy 
    relating to such programs but including the following:
            ``(A) The administrative, accounting, and financial 
        management functions of the delivery system for Federal student 
        assistance, including--
                ``(i) the collection, processing and transmission of 
            applicant data to students, institutions and authorized 
            third parties, as provided for in section 483;
                ``(ii) design and technical specifications for software 
            development and systems supporting the delivery of student 
            financial assistance under title IV;
                ``(iii) all software and hardware acquisitions and all 
            information technology contracts related to the delivery 
            and management of student financial assistance under title 
            IV;
                ``(iv) all aspects of contracting for the information 
            and financial systems supporting student financial 
            assistance programs under this title; and
                ``(v) providing all customer service, training, and 
            user support related to systems that support those 
            programs.
            ``(B) Annual development of a budget for the operations and 
        services of the PBO, in consultation with the Secretary, and 
        for consideration and inclusion in the Department's annual 
        budget submission.
        ``(3) Additional functions.--The Secretary may allocate to the 
    PBO such additional functions as the Secretary and the Chief 
    Operating Officer determine are necessary or appropriate to achieve 
    the purposes of the PBO.
        ``(4) Independence.--Subject to paragraph (1), in carrying out 
    its functions, the PBO shall exercise independent control of its 
    budget allocations and expenditures, personnel decisions and 
    processes, procurements, and other administrative and management 
    functions.
        ``(5) Audits and review.--The PBO shall be subject to the usual 
    and customary Federal audit procedures and to review by the 
    Inspector General of the Department.
        ``(6) Changes.--
            ``(A) In general.--The Secretary and the Chief Operating 
        Officer shall consult concerning the effects of policy, market, 
        or other changes on the ability of the PBO to achieve the goals 
        and objectives established in the performance plan described in 
        subsection (c).
            ``(B) Revisions to agreement.--The Secretary and the Chief 
        Operating Officer may revise the annual performance agreement 
        described in subsection (d)(4) in light of policy, market, or 
        other changes that occur after the Secretary and the Chief 
        Operating Officer enter into the agreement.
    ``(c) Performance Plan and Report.--
        ``(1) Performance plan.--
            ``(A) In general.--Each year, the Secretary and Chief 
        Operating Officer shall agree on, and make available to the 
        public, a performance plan for the PBO for the succeeding 5 
        years that establishes measurable goals and objectives for the 
        organization.
            ``(B) Consultation.--In developing the 5-year performance 
        plan and any revision to the plan, the Secretary and the Chief 
        Operating Officer shall consult with students, institutions of 
        higher education, Congress, lenders, the Advisory Committee on 
        Student Financial Assistance, and other interested parties not 
        less than 30 days prior to the implementation of the 
        performance plan or revision.
            ``(C) Areas.--The plan shall include a concise statement of 
        the goals for a modernized system for the delivery of student 
        financial assistance under title IV and identify action steps 
        necessary to achieve such goals. The plan shall address the 
        PBO's responsibilities in the following areas:
                ``(i) Improving service.--Improving service to students 
            and other participants in student financial aid programs 
            authorized under this title, including making those 
            programs more understandable to students and their parents.
                ``(ii) Reducing costs.--Reducing the costs of 
            administering those programs.
                ``(iii) Improvement and integration of support 
            systems.--Improving and integrating the information and 
            delivery systems that support those programs.
                ``(iv) Delivery and information system.-- Developing an 
            open, common, and integrated delivery and information 
            system for programs authorized under this title.
                ``(v) Other areas.--Any other areas identified by the 
            Secretary.
        ``(2) Annual report.--Each year, the Chief Operating Officer 
    shall prepare and submit to Congress, through the Secretary, an 
    annual report on the performance of the PBO, including an 
    evaluation of the extent to which the PBO met the goals and 
    objectives contained in the 5-year performance plan described in 
    paragraph (1) for the preceding year. The annual report shall 
    include the following:
            ``(A) An independent financial audit of the expenditures of 
        both the PBO and programs administered by the PBO.
            ``(B) Financial and performance requirements applicable to 
        the PBO under the Chief Financial Officer Act of 1990 and the 
        Government Performance and Results Act of 1993.
            ``(C) The results achieved by the PBO during the year 
        relative to the goals established in the organization's 
        performance plan.
            ``(D) The evaluation rating of the performance of the Chief 
        Operating Officer and senior managers under subsections (d)(4) 
        and (e)(2), including the amounts of bonus compensation awarded 
        to these individuals.
            ``(E) Recommendations for legislative and regulatory 
        changes to improve service to students and their families, and 
        to improve program efficiency and integrity.
            ``(F) Other such information as the Director of the Office 
        of Management and Budget shall prescribe for performance based 
        organizations.
        ``(3) Consultation with stakeholders.--The Chief Operating 
    Officer, in preparing the report described in paragraph (2), shall 
    establish appropriate means to consult with borrowers, 
    institutions, lenders, guaranty agencies, secondary markets, and 
    others involved in the delivery system of student aid under this 
    title--
            ``(A) regarding the degree of satisfaction with the 
        delivery system; and
            ``(B) to seek suggestions on means to improve the delivery 
        system.
    ``(d) Chief Operating Officer.--
        ``(1) Appointment.--The management of the PBO shall be vested 
    in a Chief Operating Officer who shall be appointed by the 
    Secretary to a term of not less than 3 and not more than 5 years, 
    and compensated without regard to chapters 33, 51, and 53 of title 
    5, United States Code. The Secretary shall appoint the Chief 
    Operating Officer within 6 months after the date of enactment of 
    the Higher Education Amendments of 1998. The appointment shall be 
    made on the basis of demonstrated management ability and expertise 
    in information technology, including experience with financial 
    systems, and without regard to political affiliation or activity.
        ``(2) Reappointment.--The Secretary may reappoint the Chief 
    Operating Officer to subsequent terms of not less than 3 and not 
    more than 5 years, so long as the performance of the Chief 
    Operating Officer, as set forth in the performance agreement 
    described in paragraph (4), is satisfactory.
        ``(3) Removal.--The Chief Operating Officer may be removed by--
            ``(A) the President; or
            ``(B) the Secretary, for misconduct or failure to meet 
        performance goals set forth in the performance agreement in 
        paragraph (4).
    The President or Secretary shall communicate the reasons for any 
    such removal to the appropriate committees of Congress.
        ``(4) Performance agreement.--
            ``(A) In general.--Each year, the Secretary and the Chief 
        Operating Officer shall enter into an annual performance 
        agreement, that shall set forth measurable organization and 
        individual goals for the Chief Operating Officer.
            ``(B) Transmittal.--The final agreement, and any revision 
        to the final agreement, shall be transmitted to the Committee 
        on Education and the Workforce of the House of Representatives 
        and the Committee on Labor and Human Resources of the Senate, 
        and made publicly available.
        ``(5) Compensation.--
            ``(A) In general.--The Chief Operating Officer is 
        authorized to be paid at an annual rate of basic pay not to 
        exceed the maximum rate of basic pay for the Senior Executive 
        Service under section 5382 of title 5, United States Code, 
        including any applicable locality-based comparability payment 
        that may be authorized under section 5304(h)(2)(B) of such 
        title. The compensation of the Chief Operating Officer shall be 
        considered for purposes of section 207(c)(2)(A) of title 18, 
        United States Code, to be the equivalent of that described 
        under clause (ii) of section 207(c)(2)(A) of such title.
            ``(B) Bonus.--In addition, the Chief Operating Officer may 
        receive a bonus in an amount that does not exceed 50 percent of 
        such annual rate of basic pay, based upon the Secretary's 
        evaluation of the Chief Operating Officer's performance in 
        relation to the goals set forth in the performance agreement 
        described in paragraph (2).
            ``(C) Payment.--Payment of a bonus under this subparagraph 
        (B) may be made to the Chief Operating Officer only to the 
        extent that such payment does not cause the Chief Operating 
        Officer's total aggregate compensation in a calendar year to 
        equal or exceed the amount of the President's salary under 
        section 102 of title 3, United States Code.
    ``(e) Senior Management.--
        ``(1) Appointment.--
            ``(A) In general.--The Chief Operating Officer may appoint 
        such senior managers as that officer determines necessary 
        without regard to the provisions of title 5, United States 
        Code, governing appointments in the competitive service.
            ``(B) Compensation.--The senior managers described in 
        subparagraph (A) may be paid without regard to the provisions 
        of chapter 51 and subchapter III of chapter 53 of such title 
        relating to classification and General Schedule pay rates.
        ``(2) Performance agreement.--Each year, the Chief Operating 
    Officer and each senior manager appointed under this subsection 
    shall enter into an annual performance agreement that sets forth 
    measurable organization and individual goals. The agreement shall 
    be subject to review and renegotiation at the end of each term.
        ``(3) Compensation.--
            ``(A) In general.--A senior manager appointed under this 
        subsection may be paid at an annual rate of basic pay of not 
        more than the maximum rate of basic pay for the Senior 
        Executive Service under section 5382 of title 5, United States 
        Code, including any applicable locality-based comparability 
        payment that may be authorized under section 5304(h)(2)(C) of 
        such title. The compensation of a senior manager shall be 
        considered for purposes of section 207(c)(2)(A) of title 18, 
        United States Code, to be the equivalent of that described 
        under clause (ii) of section 207(c)(2)(A) of such title.
            ``(B) Bonus.--In addition, a senior manager may receive a 
        bonus in an amount such that the manager's total annual 
        compensation does not exceed 125 percent of the maximum rate of 
        basic pay for the Senior Executive Service, including any 
        applicable locality-based comparability payment, based upon the 
        Chief Operating Officer's evaluation of the manager's 
        performance in relation to the goals set forth in the 
        performance agreement described in paragraph (2).
        ``(4) Removal.--A senior manager shall be removable by the 
    Chief Operating Officer, or by the Secretary if the position of 
    Chief Operating Officer is vacant.
    ``(f) Student Loan Ombudsman.--
        ``(1) Appointment.--The Chief Operating Officer, in 
    consultation with the Secretary, shall appoint a Student Loan 
    Ombudsman to provide timely assistance to borrowers of loans made, 
    insured, or guaranteed under title IV by performing the functions 
    described in paragraph (3).
        ``(2) Public information.--The Chief Operating Officer shall 
    disseminate information about the availability and functions of the 
    Ombudsman to borrowers and potential borrowers, as well as 
    institutions of higher education, lenders, guaranty agencies, loan 
    servicers, and other participants in those student loan programs.
        ``(3) Functions of ombudsman.--The Ombudsman shall--
            ``(A) in accordance with regulations of the Secretary, 
        receive, review, and attempt to resolve informally complaints 
        from borrowers of loans described in paragraph (1), including, 
        as appropriate, attempts to resolve such complaints within the 
        Department of Education and with institutions of higher 
        education, lenders, guaranty agencies, loan servicers, and 
        other participants in the loan programs described in paragraph 
        (1)(A); and
            ``(B) compile and analyze data on borrower complaints and 
        make appropriate recommendations.
        ``(4) Report.--Each year, the Ombudsman shall submit a report 
    to the Chief Operating Officer, for inclusion in the annual report 
    under subsection (c)(2), that describes the activities, and 
    evaluates the effectiveness of the Ombudsman during the preceding 
    year.
    ``(g) Personnel Flexibility.--
        ``(1) Personnel ceilings.--The PBO shall not be subject to any 
    ceiling relating to the number or grade of employees.
        ``(2) Administrative flexibility.--The Chief Operating Officer 
    shall work with the Office of Personnel Management to develop and 
    implement personnel flexibilities in staffing, classification, and 
    pay that meet the needs of the PBO, subject to compliance with 
    title 5, United States Code.
        ``(3) Excepted service.--The Chief Operating Officer may 
    appoint, without regard to the provisions of title 5, United States 
    Code, governing appointments in the competitive service, not more 
    than 25 technical and professional employees to administer the 
    functions of the PBO. These employees may be paid without regard to 
    the provisions of chapter 51 and subchapter III of chapter 53 of 
    such title relating to classification and General Schedule pay 
    rates.
    ``(h) Establishment of a Fair and Equitable System for Measuring 
Staff Performance.--The PBO shall establish an annual performance 
management system, subject to compliance with title 5, United States 
Code and consistent with applicable provisions of law and regulations, 
which strengthens the organizational effectiveness of the PBO by 
providing for establishing goals or objectives for individual, group, 
or organizational performance (or any combination thereof), consistent 
with the performance plan of the PBO and its performance planning 
procedures, including those established under the Government 
Performance and Results Act of 1993, and communicating such goals or 
objectives to employees.
    ``(i) Report.--The Secretary and the Chief Operating Officer, not 
later than 180 days after the date of enactment of the Higher Education 
Amendments of 1998, shall report to Congress on the proposed budget and 
sources of funding for the operation of the PBO.
    ``(j) Authorization of Appropriations.--The Secretary shall 
allocate from funds made available under section 458 such funds as are 
appropriate to the functions assumed by the PBO. In addition, there are 
authorized to be appropriated such sums as may be necessary to carry 
out the purposes of this part, including transition costs.

``SEC. 142. PROCUREMENT FLEXIBILITY.

    ``(a) Procurement Authority.--Subject to the authority of the 
Secretary, the Chief Operating Officer of a PBO may exercise the 
authority of the Secretary to procure property and services in the 
performance of functions managed by the PBO. For the purposes of this 
section, the term `PBO' includes the Chief Operating Officer of the PBO 
and any employee of the PBO exercising procurement authority under the 
preceding sentence.
    ``(b) In General.--Except as provided in this section, the PBO 
shall abide by all applicable Federal procurement laws and regulations 
when procuring property and services. The PBO shall--
        ``(1) enter into contracts for information systems supporting 
    the programs authorized under title IV to carry out the functions 
    set forth in section 141(b)(2); and
        ``(2) obtain the services of experts and consultants without 
    regard to section 3109 of title 5, United States Code and set pay 
    in accordance with such section.
    ``(c) Service Contracts.--
        ``(1) Performance-based servicing contracts.--The Chief 
    Operating Officer shall, to the extent practicable, maximize the 
    use of performance-based servicing contracts, consistent with 
    guidelines for such contracts published by the Office of Federal 
    Procurement Policy, to achieve cost savings and improve service.
        ``(2) Fee for service arrangements.--The Chief Operating 
    Officer shall, when appropriate and consistent with the purposes of 
    the PBO, acquire services related to the title IV delivery system 
    from any entity that has the capability and capacity to meet the 
    requirements for the system. The Chief Operating Officer is 
    authorized to pay fees that are equivalent to those paid by other 
    entities to an organization that provides an information system or 
    service that meets the requirements of the PBO, as determined by 
    the Chief Operating Officer.
    ``(d) Two-Phase Source-Selection Procedures.--
        ``(1) In general.--The PBO may use a two-phase process for 
    selecting a source for a procurement of property or services.
        ``(2) First phase.--The procedures for the first phase of the 
    process for a procurement are as follows:
            ``(A) Publication of notice.--The contracting officer for 
        the procurement shall publish a notice of the procurement in 
        accordance with section 18 of the Office of Federal Procurement 
        Policy Act (41 U.S.C. 416) and subsections (e), (f), and (g) of 
        section 8 of the Small Business Act (15 U.S.C. 637), except 
        that the notice shall include only the following:
                ``(i) A general description of the scope or purpose of 
            the procurement that provides sufficient information on the 
            scope or purpose for sources to make informed business 
            decisions regarding whether to participate in the 
            procurement.
                ``(ii) A description of the basis on which potential 
            sources are to be selected to submit offers in the second 
            phase.
                ``(iii) A description of the information that is to be 
            required under subparagraph (B).
                ``(iv) Any additional information that the contracting 
            officer determines appropriate.
            ``(B) Information submitted by offerors.--Each offeror for 
        the procurement shall submit basic information, such as 
        information on the offeror's qualifications, the proposed 
        conceptual approach, costs likely to be associated with the 
        proposed conceptual approach, and past performance of the 
        offeror on Federal Government contracts, together with any 
        additional information that is requested by the contracting 
        officer.
            ``(C) Selection for second phase.--The contracting officer 
        shall select the offerors that are to be eligible to 
        participate in the second phase of the process. The contracting 
        officer shall limit the number of the selected offerors to the 
        number of sources that the contracting officer determines is 
        appropriate and in the best interests of the Federal 
        Government.
        ``(3) Second phase.--
            ``(A) In general.--The contracting officer shall conduct 
        the second phase of the source selection process in accordance 
        with sections 303A and 303B of the Federal Property and 
        Administrative Services Act of 1949 (41 U.S.C. 253a and 253b).
            ``(B) Eligible participants.--Only the sources selected in 
        the first phase of the process shall be eligible to participate 
        in the second phase.
            ``(C) Single or multiple procurements.--The second phase 
        may include a single procurement or multiple procurements 
        within the scope, or for the purpose, described in the notice 
        pursuant to paragraph (2)(A).
        ``(4) Procedures considered competitive.--The procedures used 
    for selecting a source for a procurement under this subsection 
    shall be considered competitive procedures for all purposes.
    ``(e) Use of Simplified Procedures for Commercial Items.--Whenever 
the PBO anticipates that commercial items will be offered for a 
procurement, the PBO may use (consistent with the special rules for 
commercial items) the special simplified procedures for the procurement 
without regard to--
        ``(1) any dollar limitation otherwise applicable to the use of 
    those procedures; and
        ``(2) the expiration of the authority to use special simplified 
    procedures under section 4202(e) of the Clinger-Cohen Act of 1996 
    (110 Stat. 654; 10 U.S.C. 2304 note).
    ``(f) Flexible Wait Periods and Deadlines for Submission of Offers 
of Noncommercial Items.--
        ``(1) Authority.--In carrying out a procurement, the PBO may--
            ``(A) apply a shorter waiting period for the issuance of a 
        solicitation after the publication of a notice under section 18 
        of the Office of Federal Procurement Policy Act (41 U.S.C. 416) 
        than is required under subsection (a)(3)(A) of such section; 
        and
            ``(B) notwithstanding subsection (a)(3) of such section, 
        establish any deadline for the submission of bids or proposals 
        that affords potential offerors a reasonable opportunity to 
        respond to the solicitation.
        ``(2) Inapplicability to commercial items.--Paragraph (1) does 
    not apply to a procurement of a commercial item.
        ``(3) Consistency with applicable international agreements.--If 
    an international agreement is applicable to the procurement, any 
    exercise of authority under paragraph (1) shall be consistent with 
    the international agreement.
    ``(g) Modular Contracting.--
        ``(1) In general.--The PBO may satisfy the requirements of the 
    PBO for a system incrementally by carrying out successive 
    procurements of modules of the system. In doing so, the PBO may use 
    procedures authorized under this subsection to procure any such 
    module after the first module.
        ``(2) Utility requirement.--A module may not be procured for a 
    system under this subsection unless the module is useful 
    independently of the other modules or useful in combination with 
    another module previously procured for the system.
        ``(3) Conditions for use of authority.--The PBO may use 
    procedures authorized under paragraph (4) for the procurement of an 
    additional module for a system if--
            ``(A) competitive procedures were used for awarding the 
        contract for the procurement of the first module for the 
        system; and
            ``(B) the solicitation for the first module included--
                ``(i) a general description of the entire system that 
            was sufficient to provide potential offerors with 
            reasonable notice of the general scope of future modules;
                ``(ii) other information sufficient for potential 
            offerors to make informed business judgments regarding 
            whether to submit offers for the contract for the first 
            module; and
                ``(iii) a statement that procedures authorized under 
            this subsection could be used for awarding subsequent 
            contracts for the procurement of additional modules for the 
            system.
        ``(4) Procedures.--If the procurement of the first module for a 
    system meets the requirements set forth in paragraph (3), the PBO 
    may award a contract for the procurement of an additional module 
    for the system using any of the following procedures:
            ``(A) Sole source.--Award of the contract on a sole-source 
        basis to a contractor who was awarded a contract for a module 
        previously procured for the system under competitive procedures 
        or procedures authorized under subparagraph (B).
            ``(B) Adequate competition.--Award of the contract on the 
        basis of offers made by--
                ``(i) a contractor who was awarded a contract for a 
            module previously procured for the system after having been 
            selected for award of the contract under this subparagraph 
            or other competitive procedures; and
                ``(ii) at least one other offeror that submitted an 
            offer for a module previously procured for the system and 
            is expected, on the basis of the offer for the previously 
            procured module, to submit a competitive offer for the 
            additional module.
            ``(C) Other.--Award of the contract under any other 
        procedure authorized by law.
        ``(5) Notice requirement.--
            ``(A) Publication.--Not less than 30 days before issuing a 
        solicitation for offers for a contract for a module for a 
        system under procedures authorized under subparagraph (A) or 
        (B) of paragraph (4), the PBO shall publish in the Commerce 
        Business Daily a notice of the intent to use such procedures to 
        enter into the contract.
            ``(B) Exception.--Publication of a notice is not required 
        under this paragraph with respect to a use of procedures 
        authorized under paragraph (4) if the contractor referred to in 
        that subparagraph (who is to be solicited to submit an offer) 
        has previously provided a module for the system under a 
        contract that contained cost, schedule, and performance goals 
        and the contractor met those goals.
            ``(C) Content of notice.--A notice published under 
        subparagraph (A) with respect to a use of procedures described 
        in paragraph (4) shall contain the information required under 
        section 18(b) of the Office of Federal Procurement Policy Act 
        (41 U.S.C. 416(b)), other than paragraph (4) of such section, 
        and shall invite the submission of any assertion that the use 
        of the procedures for the procurement involved is not in the 
        best interest of the Federal Government together with 
        information supporting the assertion.
        ``(6) Documentation.--The basis for an award of a contract 
    under this subsection shall be documented. However, a justification 
    pursuant to section 303(f) of the Federal Property and 
    Administrative Services Act of 1949 (41 U.S.C. 253(f)) or section 
    8(h) of the Small Business Act (15 U.S.C. 637(h)) is not required.
        ``(7) Simplified source-selection procedures.--The PBO may 
    award a contract under any other simplified procedures prescribed 
    by the PBO for the selection of sources for the procurement of 
    modules for a system, after the first module, that are not to be 
    procured under a contract awarded on a sole-source basis.
    ``(h) Use of Simplified Procedures for Small Business Set-Asides 
for Services Other Than Commercial Items.--
        ``(1) Authority.--The PBO may use special simplified procedures 
    for a procurement of services that are not commercial items if--
            ``(A) the procurement is in an amount not greater than 
        $1,000,000;
            ``(B) the procurement is conducted as a small business set-
        aside pursuant to section 15(a) of the Small Business Act (15 
        U.S.C. 644(a)); and
            ``(C) the price charged for supplies associated with the 
        services procured are items of supply expected to be less than 
        20 percent of the total contract price.
        ``(2) Inapplicability to certain procurements.--The authority 
    set forth in paragraph (1) may not be used for--
            ``(A) an award of a contract on a sole-source basis; or
            ``(B) a contract for construction.
    ``(i) Guidance for Use of Authority.--
        ``(1) Issuance by pbo.--The Chief Operating Officer of the PBO, 
    in consultation with the Administrator for Federal Procurement 
    Policy, shall issue guidance for the use by PBO personnel of the 
    authority provided in this section.
        ``(2) Guidance from ofpp.--As part of the consultation required 
    under paragraph (1), the Administrator for Federal Procurement 
    Policy shall provide the PBO with guidance that is designed to 
    ensure, to the maximum extent practicable, that the authority under 
    this section is exercised by the PBO in a manner that is consistent 
    with the exercise of the authority by the heads of the other 
    performance-based organizations.
        ``(3) Compliance with ofpp guidance.--The head of the PBO shall 
    ensure that the procurements of the PBO under this section are 
    carried out in a manner that is consistent with the guidance 
    provided for the PBO under paragraph (2).
    ``(j) Limitation on Multiagency Contracting.--No department or 
agency of the Federal Government may purchase property or services 
under contracts entered into or administered by a PBO under this 
section unless the purchase is approved in advance by the senior 
procurement official of that department or agency who is responsible 
for purchasing by the department or agency.
    ``(k) Laws Not Affected.--Nothing in this section shall be 
construed to waive laws for the enforcement of civil rights or for the 
establishment and enforcement of labor standards that are applicable to 
contracts of the Federal Government.
    ``(l) Definitions.--In this section:
        ``(1) Commercial item.--The term `commercial item' has the 
    meaning given the term in section 4(12) of the Office of Federal 
    Procurement Policy Act (41 U.S.C. 403(12)).
        ``(2) Competitive procedures.--The term `competitive 
    procedures' has the meaning given the term in section 309(b) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    259(b)).
        ``(3) Sole-source basis.--The term `sole-source basis', with 
    respect to an award of a contract, means that the contract is 
    awarded to a source after soliciting an offer or offers from, and 
    negotiating with, only that source.
        ``(4) Special rules for commercial items.--The term `special 
    rules for commercial items' means the regulations set forth in the 
    Federal Acquisition Regulation pursuant to section 303(g)(1) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    253(g)(1)) and section 31 of the Office of Federal Procurement 
    Policy Act (41 U.S.C. 427).
        ``(5) Special simplified procedures.--The term `special 
    simplified procedures' means the procedures applicable to purchases 
    of property and services for amounts not greater than the 
    simplified acquisition threshold that are set forth in the Federal 
    Acquisition Regulation pursuant to section 303(g)(1)(B) of the 
    Federal Property and Administrative Services Act of 1949 (41 U.S.C. 
    253(g)(1)(A)) and section 31(a)(1) of the Office of Federal 
    Procurement Policy Act (41 U.S.C. 427(a)(1)).

``SEC. 143. ADMINISTRATIVE SIMPLIFICATION OF STUDENT AID DELIVERY.

    ``(a) In General.--In order to improve the efficiency and 
effectiveness of the student aid delivery system, the Secretary and the 
Chief Operating Officer shall encourage and participate in the 
establishment of voluntary consensus standards and requirements for the 
electronic transmission of information necessary for the administration 
of programs under title IV.
    ``(b) Participation in Standard Setting Organizations.--
        ``(1) The Chief Operating Officer shall participate in the 
    activities of standard setting organizations in carrying out the 
    provisions of this section.
        ``(2) The Chief Operating Officer shall encourage higher 
    education groups seeking to develop common forms, standards, and 
    procedures in support of the delivery of Federal student financial 
    assistance to conduct these activities within a standard setting 
    organization.
        ``(3) The Chief Operating Officer may pay necessary dues and 
    fees associated with participating in standard setting 
    organizations pursuant to this subsection.
    ``(c) Adoption of Voluntary Consensus Standards.--Except with 
respect to the common financial reporting form under section 483(a), 
the Secretary shall consider adopting voluntary consensus standards 
agreed to by the organization described in subsection (b) for 
transactions required under title IV, and common data elements for such 
transactions, to enable information to be exchanged electronically 
between systems administered by the Department and among participants 
in the Federal student aid delivery system.
    ``(d) Use of Clearinghouses.--Nothing in this section shall 
restrict the ability of participating institutions and lenders from 
using a clearinghouse or servicer to comply with the standards for the 
exchange of information established under this section.
    ``(e) Data Security.--Any entity that maintains or transmits 
information under a transaction covered by this section shall maintain 
reasonable and appropriate administrative, technical, and physical 
safeguards--
        ``(1) to ensure the integrity and confidentiality of the 
    information; and
        ``(2) to protect against any reasonably anticipated security 
    threats, or unauthorized uses or disclosures of the information.
    ``(f) Definitions.--
        ``(1) Clearinghouse.--The term `clearinghouse' means a public 
    or private entity that processes or facilitates the processing of 
    nonstandard data elements into data elements conforming to 
    standards adopted under this section.
        ``(2) Standard setting organization.--The term `standard 
    setting organization' means an organization that--
            ``(A) is accredited by the American National Standards 
        Institute;
            ``(B) develops standards for information transactions, data 
        elements, or any other standard that is necessary to, or will 
        facilitate, the implementation of this section; and
            ``(C) is open to the participation of the various entities 
        engaged in the delivery of Federal student financial 
        assistance.
        ``(3) Voluntary consensus standard.--The term `voluntary 
    consensus standard' means a standard developed or used by a 
    standard setting organization described in paragraph (2).''.
    (b) Repeal of Old General Provisions.--Title XII (20 U.S.C. 1141 et 
seq.) is repealed.
    (c) Repeal of Title IV Definition.--Section 481 (20 U.S.C. 1088) is 
amended--
        (1) by striking subsections (a), (b), and (c); and
        (2) by redesignating subsections (d) through (f) as subsections 
    (a) through (c), respectively.

SEC. 102. CONFORMING AMENDMENTS.

    (a) Conforming Amendments Correcting References to Section 1201.--
        (1) Agriculture.--
            (A) Student internship programs.--Section 922 of the 
        Federal Agriculture Improvement and Reform Act of 1996 (7 
        U.S.C. 2279c) is amended--
                (i) in subsection (a)(1)(B)--

                    (I) by striking ``1201'' and inserting ``101''; and
                    (II) by striking ``(20 U.S.C. 1141)''; and

                (ii) in subsection (b)(1)--

                    (I) by striking ``1201'' and inserting ``101''; and
                    (II) by striking ``(20 U.S.C. 1141)''.

            (B) Agricultural sciences education.--Section 1417(j)(1)(A) 
        of the National Agricultural Research, Extension, and Teaching 
        Policy Act of 1977 (7 U.S.C. 3152(j)(1)(A)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (2) Armed forces.--
            (A) Science and mathematics education improvement 
        program.--Section 2193(c)(1) of title 10, United States Code, 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (B) Support of science, mathematics, and engineering 
        education.--Section 2199(2) of title 10, United States Code, is 
        amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (C) Allowable costs under defense contracts.--Section 
        841(c)(2) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2324 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) Environmental restoration institutional grants for 
        training dislocated defense workers and young adults.--Section 
        1333(i)(3) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (E) Environmental education opportunities program.--Section 
        1334(k)(3) of the National Defense Authorization Act for fiscal 
        year 1994 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (F) Environmental scholarship and fellowship programs.--
        Section 4451(b)(1) of the National Defense Authorization Act 
        for 1993 (10 U.S.C. 2701 note) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (3) Application of antitrust laws to award of need-based 
    educational aid.--Section 568(c)(3) of the Improving America's 
    Schools Act of 1994 (15 U.S.C. 1 note) is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
        (4) Omnibus parks and public lands management act of 1996.--
    Section 1007(c)(5) of the Omnibus Parks and Public Lands Management 
    Act of 1996 (16 U.S.C. 698u-5) is amended by striking ``1201(a) of 
    the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
    inserting ``101 of the Higher Education Act of 1965''.
        (5) Restrictions on former officers, employees, and elected 
    officials of the executive and legislative branches.--Section 
    207(j)(2)(B) of title 18, United States Code, is amended by 
    striking ``1201(a)'' and inserting ``101''.
        (6) Education.--
            (A) Higher education amendments of 1992.--Section 1(c) of 
        the Higher Education Amendments of 1992 (20 U.S.C. 1001 note) 
        is amended by striking ``1201'' and inserting ``101''.
            (B) Treatment of branches.--Section 498(j)(2) of the Higher 
        Education Act of 1965 (20 U.S.C. 1099c(j)(2)) is amended by 
        striking ``1201(a)(2)'' and inserting ``101(a)(2)''.
            (C) Disclosure requirements.--Section 429(d)(2)(B)(ii) of 
        the General Education Provisions Act (20 U.S.C. 
        1228c(d)(2)(B)(ii)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (D) Harry s. truman scholarships.--Section 3(4) of the 
        Harry S. Truman Memorial Scholarship Act (20 U.S.C. 2002(4)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (E) Tech-prep education.--Section 347(2)(A) of the Carl D. 
        Perkins Vocational and Applied Technology Education Act (20 
        U.S.C. 2394e(2)(A)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (F) Education for economic security.--Section 3(6) of the 
        Education for Economic Security Act (20 U.S.C. 3902(6)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (G) James madison memorial fellowships.--Section 815 of the 
        James Madison Memorial Fellowship Act (20 U.S.C. 4514) is 
        amended--
                (i) in paragraph (3), by striking ``1201(a)'' and 
            inserting ``101''; and
                (ii) in paragraph (4), by striking ``1201(d) of the 
            Higher Education Act of 1965'' and inserting ``14101 of the 
            Elementary and Secondary Education Act of 1965''.
            (H) Barry goldwater scholarships.--Section 1403(4) of the 
        Barry Goldwater Scholarship and Excellence in Education Act (20 
        U.S.C. 4702(4)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (I) Morris k. udall scholarships.--Section 4(6) of the 
        Morris K. Udall Scholarship and Excellence in National 
        Environmental and Native American Public Policy Act of 1992 (20 
        U.S.C. 5602(6)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (J) Bilingual education, and language enhancement and 
        acquisition.--Section 7501(4) of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7601(4)) is amended by 
        striking ``1201(a)'' and inserting ``101''.
            (K) General definitions.--Section 14101(17) of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801(17)) is amended by striking ``1201(a)'' and inserting 
        ``101''.
            (L) National education statistics.--Section 402(c)(3) of 
        the National Education Statistics Act of 1994 (20 U.S.C. 
        9001(c)(3)) is amended by striking ``1201(a)'' and inserting 
        ``101''.
        (7) Foreign relations.--
            (A) Environment and sustainable development exchange 
        program.--Section 240(d) of the Foreign Relations Authorization 
        Act, Fiscal Years 1994 and 1995 (22 U.S.C. 2452 note) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (B) Samantha smith memorial exchange program.--Section 
        112(a)(8) of the Mutual Educational and Cultural Exchange Act 
        of 1961 (22 U.S.C. 2460(a)(8)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (C) Soviet-eastern european training.--Section 803(1) of 
        the Soviet-Eastern European Research and Training Act of 1983 
        (22 U.S.C. 4502(1)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (D) Developing country scholarships.--Section 603(d) of the 
        Foreign Relations Authorization Act, Fiscal Years 1986 and 1987 
        (22 U.S.C. 4703(d)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
        (8) Indians.--
            (A) Snyder act.--The last paragraph of section 410 of the 
        Act entitled ``An Act authorizing appropriations and 
        expenditures for the administration of Indian Affairs, and for 
        other purposes'', approved November 2, 1921 (25 U.S.C. 13) 
        (commonly known as the Snyder Act) is amended by striking 
        ``1201'' and inserting ``101''.
            (B) Tribally controlled community college assistance.--
        Section 2(a)(5) of the Tribally Controlled Community College 
        Assistance Act (25 U.S.C. 1801(a)(5)) is amended by striking 
        ``1201(a)'' and inserting ``101''.
            (C) Construction of new facilities.--Section 113(b)(2) of 
        the Tribally Controlled Community College Assistance Act (25 
        U.S.C. 1813(b)(2)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) American indian teacher training.--Section 
        1371(a)(1)(B) of the Higher Education Amendments of 1992 (25 
        U.S.C. 3371(a)(1)(B)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
        (9) Labor.--
            (A) Rehabilitation definitions.--Section 6(23) of the 
        Rehabilitation Act of 1973 (29 U.S.C. 705(23)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (B) Technology related assistance for individuals with 
        disabilities act of 1988.--Section 3(8) of the Technology 
        Related Assistance for Individuals with Disabilities Act of 
        1988 (29 U.S.C. 2202(8)) is amended by striking ``1201(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101 of the Higher Education Act of 1965''.
        (10) Surface mining control.--Section 701(32) of the Surface 
    Mining Control and Reclamation Act of 1977 (30 U.S.C. 1291(32)) is 
    amended by striking ``1201(a)'' and inserting ``101''.
        (11) Pollution prevention.--Section 112(a)(1) of the Federal 
    Water Pollution Control Act (33 U.S.C. 1262(a)(1)) is amended by 
    striking ``1201'' and inserting ``101''.
        (12) Postal service.--Section 3626(b)(3) of title 39, United 
    States Code, is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
        (13) Public health and welfare.--
            (A) Public health service act.--Section 705(a)(2)(C) of the 
        Public Health Service Act (42 U.S.C. 292d(a)(2)(C)) is amended 
        by striking ``section 481(a)'' and inserting ``section 
        102(a)''.
            (B) Scientific and technical education.--Section 3(g) of 
        the Scientific and Advanced-Technology Act of 1992 (42 U.S.C. 
        1862i(g)) is amended--
                (i) in paragraph (2)--

                    (I) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (II) by striking ``(20 U.S.C. 1141(a))''; and

                (ii) in paragraph (3)--

                    (I) by striking ``1201(a)'' and inserting ``101''; 
                and
                    (II) by striking ``(20 U.S.C. 1141(a))''.

            (C) Older americans.--Section 102(32) of the Older 
        Americans Act of 1965 (42 U.S.C. 3002(32)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (D) Justice system improvement.--Section 901(17) of the 
        Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
        3791(17)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (E) Energy technology commercialization services program.--
        Section 362(f)(5)(A) of the Energy Policy and Conservation Act 
        (42 U.S.C. 6322(f)(5)(A)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (F) Environmental restoration and waste management.--
        Section 3132(b)(1) of the National Defense Authorization Act 
        for Fiscal Years 1992 and 1993 (42 U.S.C. 7274e(b)(1)) is 
        amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (G) Head start.--Section 649(c)(3) of the Head Start Act 
        (42 U.S.C. 9844(c)(3)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (H) State dependent care development grants.--Section 
        670G(5) of the Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9877(5)) is amended by striking ``1201(a)'' and 
        inserting ``101''.
            (I) Instructional activities for low-income youth.--The 
        matter preceding subparagraph (A) of section 682(b)(1) of the 
        Community Services Block Grant Act (42 U.S.C. 9910c(b)(1)) is 
        amended by striking ``1201(a)'' and inserting ``101''.
            (J) Drug abuse education.--Section 3601(7) of the Anti-Drug 
        Abuse Act of 1988 (42 U.S.C. 11851(7)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (K) National and community service.--Section 101(13) of the 
        National and Community Service Act of 1990 (42 U.S.C. 
        12511(13)) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (L) Civilian community corps.--Section 166(6) of the 
        National and Community Service Act of 1990 (42 U.S.C. 12626(6)) 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (M) Cranston-gonzalez national affordable housing act.--
        Section 457(9) of the Cranston-Gonzalez National Affordable 
        Housing Act (42 U.S.C. 12899f(9)) is amended by striking 
        ``1201(a)'' and inserting ``101''.
            (N) Community schools youth services and supervision grant 
        program.--The definition of public school in section 30401(b) 
        of the Community Schools Youth Services and Supervision Grant 
        Program Act of 1994 (42 U.S.C. 13791(b)) is amended--
                (i) by striking ``1201'' each place the term appears 
            and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(i))''.
            (O) Police corps.--The definition of institution of higher 
        education in section 200103 of the Police Corps Act (42 U.S.C. 
        14092) is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
            (P) Law enforcement scholarship program.--The definition of 
        institution of higher education in section 200202 of the Law 
        Enforcement Scholarship and Recruitment Act (42 U.S.C. 14111) 
        is amended--
                (i) by striking ``1201(a)'' and inserting ``101''; and
                (ii) by striking ``(20 U.S.C. 1141(a))''.
        (14) Telecommunications.--Section 223(h)(4) of the 
    Telecommunications Act of 1934 (47 U.S.C. 223(h)(4)) is amended--
            (A) by striking ``1201'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141)''.
        (15) War and national defense.--Section 808(3) of the David L. 
    Boren National Security Education Act of 1991 (50 U.S.C. 1908(3)) 
    is amended--
            (A) by striking ``1201(a)'' and inserting ``101''; and
            (B) by striking ``(20 U.S.C. 1141(a))''.
    (b) Internal Cross References.--The Act (20 U.S.C. 1001 et seq.) is 
amended--
        (1) in section 402A(c)(2) (20 U.S.C. 1070a-11(c)(2)), by 
    striking ``1210'' and inserting ``118'';
        (2) in section 435(a) (20 U.S.C. 1085(a)), by striking 
    ``section 481'' and inserting ``section 102'';
        (3) in section 485(f)(1)(I) (20 U.S.C. 1092(f)(1)(I)), by 
    striking ``1213'' and inserting ``120'';
        (4) in section 487(d) (20 U.S.C. 1094(d)), by striking 
    ``section 481'' and inserting ``section 102'';
        (5) in subsections (j) and (k) of section 496 (20 U.S.C. 
    1099b), by striking ``section 481'' each place the term appears and 
    inserting ``section 102'';
        (6) in section 498(i) (20 U.S.C. 1099c) is amended by striking 
    ``section 481'' and inserting ``section 102'';
        (7) in section 498(j) (20 U.S.C. 1099c(j))--
            (A) in paragraph (1), by striking ``sections 481(b)(5) and 
        481(c)(3)'' and inserting ``sections 102(b)(1)(E) and 
        102(c)(1)(C)''; and
            (B) in paragraph (2), by striking ``1201(a)(2)'' and 
        inserting ``101(a)(2)''; and
        (8) in section 631(a)(8) (20 U.S.C. 1132(a)(8))--
            (A) by striking ``section 1201(a)'' each place the term 
        appears and inserting ``section 101''; and
            (B) by striking ``of 1201(a)'' and inserting ``of section 
        101''.
    (c) Additional Conforming Amendments Correcting References to 
Section 481.--
        (1) School-to-work opportunities act of  1994.--Section 4 of 
    the School-to-Work Opportunities Act of 1994 (20 U.S.C. 6103) is 
    amended--
            (A) in paragraph (11)(B)(viii), by striking ``section 
        481(b)'' and inserting ``section 102(b)''; and
            (B) in paragraph (12), by striking ``section 481'' and 
        inserting ``section 102''.
        (2) National and community service act of 1990.-- Section 
    148(g) of the National and Community Service Act of 1990 (42 U.S.C. 
    12604(g)) is amended by striking ``section 481(a) of the Higher 
    Education Act of 1965 (20 U.S.C. 1088(a))'' and inserting ``section 
    102 of the Higher Education Act of 1965''.
    (d) Workforce Investment Act of 1998.--The Workforce Investment Act 
of 1998 is amended--
        (1) in section 101(35) (29 U.S.C. 2801(35)), by striking 
    ``section 481 of the Higher Education Act of 1965 (20 U.S.C. 
    1088)'' and inserting ``section 102 of the Higher Education Act of 
    1965''; and
        (2) in section 203(11) (20 U.S.C. 9202(11)), by striking 
    ``section 1201 of the Higher Education Act of 1965 (20 U.S.C. 
    1141)'' and inserting ``section 101 of the Higher Education Act of 
    1965''.

                       TITLE II--TEACHER QUALITY

SEC. 201. TEACHER QUALITY ENHANCEMENT GRANTS.

    The Act is amended by inserting after title I (20 U.S.C. 1001 et 
seq.) the following:

     ``TITLE II--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

``SEC. 201. PURPOSES; DEFINITIONS.

    ``(a) Purposes.--The purposes of this title are to--
        ``(1) improve student achievement;
        ``(2) improve the quality of the current and future teaching 
    force by improving the preparation of prospective teachers and 
    enhancing professional development activities;
        ``(3) hold institutions of higher education accountable for 
    preparing teachers who have the necessary teaching skills and are 
    highly competent in the academic content areas in which the 
    teachers plan to teach, such as mathematics, science, English, 
    foreign languages, history, economics, art, civics, Government, and 
    geography, including training in the effective uses of technology 
    in the classroom; and
        ``(4) recruit highly qualified individuals, including 
    individuals from other occupations, into the teaching force.
    ``(b) Definitions.--In this title:
        ``(1) Arts and sciences.--The term `arts and sciences' means--
            ``(A) when referring to an organizational unit of an 
        institution of higher education, any academic unit that offers 
        1 or more academic majors in disciplines or content areas 
        corresponding to the academic subject matter areas in which 
        teachers provide instruction; and
            ``(B) when referring to a specific academic subject matter 
        area, the disciplines or content areas in which academic majors 
        are offered by the arts and science organizational unit.
        ``(2) High need local educational agency.--The term `high need 
    local educational agency' means a local educational agency that 
    serves an elementary school or secondary school located in an area 
    in which there is--
            ``(A) a high percentage of individuals from families with 
        incomes below the poverty line;
            ``(B) a high percentage of secondary school teachers not 
        teaching in the content area in which the teachers were trained 
        to teach; or
            ``(C) a high teacher turnover rate.
        ``(3) Poverty line.--The term `poverty line' means the poverty 
    line (as defined by the Office of Management and Budget, and 
    revised annually in accordance with section 673(2) of the Community 
    Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
    family of the size involved.

``SEC. 202. STATE GRANTS.

    ``(a) In General.--From amounts made available under section 210(1) 
for a fiscal year, the Secretary is authorized to award grants under 
this section, on a competitive basis, to eligible States to enable the 
eligible States to carry out the activities described in subsection 
(d).
    ``(b) Eligible State.--
        ``(1) Definition.--In this title, the term `eligible State' 
    means--
            ``(A) the Governor of a State; or
            ``(B) in the case of a State for which the constitution or 
        law of such State designates another individual, entity, or 
        agency in the State to be responsible for teacher certification 
        and preparation activity, such individual, entity, or agency.
        ``(2) Consultation.--The Governor and the individual, entity, 
    or agency designated under paragraph (1) shall consult with the 
    Governor, State board of education, State educational agency, or 
    State agency for higher education, as appropriate, with respect to 
    the activities assisted under this section.
        ``(3) Construction.--Nothing in this subsection shall be 
    construed to negate or supersede the legal authority under State 
    law of any State agency, State entity, or State public official 
    over programs that are under the jurisdiction of the agency, 
    entity, or official.
    ``(c) Application.--To be eligible to receive a grant under this 
section, an eligible State shall, at the time of the initial grant 
application, submit an application to the Secretary that--
        ``(1) meets the requirement of this section;
        ``(2) includes a description of how the eligible State intends 
    to use funds provided under this section; and
        ``(3) contains such other information and assurances as the 
    Secretary may require.
    ``(d) Uses of Funds.--An eligible State that receives a grant under 
this section shall use the grant funds to reform teacher preparation 
requirements, and to ensure that current and future teachers possess 
the necessary teaching skills and academic content knowledge in the 
subject areas in which the teachers are assigned to teach, by carrying 
out 1 or more of the following activities:
        ``(1) Reforms.--Implementing reforms that hold institutions of 
    higher education with teacher preparation programs accountable for 
    preparing teachers who are highly competent in the academic content 
    areas in which the teachers plan to teach, and possess strong 
    teaching skills, which may include the use of rigorous subject 
    matter competency tests and the requirement that a teacher have an 
    academic major in the subject area, or related discipline, in which 
    the teacher plans to teach.
        ``(2) Certification or licensure requirements.--Reforming 
    teacher certification or licensure requirements to ensure that 
    teachers have the necessary teaching skills and academic content 
    knowledge in the subject areas in which teachers are assigned to 
    teach.
        ``(3) Alternatives to traditional preparation for teaching.--
    Providing prospective teachers with alternatives to traditional 
    preparation for teaching through programs at colleges of arts and 
    sciences or at nonprofit educational organizations.
        ``(4) Alternative routes to state certification.-- Carrying out 
    programs that--
            ``(A) include support during the initial teaching 
        experience; and
            ``(B) establish, expand, or improve alternative routes to 
        State certification of teachers for highly qualified 
        individuals, including mid-career professionals from other 
        occupations, paraprofessionals, former military personnel and 
        recent college graduates with records of academic distinction.
        ``(5) Recruitment; pay; removal.--Developing and implementing 
    effective mechanisms to ensure that local educational agencies and 
    schools are able to effectively recruit highly qualified teachers, 
    to financially reward those teachers and principals whose students 
    have made significant progress toward high academic performance, 
    such as through performance-based compensation systems and access 
    to ongoing professional development opportunities for teachers and 
    administrators, and to expeditiously remove incompetent or 
    unqualified teachers consistent with procedures to ensure due 
    process for the teachers.
        ``(6) Social promotion.--Development and implementation of 
    efforts to address the problem of social promotion and to prepare 
    teachers to effectively address the issues raised by ending the 
    practice of social promotion.
        ``(7) Recruitment.--Activities described in section 204(d).

``SEC. 203. PARTNERSHIP GRANTS.

    ``(a) Grants.--From amounts made available under section 210(2) for 
a fiscal year, the Secretary is authorized to award grants under this 
section, on a competitive basis, to eligible partnerships to enable the 
eligible partnerships to carry out the activities described in 
subsections (d) and (e).
    ``(b) Definitions.--
        ``(1) Eligible partnerships.--In this title, the term `eligible 
    partnerships' means an entity that--
            ``(A) shall include--
                ``(i) a partner institution;
                ``(ii) a school of arts and sciences; and
                ``(iii) a high need local educational agency; and
            ``(B) may include a Governor, State educational agency, the 
        State board of education, the State agency for higher 
        education, an institution of higher education not described in 
        subparagraph (A), a public charter school, a public or private 
        elementary school or secondary school, a public or private 
        nonprofit educational organization, a business, a teacher 
        organization, or a prekindergarten program.
        ``(2) Partner institution.--In this section, the term `partner 
    institution' means a private independent or State-supported public 
    institution of higher education, the teacher training program of 
    which demonstrates that--
            ``(A) graduates from the teacher training program exhibit 
        strong performance on State-determined qualifying assessments 
        for new teachers through--
                ``(i) demonstrating that 80 percent or more of the 
            graduates of the program who intend to enter the field of 
            teaching have passed all of the applicable State 
            qualification assessments for new teachers, which shall 
            include an assessment of each prospective teacher's subject 
            matter knowledge in the content area or areas in which the 
            teacher intends to teach; or
                ``(ii) being ranked among the highest-performing 
            teacher preparation programs in the State as determined by 
            the State--

                    ``(I) using criteria consistent with the 
                requirements for the State report card under section 
                207(b); and
                    ``(II) using the State report card on teacher 
                preparation required under section 207(b), after the 
                first publication of such report card and for every 
                year thereafter; or

            ``(B) the teacher training program requires all the 
        students of the program to participate in intensive clinical 
        experience, to meet high academic standards, and--
                ``(i) in the case of secondary school candidates, to 
            successfully complete an academic major in the subject area 
            in which the candidate intends to teach or to demonstrate 
            competence through a high level of performance in relevant 
            content areas; and
                ``(ii) in the case of elementary school candidates, to 
            successfully complete an academic major in the arts and 
            sciences or to demonstrate competence through a high level 
            of performance in core academic subject areas.
    ``(c) Application.--Each eligible partnership desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information as the 
Secretary may require. Each such application shall--
        ``(1) contain a needs assessment of all the partners with 
    respect to teaching and learning and a description of how the 
    partnership will coordinate with other teacher training or 
    professional development programs, and how the activities of the 
    partnership will be consistent with State, local, and other 
    education reform activities that promote student achievement;
        ``(2) contain a resource assessment that describes the 
    resources available to the partnership, the intended use of the 
    grant funds, including a description of how the grant funds will be 
    fairly distributed in accordance with subsection (f), and the 
    commitment of the resources of the partnership to the activities 
    assisted under this title, including financial support, faculty 
    participation, time commitments, and continuation of the activities 
    when the grant ends; and
        ``(3) contain a description of--
            ``(A) how the partnership will meet the purposes of this 
        title;
            ``(B) how the partnership will carry out the activities 
        required under subsection (d) and any permissible activities 
        under subsection (e); and
            ``(C) the partnership's evaluation plan pursuant to section 
        206(b).
    ``(d) Required Uses of Funds.--An eligible partnership that 
receives a grant under this section shall use the grant funds to carry 
out the following activities:
        ``(1) Reforms.--Implementing reforms within teacher preparation 
    programs to hold the programs accountable for preparing teachers 
    who are highly competent in the academic content areas in which the 
    teachers plan to teach, and for promoting strong teaching skills, 
    including working with a school of arts and sciences and 
    integrating reliable research-based teaching methods into the 
    curriculum, which curriculum shall include programs designed to 
    successfully integrate technology into teaching and learning.
        ``(2) Clinical experience and interaction.--Providing sustained 
    and high quality preservice clinical experience including the 
    mentoring of prospective teachers by veteran teachers, and 
    substantially increasing interaction between faculty at 
    institutions of higher education and new and experienced teachers, 
    principals, and other administrators at elementary schools or 
    secondary schools, and providing support, including preparation 
    time, for such interaction.
        ``(3) Professional development.--Creating opportunities for 
    enhanced and ongoing professional development that improves the 
    academic content knowledge of teachers in the subject areas in 
    which the teachers are certified to teach or in which the teachers 
    are working toward certification to teach, and that promotes strong 
    teaching skills.
    ``(e) Allowable Uses of Funds.--An eligible partnership that 
receives a grant under this section may use such funds to carry out the 
following activities:
        ``(1) Teacher preparation and parent involvement.--Preparing 
    teachers to work with diverse student populations, including 
    individuals with disabilities and limited English proficient 
    individuals, and involving parents in the teacher preparation 
    program reform process.
        ``(2) Dissemination and coordination.--Broadly disseminating 
    information on effective practices used by the partnership, and 
    coordinating with the activities of the Governor, State board of 
    education, State higher education agency, and State educational 
    agency, as appropriate.
        ``(3) Managerial and leadership skills.--Developing and 
    implementing proven mechanisms to provide principals and 
    superintendents with effective managerial and leadership skills 
    that result in increased student achievement.
        ``(4) Teacher recruitment.--Activities described in section 
    204(d).
    ``(f) Special Rule.--No individual member of an eligible 
partnership shall retain more than 50 percent of the funds made 
available to the partnership under this section.
    ``(g) Construction.--Nothing in this section shall be construed to 
prohibit an eligible partnership from using grant funds to coordinate 
with the activities of more than one Governor, State board of 
education, State educational agency, local educational agency, or State 
agency for higher education.

``SEC. 204. TEACHER RECRUITMENT GRANTS.

    ``(a) Program Authorized.--From amounts made available under 
section 210(3) for a fiscal year, the Secretary is authorized to award 
grants, on a competitive basis, to eligible applicants to enable the 
eligible applicants to carry out activities described in subsection 
(d).
    ``(b) Eligible Applicant Defined.--In this title, the term 
`eligible applicant' means--
        ``(1) an eligible State described in section 202(b); or
        ``(2) an eligible partnership described in section 203(b).
    ``(c) Application.--Any eligible applicant desiring to receive a 
grant under this section shall submit an application to the Secretary 
at such time, in such form, and containing such information as the 
Secretary may require, including--
        ``(1) a description of the assessment that the eligible 
    applicant, and the other entities with whom the eligible applicant 
    will carry out the grant activities, have undertaken to determine 
    the most critical needs of the participating high-need local 
    educational agencies;
        ``(2) a description of the activities the eligible applicant 
    will carry out with the grant; and
        ``(3) a description of the eligible applicant's plan for 
    continuing the activities carried out with the grant, once Federal 
    funding ceases.
    ``(d) Uses of Funds.--Each eligible applicant receiving a grant 
under this section shall use the grant funds--
        ``(1)(A) to award scholarships to help students pay the costs 
    of tuition, room, board, and other expenses of completing a teacher 
    preparation program;
        ``(B) to provide support services, if needed to enable 
    scholarship recipients to complete postsecondary education 
    programs; and
        ``(C) for followup services provided to former scholarship 
    recipients during the recipients first 3 years of teaching; or
        ``(2) to develop and implement effective mechanisms to ensure 
    that high need local educational agencies and schools are able to 
    effectively recruit highly qualified teachers.
    ``(e) Service Requirements.--The Secretary shall establish such 
requirements as the Secretary finds necessary to ensure that recipients 
of scholarships under this section who complete teacher education 
programs subsequently teach in a high-need local educational agency, 
for a period of time equivalent to the period for which the recipients 
receive scholarship assistance, or repay the amount of the scholarship. 
The Secretary shall use any such repayments to carry out additional 
activities under this section.

``SEC. 205. ADMINISTRATIVE PROVISIONS.

    ``(a) Duration; One-Time Awards; Payments.--
        ``(1) Duration.--
            ``(A) Eligible states and eligible applicants.--Grants 
        awarded to eligible States and eligible applicants under this 
        title shall be awarded for a period not to exceed 3 years.
            ``(B) Eligible partnerships.--Grants awarded to eligible 
        partnerships under this title shall be awarded for a period of 
        5 years.
        ``(2) One-time award.--An eligible State and an eligible 
    partnership may receive a grant under each of sections 202, 203, 
    and 204 only once.
        ``(3) Payments.--The Secretary shall make annual payments of 
    grant funds awarded under this part.
    ``(b) Peer Review.--
        ``(1) Panel.--The Secretary shall provide the applications 
    submitted under this title to a peer review panel for evaluation. 
    With respect to each application, the peer review panel shall 
    initially recommend the application for funding or for disapproval.
        ``(2) Priority.--In recommending applications to the Secretary 
    for funding under this title, the panel shall--
            ``(A) with respect to grants under section 202, give 
        priority to eligible States serving States that--
                ``(i) have initiatives to reform State teacher 
            certification requirements that are designed to ensure that 
            current and future teachers possess the necessary teaching 
            skills and academic content knowledge in the subject areas 
            in which the teachers are certified or licensed to teach;
                ``(ii) include innovative reforms to hold institutions 
            of higher education with teacher preparation programs 
            accountable for preparing teachers who are highly competent 
            in the academic content area in which the teachers plan to 
            teach and have strong teaching skills; or
                ``(iii) involve the development of innovative efforts 
            aimed at reducing the shortage of highly qualified teachers 
            in high poverty urban and rural areas;
            ``(B) with respect to grants under section 203--
                ``(i) give priority to applications from eligible 
            partnerships that involve businesses; and
                ``(ii) take into consideration--

                    ``(I) providing an equitable geographic 
                distribution of the grants throughout the United 
                States; and
                    ``(II) the potential of the proposed activities for 
                creating improvement and positive change.

        ``(3) Secretarial selection.--The Secretary shall determine, 
    based on the peer review process, which application shall receive 
    funding and the amounts of the grants. In determining grant 
    amounts, the Secretary shall take into account the total amount of 
    funds available for all grants under this title and the types of 
    activities proposed to be carried out.
    ``(c) Matching Requirements.--
        ``(1) State grants.--Each eligible State receiving a grant 
    under section 202 or 204 shall provide, from non-Federal sources, 
    an amount equal to 50 percent of the amount of the grant (in cash 
    or in kind) to carry out the activities supported by the grant.
        ``(2) Partnership grants.--Each eligible partnership receiving 
    a grant under section 203 or 204 shall provide, from non-Federal 
    sources (in cash or in kind), an amount equal to 25 percent of the 
    grant for the first year of the grant, 35 percent of the grant for 
    the second year of the grant, and 50 percent of the grant for each 
    succeeding year of the grant.
    ``(d) Limitation on Administrative Expenses.--An eligible State or 
eligible partnership that receives a grant under this title may not use 
more than 2 percent of the grant funds for purposes of administering 
the grant.
    ``(e) Teacher Qualifications Provided to Parents Upon Request.--Any 
local educational agency or school that benefits from the activities 
assisted under this title shall make available, upon request and in an 
understandable and uniform format, to any parent of a student attending 
any school served by the local educational agency, information 
regarding the qualification of the student's classroom teacher with 
regard to the subject matter in which the teacher provides instruction. 
The local educational agency shall inform parents that the parents are 
entitled to receive the information upon request.

``SEC. 206. ACCOUNTABILITY AND EVALUATION.

    ``(a) State Grant Accountability Report.--An eligible State that 
receives a grant under section 202 shall submit an annual 
accountability report to the Secretary, the Committee on Labor and 
Human Resources of the Senate, and the Committee on Education and the 
Workforce of the House of Representatives. Such report shall include a 
description of the degree to which the eligible State, in using funds 
provided under such section, has made substantial progress in meeting 
the following goals:
        ``(1) Student achievement.--Increasing student achievement for 
    all students as defined by the eligible State.
        ``(2) Raising standards.--Raising the State academic standards 
    required to enter the teaching profession, including, where 
    appropriate, through the use of incentives to incorporate the 
    requirement of an academic major in the subject, or related 
    discipline, in which the teacher plans to teach.
        ``(3) Initial certification or licensure.--Increasing success 
    in the pass rate for initial State teacher certification or 
    licensure, or increasing the numbers of highly qualified 
    individuals being certified or licensed as teachers through 
    alternative programs.
        ``(4) Core academic subjects.--
            ``(A) Secondary school classes.--Increasing the percentage 
        of secondary school classes taught in core academic subject 
        areas by teachers--
                ``(i) with academic majors in those areas or in a 
            related field;
                ``(ii) who can demonstrate a high level of competence 
            through rigorous academic subject area tests; or
                ``(iii) who can demonstrate competence through a high 
            level of performance in relevant content areas.
            ``(B) Elementary school classes.--Increasing the percentage 
        of elementary school classes taught by teachers--
                ``(i) with academic majors in the arts and sciences; or
                ``(ii) who can demonstrate competence through a high 
            level of performance in core academic subjects.
        ``(5) Decreasing teacher shortages.--Decreasing shortages of 
    qualified teachers in poor urban and rural areas.
        ``(6) Increasing opportunities for professional development.--
    Increasing opportunities for enhanced and ongoing professional 
    development that improves the academic content knowledge of 
    teachers in the subject areas in which the teachers are certified 
    or licensed to teach or in which the teachers are working toward 
    certification or licensure to teach, and that promotes strong 
    teaching skills.
        ``(7) Technology integration.--Increasing the number of 
    teachers prepared to integrate technology in the classroom.
    ``(b) Eligible Partnership Evaluation.--Each eligible partnership 
receiving a grant under section 203 shall establish and include in the 
application submitted under section 203(c), an evaluation plan that 
includes strong performance objectives. The plan shall include 
objectives and measures for--
        ``(1) increased student achievement for all students as 
    measured by the partnership;
        ``(2) increased teacher retention in the first 3 years of a 
    teacher's career;
        ``(3) increased success in the pass rate for initial State 
    certification or licensure of teachers; and
        ``(4) increased percentage of secondary school classes taught 
    in core academic subject areas by teachers--
            ``(A) with academic majors in the areas or in a related 
        field; and
            ``(B) who can demonstrate a high level of competence 
        through rigorous academic subject area tests or who can 
        demonstrate competence through a high level of performance in 
        relevant content areas;
        ``(5) increasing the percentage of elementary school classes 
    taught by teachers with academic majors in the arts and sciences or 
    who demonstrate competence through a high level of performance in 
    core academic subject areas; and
        ``(6) increasing the number of teachers trained in technology.
    ``(c) Revocation of Grant.--
        ``(1) Report.--Each eligible State or eligible partnership 
    receiving a grant under this title shall report annually on the 
    progress of the eligible State or eligible partnership toward 
    meeting the purposes of this title and the goals, objectives, and 
    measures described in subsections (a) and (b).
        ``(2) Revocation.--
            ``(A) Eligible states and eligible applicants.--If the 
        Secretary determines that an eligible State or eligible 
        applicant is not making substantial progress in meeting the 
        purposes, goals, objectives, and measures, as appropriate, by 
        the end of the second year of a grant under this title, then 
        the grant payment shall not be made for the third year of the 
        grant.
            ``(B) Eligible partnerships.--If the Secretary determines 
        that an eligible partnership is not making substantial progress 
        in meeting the purposes, goals, objectives, and measures, as 
        appropriate, by the end of the third year of a grant under this 
        title, then the grant payments shall not be made for any 
        succeeding year of the grant.
    ``(d) Evaluation and Dissemination.--The Secretary shall evaluate 
the activities funded under this title and report the Secretary's 
findings regarding the activities to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the 
Workforce of the House of Representatives. The Secretary shall broadly 
disseminate successful practices developed by eligible States and 
eligible partnerships under this title, and shall broadly disseminate 
information regarding such practices that were found to be ineffective.

``SEC. 207. ACCOUNTABILITY FOR PROGRAMS THAT PREPARE TEACHERS.

    ``(a) Development of Definitions and Reporting Methods.--Within 9 
months of the date of enactment of the Higher Education Amendments of 
1998, the Commissioner of the National Center for Education Statistics, 
in consultation with States and institutions of higher education, shall 
develop key definitions for terms, and uniform reporting methods 
(including the key definitions for the consistent reporting of pass 
rates), related to the performance of elementary school and secondary 
school teacher preparation programs.
    ``(b) State Report Card on the Quality of Teacher Preparation.--
Each State that receives funds under this Act shall provide to the 
Secretary, within 2 years of the date of enactment of the Higher 
Education Amendments of 1998, and annually thereafter, in a uniform and 
comprehensible manner that conforms with the definitions and methods 
established in subsection (a), a State report card on the quality of 
teacher preparation in the State, which shall include at least the 
following:
        ``(1) A description of the teacher certification and licensure 
    assessments, and any other certification and licensure 
    requirements, used by the State.
        ``(2) The standards and criteria that prospective teachers must 
    meet in order to attain initial teacher certification or licensure 
    and to be certified or licensed to teach particular subjects or in 
    particular grades within the State.
        ``(3) A description of the extent to which the assessments and 
    requirements described in paragraph (1) are aligned with the 
    State's standards and assessments for students.
        ``(4) The percentage of teaching candidates who passed each of 
    the assessments used by the State for teacher certification and 
    licensure, and the passing score on each assessment that determines 
    whether a candidate has passed that assessment.
        ``(5) The percentage of teaching candidates who passed each of 
    the assessments used by the State for teacher certification and 
    licensure, disaggregated and ranked, by the teacher preparation 
    program in that State from which the teacher candidate received the 
    candidate's most recent degree, which shall be made available 
    widely and publicly.
        ``(6) Information on the extent to which teachers in the State 
    are given waivers of State certification or licensure requirements, 
    including the proportion of such teachers distributed across high- 
    and low-poverty school districts and across subject areas.
        ``(7) A description of each State's alternative routes to 
    teacher certification, if any, and the percentage of teachers 
    certified through alternative certification routes who pass State 
    teacher certification or licensure assessments.
        ``(8) For each State, a description of proposed criteria for 
    assessing the performance of teacher preparation programs within 
    institutions of higher education in the State, including indicators 
    of teacher candidate knowledge and skills.
        ``(9) Information on the extent to which teachers or 
    prospective teachers in each State are required to take 
    examinations or other assessments of their subject matter knowledge 
    in the area or areas in which the teachers provide instruction, the 
    standards established for passing any such assessments, and the 
    extent to which teachers or prospective teachers are required to 
    receive a passing score on such assessments in order to teach in 
    specific subject areas or grade levels.
    ``(c) Initial Report.--
        ``(1) In general.--Each State that receives funds under this 
    Act, not later than 6 months of the date of enactment of the Higher 
    Education Amendments of 1998 and in a uniform and comprehensible 
    manner, shall submit to the Secretary the information described in 
    paragraphs (1), (5), and (6) of subsection (b). Such information 
    shall be compiled by the Secretary and submitted to the Committee 
    on Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 9 months after the date of enactment of the Higher 
    Education Amendments of 1998.
        ``(2) Construction.--Nothing in this subsection shall be 
    construed to require a State to gather information that is not in 
    the possession of the State or the teacher preparation programs in 
    the State, or readily available to the State or teacher preparation 
    programs.
    ``(d) Report of the Secretary on the Quality of Teacher 
Preparation.--
        ``(1) Report card.--The Secretary shall provide to Congress, 
    and publish and make widely available, a report card on teacher 
    qualifications and preparation in the United States, including all 
    the information reported in paragraphs (1) through (9) of 
    subsection (b). Such report shall identify States for which 
    eligible States and eligible partnerships received a grant under 
    this title. Such report shall be so provided, published and made 
    available not later than 2 years 6 months after the date of 
    enactment of the Higher Education Amendments of 1998 and annually 
    thereafter.
        ``(2) Report to congress.--The Secretary shall report to 
    Congress--
            ``(A) a comparison of States' efforts to improve teaching 
        quality; and
            ``(B) regarding the national mean and median scores on any 
        standardized test that is used in more than 1 State for teacher 
        certification or licensure.
        ``(3) Special rule.--In the case of teacher preparation 
    programs with fewer than 10 graduates taking any single initial 
    teacher certification or licensure assessment during an academic 
    year, the Secretary shall collect and publish information with 
    respect to an average pass rate on State certification or licensure 
    assessments taken over a 3-year period.
    ``(e) Coordination.--The Secretary, to the extent practicable, 
shall coordinate the information collected and published under this 
title among States for individuals who took State teacher certification 
or licensure assessments in a State other than the State in which the 
individual received the individual's most recent degree.
    ``(f) Institutional Report Cards on the Quality of Teacher 
Preparation.--
        ``(1) Report card.--Each institution of higher education that 
    conducts a teacher preparation program that enrolls students 
    receiving Federal assistance under this Act, not later than 18 
    months after the date of enactment of the Higher Education 
    Amendments of 1998 and annually thereafter, shall report to the 
    State and the general public, in a uniform and comprehensible 
    manner that conforms with the definitions and methods established 
    under subsection (a), the following information:
            ``(A) Pass rate.--(i) For the most recent year for which 
        the information is available, the pass rate of the 
        institution's graduates on the teacher certification or 
        licensure assessments of the State in which the institution is 
        located, but only for those students who took those assessments 
        within 3 years of completing the program.
            ``(ii) A comparison of the program's pass rate with the 
        average pass rate for programs in the State.
            ``(iii) In the case of teacher preparation programs with 
        fewer than 10 graduates taking any single initial teacher 
        certification or licensure assessment during an academic year, 
        the institution shall collect and publish information with 
        respect to an average pass rate on State certification or 
        licensure assessments taken over a 3-year period.
            ``(B) Program information.--The number of students in the 
        program, the average number of hours of supervised practice 
        teaching required for those in the program, and the faculty-
        student ratio in supervised practice teaching.
            ``(C) Statement.--In States that approve or accredit 
        teacher education programs, a statement of whether the 
        institution's program is so approved or accredited.
            ``(D) Designation as low-performing.--Whether the program 
        has been designated as low-performing by the State under 
        section 208(a).
        ``(2) Requirement.--The information described in paragraph (1) 
    shall be reported through publications such as school catalogs and 
    promotional materials sent to potential applicants, secondary 
    school guidance counselors, and prospective employers of the 
    institution's program graduates.
        ``(3) Fines.--In addition to the actions authorized in section 
    487(c), the Secretary may impose a fine not to exceed $25,000 on an 
    institution of higher education for failure to provide the 
    information described in this subsection in a timely or accurate 
    manner.

``SEC. 208. STATE FUNCTIONS.

    ``(a) State Assessment.--In order to receive funds under this Act, 
a State, not later than 2 years after the date of enactment of the 
Higher Education Amendments of 1998, shall have in place a procedure to 
identify, and assist, through the provision of technical assistance, 
low-performing programs of teacher preparation within institutions of 
higher education. Such State shall provide the Secretary an annual list 
of such low-performing institutions that includes an identification of 
those institutions at-risk of being placed on such list. Such levels of 
performance shall be determined solely by the State and may include 
criteria based upon information collected pursuant to this title. Such 
assessment shall be described in the report under section 207(b).
    ``(b) Termination of Eligibility.--Any institution of higher 
education that offers a program of teacher preparation in which the 
State has withdrawn the State's approval or terminated the State's 
financial support due to the low performance of the institution's 
teacher preparation program based upon the State assessment described 
in subsection (a)--
        ``(1) shall be ineligible for any funding for professional 
    development activities awarded by the Department of Education; and
        ``(2) shall not be permitted to accept or enroll any student 
    that receives aid under title IV of this Act in the institution's 
    teacher preparation program.
    ``(c) Negotiated Rulemaking.--If the Secretary develops any 
regulations implementing subsection (b)(2), the Secretary shall submit 
such proposed regulations to a negotiated rulemaking process, which 
shall include representatives of States, institutions of higher 
education, and educational and student organizations.

``SEC. 209. GENERAL PROVISIONS.

    ``(a) Methods.--In complying with sections 207 and 208, the 
Secretary shall ensure that States and institutions of higher education 
use fair and equitable methods in reporting and that the reporting 
methods protect the privacy of individuals.
    ``(b) Special Rule.--For each State in which there are no State 
certification or licensure assessments, or for States that do not set 
minimum performance levels on those assessments--
        ``(1) the Secretary shall, to the extent practicable, collect 
    data comparable to the data required under this title from States, 
    local educational agencies, institutions of higher education, or 
    other entities that administer such assessments to teachers or 
    prospective teachers; and
        ``(2) notwithstanding any other provision of this title, the 
    Secretary shall use such data to carry out requirements of this 
    title related to assessments or pass rates.
    ``(c) Limitations.--
        ``(1) Federal control prohibited.--Nothing in this title shall 
    be construed to permit, allow, encourage, or authorize any Federal 
    control over any aspect of any private, religious, or home school, 
    whether or not a home school is treated as a private school or home 
    school under State law. This section shall not be construed to 
    prohibit private, religious, or home schools from participation in 
    programs or services under this title.
        ``(2) No change in state control encouraged or required.--
    Nothing in this title shall be construed to encourage or require 
    any change in a State's treatment of any private, religious, or 
    home school, whether or not a home school is treated as a private 
    school or home school under State law.
        ``(3) National system of teacher certification prohibited.--
    Nothing in this title shall be construed to permit, allow, 
    encourage, or authorize the Secretary to establish or support any 
    national system of teacher certification.

``SEC. 210. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this title 
$300,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years, of which--
        ``(1) 45 percent shall be available for each fiscal year to 
    award grants under section 202;
        ``(2) 45 percent shall be available for each fiscal year to 
    award grants under section 203; and
        ``(3) 10 percent shall be available for each fiscal year to 
    award grants under section 204.''.

                      TITLE III--INSTITUTIONAL AID

SEC. 301. TRANSFERS AND REDESIGNATIONS.

    (a) In General.--The Higher Education Act of 1965 is amended--
        (1) by redesignating part D of title III (20 U.S.C. 1066 et 
    seq.) as part F of title III;
        (2) by redesignating sections 351, 352, 353, 354, 356, 357, 
    358, and 360 (20 U.S.C. 1066, 1067, 1068, 1069, 1069b, 1069c, 
    1069d, and 1069f) as sections 391, 392, 393, 394, 395, 396, 397, 
    and 399, respectively;
        (3) by transferring part B of title VII (20 U.S.C. 1132c et 
    seq.) to title III to follow part C of title III (20 U.S.C. 1065 et 
    seq.), and redesignating such part B as part D;
        (4) by redesignating sections 721 through 728 (20 U.S.C. 1132c 
    and 1132c-7) as sections 341 through 348, respectively;
        (5) by transferring subparts 1 and 3 of part B of title X (20 
    U.S.C. 1135b et seq. and 1135d et seq.) to title III to follow part 
    D of title III (as redesignated by paragraph (3)), and 
    redesignating such subpart 3 as subpart 2;
        (6) by inserting after part D of title III (as redesignated by 
    paragraph (3)) the following:

   ``PART E--MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM'';

        (7) by redesignating sections 1021 through 1023 (20 U.S.C. 
    1135b and 1135b-2), and sections 1041, 1042, 1043, 1044, 1046, and 
    1047 (20 U.S.C. 1135d, 1135d-1, 1135d-2, 1135d-3, 1135d-5, and 
    1135d-6) as sections 351 through 353, and sections 361, 362, 363, 
    364, 365, and 366, respectively; and
        (8) by repealing section 366 (as redesignated by paragraph (7)) 
    (20 U.S.C. 1135d-6).
    (b) Conforming Amendments.--Section 361 (as redesignated by 
subsection (a)(7)) (20 U.S.C. 1135d) is amended--
        (1) in paragraph (1), by inserting ``and'' after the semicolon;
        (2) in paragraph (2), by striking ``; and'' and inserting a 
    period; and
        (3) by striking paragraph (3).
    (c) Cross References.--Title III (20 U.S.C. 1051 et seq.) is 
amended--
        (1) in section 311(b) (20 U.S.C. 1057(b)), by striking 
    ``360(a)(1)'' and inserting ``399(a)(1)'';
        (2) in section 312 (20 U.S.C. 1058)--
            (A) in subsection (b)(1)(B), by striking ``352(b)'' and 
        inserting ``392(b)''; and
            (B) in subsection (c)(2), by striking ``352(a)'' and 
        inserting ``392(a)'';
        (3) in section 313(b) (20 U.S.C. 1059(b)), by striking 
    ``354(a)(1)'' and inserting ``394(a)(1)'';
        (4) in section 342 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-1)--
            (A) in paragraph (3), by striking ``723(b)'' and inserting 
        ``343(b)'';
            (B) in paragraph (4), by striking ``723'' and inserting 
        ``343'';
            (C) in the matter preceding subparagraph (A) of paragraph 
        (5), by striking ``724(b)'' and inserting ``344(b)'';
            (D) in paragraph (8), by striking ``725(1)'' and inserting 
        ``345(1)''; and
            (E) in paragraph (9), by striking ``727'' and inserting 
        ``347'';
        (5) in section 343 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-2)--
            (A) in subsection (a), by striking ``724'' and inserting 
        ``344''; and
            (B) in subsection (b)--
                (i) in the matter preceding paragraph (1), by striking 
            ``725(1) and 726'' and inserting ``345(1) and 346'';
                (ii) in paragraph (10), by striking ``724'' and 
            inserting ``344''; and
                (iii) in subsection (d), by striking ``723(c)(1)'' and 
            inserting ``343(c)(1)'';
        (6) in section 345(2) (as redesignated by subsection (a)(4)) 
    (20 U.S.C. 1132c-4(2)), by striking ``723'' and inserting ``343'';
        (7) in section 348 (as redesignated by subsection (a)(4)) (20 
    U.S.C. 1132c-7), by striking ``725(1)'' and inserting ``345(1)'';
        (8) in section 353(a) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135b-2(a))--
            (A) in paragraph (1), by striking ``1046(6)'' and inserting 
        ``365(6)'';
            (B) in paragraph (2), by striking ``1046(7)'' and inserting 
        ``365(7)'';
            (C) in paragraph (3), by striking ``1046(8)'' and inserting 
        ``365(8)''; and
            (D) in paragraph (4), by striking ``1046(9)'' and inserting 
        ``365(9)'';
        (9) in section 361(1) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135d(1)), by striking ``1046(3)'' and inserting 
    ``365(3)'';
        (10) in section 362(a) (as redesignated by subsection (a)(7)) 
    (20 U.S.C. 1135d-1(a))--
            (A) in the matter preceding paragraph (1), by striking 
        ``1041'' and inserting ``361''; and
            (B) in paragraph (1), by striking ``1021(b)'' and inserting 
        ``351(b)''; and
        (11) in section 391(b)(6) (as redesignated by subsection 
    (a)(2)), by striking ``357'' and inserting ``396''.

SEC. 302. FINDINGS.

    Section 301(a) (20 U.S.C. 1051(a)) is amended--
        (1) by redesignating paragraphs (3) through (7) as paragraphs 
    (4) through (8), respectively; and
        (2) by inserting after paragraph (2) the following:
        ``(3) in order to be competitive and provide a high-quality 
    education for all, institutions of higher education should improve 
    their technological capacity and make effective use of 
    technology;''.

SEC. 303. STRENGTHENING INSTITUTIONS.

    (a) Grants.--Section 311 (20 U.S.C. 1057) is amended by adding at 
the end the following:
    ``(c) Authorized Activities.--Grants awarded under this section 
shall be used for 1 or more of the following activities:
        ``(1) Purchase, rental, or lease of scientific or laboratory 
    equipment for educational purposes, including instructional and 
    research purposes.
        ``(2) Construction, maintenance, renovation, and improvement in 
    classrooms, libraries, laboratories, and other instructional 
    facilities, including the integration of computer technology into 
    institutional facilities to create smart buildings.
        ``(3) Support of faculty exchanges, faculty development, and 
    faculty fellowships to assist in attaining advanced degrees in the 
    field of instruction of the faculty.
        ``(4) Development and improvement of academic programs.
        ``(5) Purchase of library books, periodicals, and other 
    educational materials, including telecommunications program 
    material.
        ``(6) Tutoring, counseling, and student service programs 
    designed to improve academic success.
        ``(7) Funds management, administrative management, and 
    acquisition of equipment for use in strengthening funds management.
        ``(8) Joint use of facilities, such as laboratories and 
    libraries.
        ``(9) Establishing or improving a development office to 
    strengthen or improve contributions from alumni and the private 
    sector.
        ``(10) Establishing or improving an endowment fund.
        ``(11) Creating or improving facilities for Internet or other 
    distance learning academic instruction capabilities, including 
    purchase or rental of telecommunications technology equipment or 
    services.
        ``(12) Other activities proposed in the application submitted 
    pursuant to subsection (c) that--
            ``(A) contribute to carrying out the purposes of the 
        program assisted under this part; and
            ``(B) are approved by the Secretary as part of the review 
        and acceptance of such application.
    ``(d) Endowment Fund.--
        ``(1) In general.--An eligible institution may use not more 
    than 20 percent of the grant funds provided under this part to 
    establish or increase an endowment fund at such institution.
        ``(2) Matching requirement.--In order to be eligible to use 
    grant funds in accordance with paragraph (1), the eligible 
    institution shall provide matching funds from non-Federal sources, 
    in an amount equal to or greater than the Federal funds used in 
    accordance with paragraph (1), for the establishment or increase of 
    the endowment fund.
        ``(3) Comparability.--The provisions of part C, regarding the 
    establishment or increase of an endowment fund, that the Secretary 
    determines are not inconsistent with this subsection, shall apply 
    to funds used under paragraph (1).''.
    (b) Endowment Fund Definition.--Section 312 (as amended by section 
301(c)(2)) (20 U.S.C. 1058) is amended--
        (1) by redesignating subsections (c) through (f) as subsections 
    (d) through (g), respectively; and
        (2) by inserting after subsection (b) the following:
    ``(c) Endowment Fund.--For the purpose of this part, the term 
`endowment fund' means a fund that--
        ``(1) is established by State law, by an institution of higher 
    education, or by a foundation that is exempt from Federal income 
    taxation;
        ``(2) is maintained for the purpose of generating income for 
    the support of the institution; and
        ``(3) does not include real estate.''.
    (c) Duration of Grant.--Section 313 (20 U.S.C. 1059) is amended--
        (1) in subsection (b), by inserting ``subsection (c) and a 
    grant under'' before ``section 394(a)(1)''; and
        (2) by adding at the end the following:
    ``(d) Wait-Out-Period.--Each eligible institution that received a 
grant under this part for a 5-year period shall not be eligible to 
receive an additional grant under this part until 2 years after the 
date on which the 5-year grant period terminates.''.
    (d) Applications.--Title III is amended by striking section 314 (20 
U.S.C. 1059a) and inserting the following:

``SEC. 314. APPLICATIONS.

    ``Each eligible institution desiring to receive assistance under 
this part shall submit an application in accordance with the 
requirements of section 391.''.
    (e) American Indian Tribally Controlled Colleges and 
Universities.--Section 316 (20 U.S.C. 1059c) is amended to read as 
follows:

``SEC. 316. AMERICAN INDIAN TRIBALLY CONTROLLED COLLEGES AND 
              UNIVERSITIES.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Indian Tribal Colleges and Universities to enable 
such institutions to improve and expand their capacity to serve Indian 
students.
    ``(b) Definitions.--In this section:
        ``(1) Indian.--The term `Indian' has the meaning given the term 
    in section 2 of the Tribally Controlled College or University 
    Assistance Act of 1978.
        ``(2) Indian tribe.--The term `Indian tribe' has the meaning 
    given the term in section 2 of the Tribally Controlled College or 
    University Assistance Act of 1978.
        ``(3) Tribal college or university.--The term `Tribal College 
    or University' has the meaning give the term `tribally controlled 
    college or university' in section 2 of the Tribally Controlled 
    College or University Assistance Act of 1978, and includes an 
    institution listed in the Equity in Educational Land Grant Status 
    Act of 1994.
        ``(4) Institution of higher education.--The term `institution 
    of higher education' means an institution of higher education as 
    defined in section 101(a), except that paragraph (2) of such 
    section shall not apply.
    ``(c) Authorized Activities.--
        ``(1) In general.--Grants awarded under this section shall be 
    used by Tribal Colleges or Universities to assist such institutions 
    to plan, develop, undertake, and carry out activities to improve 
    and expand such institutions' capacity to serve Indian students.
        ``(2) Examples of authorized activities.--The activities 
    described in paragraph (1) may include--
            ``(A) purchase, rental, or lease of scientific or 
        laboratory equipment for educational purposes, including 
        instructional and research purposes;
            ``(B) construction, maintenance, renovation, and 
        improvement in classrooms, libraries, laboratories, and other 
        instructional facilities, including purchase or rental of 
        telecommunications technology equipment or services;
            ``(C) support of faculty exchanges, faculty development, 
        and faculty fellowships to assist in attaining advanced degrees 
        in the faculty's field of instruction;
            ``(D) academic instruction in disciplines in which Indians 
        are underrepresented;
            ``(E) purchase of library books, periodicals, and other 
        educational materials, including telecommunications program 
        material;
            ``(F) tutoring, counseling, and student service programs 
        designed to improve academic success;
            ``(G) funds management, administrative management, and 
        acquisition of equipment for use in strengthening funds 
        management;
            ``(H) joint use of facilities, such as laboratories and 
        libraries;
            ``(I) establishing or improving a development office to 
        strengthen or improve contributions from alumni and the private 
        sector;
            ``(J) establishing or enhancing a program of teacher 
        education designed to qualify students to teach in elementary 
        schools or secondary schools, with a particular emphasis on 
        teaching Indian children and youth, that shall include, as part 
        of such program, preparation for teacher certification;
            ``(K) establishing community outreach programs that 
        encourage Indian elementary school and secondary school 
        students to develop the academic skills and the interest to 
        pursue postsecondary education; and
            ``(L) other activities proposed in the application 
        submitted pursuant to subsection (d) that--
                ``(i) contribute to carrying out the activities 
            described in subparagraphs (A) through (K); and
                ``(ii) are approved by the Secretary as part of the 
            review and acceptance of such application.
        ``(3) Endowment fund.--
            ``(A) In general.--A Tribal College or University may use 
        not more than 20 percent of the grant funds provided under this 
        section to establish or increase an endowment fund at the 
        institution.
            ``(B) Matching requirement.--In order to be eligible to use 
        grant funds in accordance with subparagraph (A), the Tribal 
        College or University shall provide matching funds, in an 
        amount equal to the Federal funds used in accordance with 
        subparagraph (A), for the establishment or increase of the 
        endowment fund.
            ``(C) Comparability.--The provisions of part C regarding 
        the establishment or increase of an endowment fund, that the 
        Secretary determines are not inconsistent with this paragraph, 
        shall apply to funds used under subparagraph (A).
    ``(d) Application Process.--
        ``(1) Institutional eligibility.--To be eligible to receive 
    assistance under this section, a Tribal College or University shall 
    be an eligible institution under section 312(b).
        ``(2) Application.--Any Tribal College or University desiring 
    to receive assistance under this section shall submit an 
    application to the Secretary at such time, and in such manner, as 
    the Secretary may by regulation reasonably require. Each such 
    application shall include--
            ``(A) a 5-year plan for improving the assistance provided 
        by the Tribal College or University to Indian students, 
        increasing the rates at which Indian secondary school students 
        enroll in higher education, and increasing overall 
        postsecondary retention rates for Indian students; and
            ``(B) such enrollment data and other information and 
        assurances as the Secretary may require to demonstrate 
        compliance with paragraph (1).
        ``(3) Special rule.--For the purposes of this part, no Tribal 
    College or University that is eligible for and receives funds under 
    this section may concurrently receive other funds under this part 
    or part B.''.
    (f) Alaska Native and Native Hawaiian-Serving Institutions.--Part A 
of title III (20 U.S.C. 1057 et seq.) is amended by adding at the end 
the following:

``SEC. 317. ALASKA NATIVE AND NATIVE HAWAIIAN-SERVING INSTITUTIONS.

    ``(a) Program Authorized.--The Secretary shall provide grants and 
related assistance to Alaska Native-serving institutions and Native 
Hawaiian-serving institutions to enable such institutions to improve 
and expand their capacity to serve Alaska Natives and Native Hawaiians.
    ``(b) Definitions.--For the purpose of this section--
        ``(1) the term `Alaska Native' has the meaning given the term 
    in section 9308 of the Elementary and Secondary Education Act of 
    1965;
        ``(2) the term `Alaska Native-serving institution' means an 
    institution of higher education that--
            ``(A) is an eligible institution under section 312(b); and
            ``(B) at the time of application, has an enrollment of 
        undergraduate students that is at least 20 percent Alaska 
        Native students;
        ``(3) the term `Native Hawaiian' has the meaning given the term 
    in section 9212 of the Elementary and Secondary Education Act of 
    1965; and
        ``(4) the term `Native Hawaiian-serving institution' means an 
    institution of higher education which--
            ``(A) is an eligible institution under section 312(b); and
            ``(B) at the time of application, has an enrollment of 
        undergraduate students that is at least 10 percent Native 
        Hawaiian students.
    ``(c) Authorized Activities.--
        ``(1) Types of activities authorized.--Grants awarded under 
    this section shall be used by Alaska Native-serving institutions 
    and Native Hawaiian-serving institutions to assist such 
    institutions to plan, develop, undertake, and carry out activities 
    to improve and expand such institutions' capacity to serve Alaska 
    Natives or Native Hawaiians.
        ``(2) Examples of authorized activities.--Such programs may 
    include--
            ``(A) purchase, rental, or lease of scientific or 
        laboratory equipment for educational purposes, including 
        instructional and research purposes;
            ``(B) renovation and improvement in classroom, library, 
        laboratory, and other instructional facilities;
            ``(C) support of faculty exchanges, and faculty development 
        and faculty fellowships to assist in attaining advanced degrees 
        in the faculty's field of instruction;
            ``(D) curriculum development and academic instruction;
            ``(E) purchase of library books, periodicals, microfilm, 
        and other educational materials;
            ``(F) funds and administrative management, and acquisition 
        of equipment for use in strengthening funds management;
            ``(G) joint use of facilities such as laboratories and 
        libraries; and
            ``(H) academic tutoring and counseling programs and student 
        support services.
    ``(d) Application Process.--
        ``(1) Institutional eligibility.--Each Alaska Native-serving 
    institution and Native Hawaiian-serving institution desiring to 
    receive assistance under this section shall submit to the Secretary 
    such enrollment data as may be necessary to demonstrate that the 
    institution is an Alaska Native-serving institution or a Native 
    Hawaiian-serving institution as defined in subsection (b), along 
    with such other information and data as the Secretary may by 
    regulation require.
        ``(2) Applications.--Any institution which is determined by the 
    Secretary to be an Alaska Native-serving institution or a Native 
    Hawaiian-serving institution may submit an application for 
    assistance under this section to the Secretary. Such application 
    shall include--
            ``(A) a 5-year plan for improving the assistance provided 
        by the Alaska Native-serving institution or the Native 
        Hawaiian-serving institution to Alaska Native or Native 
        Hawaiian students; and
            ``(B) such other information and assurance as the Secretary 
        may require.
    ``(e) Special Rule.--For the purposes of this section, no Alaska 
Native-serving institution or Native Hawaiian-serving institution which 
is eligible for and receives funds under this section may concurrently 
receive other funds under this part or part B.''.

SEC. 304. STRENGTHENING HBCU'S.

    (a) Grants.--Section 323 (20 U.S.C. 1062) is amended--
        (1) by redesignating subsection (b) as subsection (c);
        (2) by inserting after subsection (a) the following:
    ``(b) Endowment Fund.--
        ``(1) In general.--An institution may use not more than 20 
    percent of the grant funds provided under this part to establish or 
    increase an endowment fund at the institution.
        ``(2) Matching requirement.--In order to be eligible to use 
    grant funds in accordance with paragraph (1), the eligible 
    institution shall provide matching funds from non-Federal sources, 
    in an amount equal to or greater than the Federal funds used in 
    accordance with paragraph (1), for the establishment or increase of 
    the endowment fund.
        ``(3) Comparability.--The provisions of part C regarding the 
    establishment or increase of an endowment fund, that the Secretary 
    determines are not inconsistent with this subsection, shall apply 
    to funds used under paragraph (1).''; and
        (3) in subsection (c) (as redesignated by paragraph (1)), by 
    striking paragraph (3).
    (b) Professional or Graduate Institutions.--
        (1) General authorization.--Section 326(a) (20 U.S.C. 1063b(a)) 
    is amended--
            (A) in subsection (a)--
                (i) in paragraph (1), by inserting ``in mathematics, 
            engineering, or the physical or natural sciences'' after 
            ``graduate education opportunities''; and
                (ii) in paragraph (2)--

                    (I) by striking ``$500,000'' and inserting 
                ``$1,000,000''; and
                    (II) by striking ``except that'' and all that 
                follows and inserting the following: ``, except that no 
                institution shall be required to match any portion of 
                the first $1,000,000 of the institution's award from 
                the Secretary. After funds are made available to each 
                eligible institution under the funding rules described 
                in subsection (f), the Secretary shall distribute, on a 
                pro rata basis, any amounts which were not so made 
                available (by reason of the failure of an institution 
                to comply with the matching requirements of this 
                paragraph) among the institutions that have complied 
                with such matching requirement.''; and

            (B) in subsection (d)(2), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
        (2) Use of funds.--Section 326(c) (20 U.S.C. 1063b(c)) is 
    amended by striking paragraphs (1) through (3) and inserting the 
    following:
        ``(1) purchase, rental or lease of scientific or laboratory 
    equipment for educational purposes, including instructional and 
    research purposes;
        ``(2) construction, maintenance, renovation, and improvement in 
    classroom, library, laboratory, and other instructional facilities, 
    including purchase or rental of telecommunications technology 
    equipment or services;
        ``(3) purchase of library books, periodicals, technical and 
    other scientific journals, microfilm, microfiche, and other 
    educational materials, including telecommunications program 
    materials;
        ``(4) scholarships, fellowships, and other financial assistance 
    for needy graduate and professional students to permit the 
    enrollment of the students in and completion of the doctoral degree 
    in medicine, dentistry, pharmacy, veterinary medicine, law, and the 
    doctorate degree in the physical or natural sciences, engineering, 
    mathematics, or other scientific disciplines in which African 
    Americans are underrepresented;
        ``(5) establish or improve a development office to strengthen 
    and increase contributions from alumni and the private sector;
        ``(6) assist in the establishment or maintenance of an 
    institutional endowment to facilitate financial independence 
    pursuant to section 331; and
        ``(7) funds and administrative management, and the acquisition 
    of equipment, including software, for use in strengthening funds 
    management and management information systems.''.
        (3) Eligibility.--Section 326(e) (20 U.S.C. 1063b(e)) is 
    amended--
            (A) in paragraph (1)--
                (i) by striking ``include--'' and inserting ``are the 
            following'';
                (ii) by inserting ``and other qualified graduate 
            programs'' before the semicolon at the end of subparagraphs 
            (E) through (J);
                (iii) by striking ``and'' at the end of subparagraph 
            (O); and
                (iv) in subparagraph (P)--

                    (I) by inserting ``University'' after ``State''; 
                and
                    (II) by striking the period and inserting a 
                semicolon; and
                    (III) by adding at the end the following:

            ``(Q) Norfolk State University qualified graduate programs; 
        and
            ``(R) Tennessee State University qualified graduate 
        programs.'';
            (B) by striking paragraphs (2) and (3) and inserting the 
        following:
        ``(2) Qualified graduate program.--(A) For the purposes of this 
    section, the term `qualified graduate program' means a graduate or 
    professional program that provides a program of instruction in the 
    physical or natural sciences, engineering, mathematics, or other 
    scientific discipline in which African Americans are 
    underrepresented and has students enrolled in such program at the 
    time of application for a grant under this section.
        ``(B) Notwithstanding the enrollment requirement contained in 
    subparagraph (A), an institution may use an amount equal to not 
    more than 10 percent of the institution's grant under this section 
    for the development of a new qualified graduate program.
        ``(3) Special rule.--Institutions that were awarded grants 
    under this section prior to October 1, 1998, shall continue to 
    receive such grants, subject to the availability of appropriated 
    funds, regardless of the eligibility of the institutions described 
    in subparagraphs (Q) and (R) of paragraph (1).''; and
            (C) by adding at the end the following:
        ``(5) Institutional choice.--The president or chancellor of the 
    institution may decide which graduate or professional school or 
    qualified graduate program will receive funds under the grant in 
    any 1 fiscal year, if the allocation of funds among the schools or 
    programs is delineated in the application for funds submitted to 
    the Secretary under this section.''.
        (4) Funding rule.--Section 326(f) (20 U.S.C. 1063b(f)) is 
    amended--
            (A) by striking ``Of the amount appropriated'' and 
        inserting ``Subject to subsection (g), of the amount 
        appropriated'';
            (B) in paragraph (1)--
                (i) by striking ``$12,000,000'' and inserting 
            ``$26,600,000''; and
                (ii) by striking ``(A) through (E)'' and inserting 
            ``(A) through (P)'';
            (C) by striking paragraph (2) and inserting the following:
        ``(2) any amount in excess of $26,600,000, but not in excess of 
    $28,600,000, shall be available for the purpose of making grants to 
    institutions or programs described in subparagraphs (Q) and (R) of 
    subsection (e)(1); and
        ``(3) any amount in excess of $28,600,000, shall be made 
    available to each of the institutions or programs identified in 
    subparagraphs (A) through (R) pursuant to a formula developed by 
    the Secretary that uses the following elements:
            ``(A) The ability of the institution to match Federal funds 
        with non-Federal funds.
            ``(B) The number of students enrolled in the programs for 
        which the eligible institution received funding under this 
        section in the previous year.
            ``(C) The average cost of education per student, for all 
        full-time graduate or professional students (or the equivalent) 
        enrolled in the eligible professional or graduate school, or 
        for doctoral students enrolled in the qualified graduate 
        programs.
            ``(D) The number of students in the previous year who 
        received their first professional or doctoral degree from the 
        programs for which the eligible institution received funding 
        under this section in the previous year.
            ``(E) The contribution, on a percent basis, of the programs 
        for which the institution is eligible to receive funds under 
        this section to the total number of African Americans receiving 
        graduate or professional degrees in the professions or 
        disciplines related to the programs for the previous year.''.
        (5) Hold harmless rule.--Section 326 is further amended by 
    adding at the end the following new subsection:
    ``(g) Hold Harmless Rule.--Notwithstanding paragraphs (2) and (3) 
of subsection (f), no institution or qualified program identified in 
subsection (e)(1) that received a grant for fiscal year 1998 and that 
is eligible to receive a grant in a subsequent fiscal year shall 
receive a grant amount in any such subsequent fiscal year that is less 
than the grant amount received for fiscal year 1998, unless the amount 
appropriated is not sufficient to provide such grant amounts to all 
such institutions and programs, or the institution cannot provide 
sufficient matching funds to meet the requirements of this section.''.

SEC. 305. ENDOWMENT CHALLENGE GRANTS.

    Section 331(b) (20 U.S.C. 1065(b)) is amended--
        (1) in paragraph (1), by striking ``360'' and inserting 
    ``399''; and
        (2) in paragraph (2), by striking subparagraphs (B) and (C) and 
    inserting the following:
    ``(B) The Secretary may make a grant under this part to an eligible 
institution in any fiscal year if the institution--
        ``(i) applies for a grant in an amount not exceeding $500,000; 
    and
        ``(ii) has deposited in the eligible institution's endowment 
    fund established under this section an amount which is equal to \1/
    2\ of the amount of such grant.
    ``(C) An eligible institution of higher education that is awarded a 
grant under subparagraph (B) shall not be eligible to receive an 
additional grant under subparagraph (B) until 10 years after the date 
on which the grant period terminates.''.

SEC. 306. HBCU CAPITAL FINANCING.

    (a) Definition.--Section 342(5) (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-1(5)) is amended--
        (1) by redesignating subparagraphs (B), (C), and (D) as 
    subparagraphs (C), (G), and (H), respectively;
        (2) by inserting after subparagraph (A) the following:
            ``(B) a facility for the administration of an educational 
        program, or a student center or student union, except that not 
        more than 5 percent of the loan proceeds provided under this 
        part may be used for the facility, center or union if the 
        facility, center or union is owned, leased, managed, or 
        operated by a private business, that, in return for such use, 
        makes a payment to the eligible institution;'';
        (3) in subparagraph (C) (as redesignated by paragraph (1)), 
    insert ``technology,'' after ``instructional equipment'';
        (4) by inserting after subparagraph (C) (as redesignated by 
    paragraph (1)) the following:
            ``(D) a maintenance, storage, or utility facility that is 
        essential to the operation of a facility, a library, a 
        dormitory, equipment, instrumentation, a fixture, real property 
        or an interest therein, described in this paragraph;
            ``(E) a facility designed to provide primarily outpatient 
        health care for students or faculty;
            ``(F) physical infrastructure essential to support the 
        projects authorized under this paragraph, including roads, 
        sewer and drainage systems, and water, power, lighting, 
        telecommunications, and other utilities;''; and
        (5) in subparagraph (H) (as redesignated by paragraph (2)), by 
    striking ``(C)'' and inserting ``(G)''.
    (b) Responsibilities.--Section 343 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-2) is amended--
        (1) in subsection (b)(8) (as redesignated by section 301(a)(4)) 
    (20 U.S.C. 1132c-2(b)(8)), by striking ``10 percent'' each place 
    the term appears and inserting ``5 percent''; and
        (2) by adding at the end the following:
    ``(e) Notwithstanding any other provision of law, a qualified bond 
guaranteed under this part may be sold to any party that offers terms 
that the Secretary determines are in the best interest of the eligible 
institution.''.
    (c) Technical Assistance.--Section 345 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-4) is amended--
        (1) in paragraph (5), by striking ``and'' after the semicolon;
        (2) in paragraph (6), by striking the period and inserting ``; 
    and''; and
        (3) by adding at the end the following:
        ``(7) may, directly or by grant or contract, provide technical 
    assistance to eligible institutions to prepare the institutions to 
    qualify, apply for, and maintain a capital improvement loan, 
    including a loan under this part.''.
    (d) Prohibition.--Section 346 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-5) is repealed.
    (e) Advisory Board.--Section 347 (as redesignated by section 
301(a)(4)) (20 U.S.C. 1132c-6) is amended--
        (1) in subsection (b)--
            (A) in subparagraph (D), by inserting ``, or the 
        president's designee.'' after the period; and
            (B) in subparagraph (E), by inserting ``, or the designee 
        of the Association'' before the period; and
        (2) by striking subsection (c).

SEC. 307. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM.

    (a) Minority Science and Engineering Improvement Program 
Findings.--Subpart 1 of part E of title III (as redesignated by 
paragraphs (6) and (7) of section 301) (20 U.S.C. 1135b et seq.) is 
amended by inserting after the subpart heading the following:

``SEC. 350. FINDINGS.

    ``Congress makes the following findings:
        ``(1) It is incumbent on the Federal Government to support the 
    technological and economic competitiveness of the United States by 
    improving and expanding the scientific and technological capacity 
    of the United States. More and better prepared scientists, 
    engineers, and technical experts are needed to improve and expand 
    such capacity.
        ``(2) As the Nation's population becomes more diverse, it is 
    important that the educational and training needs of all Americans 
    are met. Underrepresentation of minorities in science and 
    technological fields diminishes our Nation's competitiveness by 
    impairing the quantity of well prepared scientists, engineers, and 
    technical experts in these fields.
        ``(3) Despite significant limitations in resources, minority 
    institutions provide an important educational opportunity for 
    minority students, particularly in science and engineering fields. 
    Aid to minority institutions is a good way to address the 
    underrepresentation of minorities in science and technological 
    fields.
        ``(4) There is a strong Federal interest in improving science 
    and engineering programs at minority institutions as such programs 
    lag behind in program offerings and in student enrollment compared 
    to such programs at other institutions of higher education.''.
    (b) Eligibility for Grants.--Section 361 (as redesignated by 
section 301(a)(7)) (20 U.S.C. 1135d) is amended to read as follows:

``SEC. 361. ELIGIBILITY FOR GRANTS.

    ``Eligibility to receive grants under this part is limited to--
        ``(1) public and private nonprofit institutions of higher 
    education that--
            ``(A) award baccalaureate degrees; and
            ``(B) are minority institutions;
        ``(2) public or private nonprofit institutions of higher 
    education that--
            ``(A) award associate degrees; and
            ``(B) are minority institutions that--
                ``(i) have a curriculum that includes science or 
            engineering subjects; and
                ``(ii) enter into a partnership with public or private 
            nonprofit institutions of higher education that award 
            baccalaureate degrees in science and engineering;
        ``(3) nonprofit science-oriented organizations, professional 
    scientific societies, and institutions of higher education that 
    award baccalaureate degrees, that--
            ``(A) provide a needed service to a group of minority 
        institutions; or
            ``(B) provide in-service training for project directors, 
        scientists, and engineers from minority institutions; or
        ``(4) consortia of organizations, that provide needed services 
    to one or more minority institutions, the membership of which may 
    include--
            ``(A) institutions of higher education which have a 
        curriculum in science or engineering;
            ``(B) institutions of higher education that have a graduate 
        or professional program in science or engineering;
            ``(C) research laboratories of, or under contract with, the 
        Department of Energy;
            ``(D) private organizations that have science or 
        engineering facilities; or
            ``(E) quasi-governmental entities that have a significant 
        scientific or engineering mission.''.
    (c) Definitions.--Section 365(4) (as redesignated by section 
301(a)(7)) (20 U.S.C. 1135d-5(4)) is amended by inserting 
``behavioral,'' after ``physical,''.
    (d) Conforming amendments.--The heading for subpart 1 of part E of 
title III (as redesignated by paragraphs (6) and (7) of section 301(a)) 
is amended by inserting ``and Engineering'' before ``Improvement 
Program''.

SEC. 308. GENERAL PROVISIONS.

    (a) Applications for Assistance.--Subsection (a) of section 391(a) 
(as redesignated by section 301(a)(2)) (20 U.S.C. 1066(a)) is amended 
to read as follows:
    ``(a) Applications.--
        ``(1) Applications required.--Any institution which is eligible 
    for assistance under this title shall submit to the Secretary an 
    application for assistance at such time, in such form, and 
    containing such information, as may be necessary to enable the 
    Secretary to evaluate the institution's need for the assistance. 
    Subject to the availability of appropriations to carry out this 
    title, the Secretary may approve an application for assistance 
    under this title only if the Secretary determines that--
            ``(A) the application meets the requirements of subsection 
        (b);
            ``(B) the applicant is eligible for assistance in 
        accordance with the part of this title under which the 
        assistance is sought; and
            ``(C) the applicant's performance goals are sufficiently 
        rigorous as to meet the purposes of this title and the 
        performance objectives and indicators for this title 
        established by the Secretary pursuant to the Government 
        Performance and Results Act of 1993 and the amendments made by 
        such Act.
        ``(2) Preliminary applications.--In carrying out paragraph (1), 
    the Secretary may develop a preliminary application for use by 
    eligible institutions applying under part A prior to the submission 
    of the principal application.''.
    (b) Applications.--Paragraph (1) of section 391(b) (as redesignated 
by section 301(a)(2)) (20 U.S.C. 1066(b)) is amended by inserting ``, D 
or E'' after ``part C''.
    (c) Contents of Applications.--Section 391(b)(6) (as redesignated 
by section 301(a)(2)) is amended by inserting before the semicolon the 
following: ``, except that for purposes of section 316, paragraphs (2) 
and (3) of section 396 shall not apply''.
    (d) Waivers.--Section 392(a) (as redesignated by section 301(a)(2)) 
(20 U.S.C. 1067(a)) is amended--
        (1) by striking ``or'' at the end of paragraph (5);
        (2) by redesignating paragraph (6) as paragraph (7); and
        (3) by inserting after paragraph (5) the following new 
    paragraph:
        ``(6) that is a tribally controlled college or university as 
    defined in section 2 of the Tribally Controlled College or 
    University Assistance Act of 1978; or''.
    (e) Application Review Process.--Section 393(a) (as redesignated by 
section 301(a)(2)) (20 U.S.C. 1068(a)) is amended--
        (1) in paragraph (2), by striking ``Native American colleges 
    and universities'' and inserting ``Tribal Colleges and 
    Universities''; and
        (2) by adding at the end the following:
    ``(d) Exclusion.--The provisions of this section shall not apply to 
applications submitted under part D.''.
    (f) Waivers.--Paragraph (2) of section 395(b) (as redesignated by 
section 301(a)(2)) (20 U.S.C. 1069b(b)) is amended by striking ``title 
IV, VII, or VIII'' and inserting ``part D or title IV''.
    (g) Continuation Awards.--Part F of title III is amended by 
inserting after section 397 (as redesignated by section 301(a)(2)) (20 
U.S.C. 1069d) the following:

``SEC. 398. CONTINUATION AWARDS.

    ``The Secretary shall make continuation awards under this title for 
the second and succeeding years of a grant only after determining that 
the recipient is making satisfactory progress in carrying out the 
grant.''.
    (h) Authorization of Appropriations.--Section 399(a) (as 
redesignated by section 301(a)(2)) (20 U.S.C. 1069f) is amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A), by striking ``1993'' and inserting 
        ``1999'';
            (B) in subparagraph (B)--
                (i) in clause (i), by striking ``$45,000,000 for fiscal 
            year 1993'' and inserting ``$10,000,000 for fiscal year 
            1999'';
                (ii) by striking clause (ii); and
                (iii) by striking ``(B)(i) There'' and inserting ``(B) 
            There''; and
            (C) by adding at the end the following:
        ``(C) There are authorized to be appropriated to carry out 
    section 317, $5,000,000 for fiscal year 1999 and such sums as may 
    be necessary for each of the 4 succeeding fiscal years.'';
        (2) in paragraph (2)--
            (A) in subparagraph (A), by striking ``1993'' and inserting 
        ``1999''; and
            (B) in subparagraph (B), by striking ``$20,000,000 for 
        fiscal year 1993'' and inserting ``$35,000,000 for fiscal year 
        1999'';
        (3) in paragraph (3), by striking ``$50,000,000 for fiscal year 
    1993'' and inserting ``$10,000,000 for fiscal year 1999'';
        (4) by adding at the end the following:
        ``(4) Part d.--(A) There are authorized to be appropriated to 
    carry out part D (other than section 345(7), but including section 
    347), $110,000 for fiscal year 1999, and such sums as may be 
    necessary for each of the 4 succeeding fiscal years.
        ``(B) There are authorized to be appropriated to carry out 
    section 345(7), such sums as may be necessary for fiscal year 1999 
    and each of the 4 succeeding fiscal years.
        ``(5) Part e.--There are authorized to be appropriated to carry 
    out part E, $10,000,000 for fiscal year 1999, and such sums as may 
    be necessary for each of the 4 succeeding fiscal years.''; and
        (5) by striking subsections (c), (d), and (e).

                      TITLE IV--STUDENT ASSISTANCE

                       PART A--GRANTS TO STUDENTS

SEC. 401. FEDERAL PELL GRANTS.

    (a) Extension of Authority.--Section 401(a)(1) (20 U.S.C. 
1070a(a)(1)) is amended--
        (1) in the first sentence, by striking ``The Secretary shall, 
    during the period beginning July 1, 1972, and ending September 30, 
    1998,'' and inserting ``For each fiscal year through fiscal year 
    2004, the Secretary shall''; and
        (2) in the second sentence, by inserting ``until such time as 
    the Secretary determines and publishes in the Federal Register with 
    an opportunity for comment, an alternative payment system that 
    provides payments to institutions in an accurate and timely 
    manner,'' after ``pay eligible students''.
    (b) Amount of Grant.--Paragraph (2)(A) of section 401(b) is amended 
to read as follows:
    ``(2)(A) The amount of the Federal Pell Grant for a student 
eligible under this part shall be--
        ``(i) $4,500 for academic year 1999-2000;
        ``(ii) $4,800 for academic year 2000-2001;
        ``(iii) $5,100 for academic year 2001-2002;
        ``(iv) $5,400 for academic year 2002-2003; and
        ``(v) $5,800 for academic year 2003-2004,
less an amount equal to the amount determined to be the expected family 
contribution with respect to that student for that year.''.
    (c) Relation of Maximum Grant to Tuition and Expenses.--Paragraph 
(3) of section 401(b) is amended to read as follows:
    ``(3)(A) For any academic year for which an appropriation Act 
provides a maximum basic grant in an amount in excess of $2,700, the 
amount of a student's basic grant shall equal $2,700 plus--
        ``(i) one-half of the amount by which such maximum basic grant 
    exceeds $2,700; plus
        ``(ii) the lesser of--
            ``(I) the remaining one-half of such excess; or
            ``(II) the sum of the student's tuition and, if the student 
        has dependent care expenses (as described in section 472(8)) or 
        disability-related expenses (as described in section 472(9)), 
        an allowance determined by the institution for such expenses.
    ``(B) An institution that charged only fees in lieu of tuition as 
of October 1, 1998, may include in the institution's determination of 
tuition charged, fees that would normally constitute tuition.''.
    (d) Regulations for Multiple Awards.--Section 401(b)(6) is 
amended--
        (1) by redesignating subparagraphs (A) and (B) as clauses (i) 
    and (ii), respectively;
        (2) by inserting ``(A)'' after the paragraph designation; and
        (3) by adding at the end the following:
    ``(B) The Secretary shall promulgate regulations implementing this 
paragraph.''.
    (e) Time Limit To Receive Grants.--Section 401(c) is amended by 
adding at the end the following:
    ``(4) Notwithstanding paragraph (1), the Secretary may allow, on a 
case-by-case basis, a student to receive a basic grant if the student--
        ``(A) is carrying at least one-half the normal full-time work 
    load for the course of study the student is pursuing, as determined 
    by the institution of higher education; and
        ``(B) is enrolled or accepted for enrollment in a 
    postbaccalaureate program that does not lead to a graduate degree, 
    and in courses required by a State in order for the student to 
    receive a professional certification or licensing credential that 
    is required for employment as a teacher in an elementary school or 
    secondary school in that State,
except that this paragraph shall not apply to a student who is enrolled 
in an institution of higher education that offers a baccalaureate 
degree in education.''.
    (f) Institutional Ineligibility Based on Default Rates.--Section 
401 is amended by adding at the end the following:
    ``(j) Institutional Ineligibility Based on Default Rates.--
        ``(1) In general.--No institution of higher education shall be 
    an eligible institution for purposes of this subpart if such 
    institution of higher education is ineligible to participate in a 
    loan program under part B or D as a result of a final default rate 
    determination made by the Secretary under part B or D after the 
    final publication of cohort default rates for fiscal year 1996 or a 
    succeeding fiscal year.
        ``(2) Sanctions subject to appeal opportunity.--No institution 
    may be subject to the terms of this subsection unless the 
    institution has had the opportunity to appeal the institution's 
    default rate determination under regulations issued by the 
    Secretary for the loan program authorized under part B or D, as 
    applicable. This subsection shall not apply to an institution that 
    was not participating in the loan program authorized under part B 
    or D on the date of enactment of the Higher Education Amendments of 
    1998, unless the institution subsequently participates in the loan 
    programs.''.
    (g) Conforming Amendments.--
        (1) Section 400(a)(1) (20 U.S.C. 1070(a)(1)) is amended by 
    striking ``basic educational opportunity grants'' and inserting 
    ``Federal Pell Grants''.
        (2) The heading of subpart 1 of part A of title IV (20 U.S.C. 
    1070a et seq.) is amended to read as follows:

                  ``Subpart 1--Federal Pell Grants''.

        (3) Section 401 is amended--
            (A) in the heading of the section, by striking ``basic 
        educational opportunity'' and inserting ``federal pell'';
            (B) in subsection (a)(3), by striking ``Basic grants'' and 
        inserting ``Grants'';
            (C) by striking ``basic grant'' each place the term appears 
        and inserting ``Federal Pell Grant''; and
            (D) by striking ``basic grants'' each place the term 
        appears and inserting ``Federal Pell Grants''.
        (4) Section 401(f)(3) is amended by striking ``Education and 
    Labor'' and inserting ``Education and the Workforce''.
        (5) Section 452(c) (20 U.S.C. 1087b(c)) is amended by striking 
    ``basic grants'' and inserting ``Federal Pell Grants''.
        (6) Subsections (j)(2) and (k)(3) of section 455 (20 U.S.C. 
    1087e) are each amended by striking ``basic grants'' and inserting 
    ``Federal Pell Grants''.

SEC. 402. FEDERAL TRIO PROGRAMS.

    (a) Program Authority; Authorization of Appropriations.--
        (1) Duration of grants.--Section 402A(b)(2) (20 U.S.C. 1070a-
    11(b)(2)) is amended--
            (A) by striking ``and'' at the end of subparagraph (A);
            (B) by striking the period at the end of subparagraph (B) 
        and inserting ``; and''; and
            (C) by inserting after subparagraph (B) the following new 
        subparagraph:
            ``(C) grants under section 402H shall be awarded for a 
        period determined by the Secretary.''.
        (2) Minimum grants.--Section 402A(b)(3) is amended to read as 
    follows:
        ``(3) Minimum grants.--Unless the institution or agency 
    requests a smaller amount, individual grants under this chapter 
    shall be no less than--
            ``(A) $170,000 for programs authorized by sections 402D and 
        402G;
            ``(B) $180,000 for programs authorized by sections 402B and 
        402F; and
            ``(C) $190,000 for programs authorized by sections 402C and 
        402E.''.
        (3) Procedures for awarding grants and contracts.--Subsection 
    (c) of section 402A is amended to read as follows:
    ``(c) Procedures for Awarding Grants and Contracts.--
        ``(1) Application requirements.--An eligible entity that 
    desires to receive a grant or contract under this chapter shall 
    submit an application to the Secretary in such manner and form, and 
    containing such information and assurances, as the Secretary may 
    reasonably require.
        ``(2) Prior experience.--In making grants under this chapter, 
    the Secretary shall consider each applicant's prior experience of 
    service delivery under the particular program for which funds are 
    sought. The level of consideration given the factor of prior 
    experience shall not vary from the level of consideration given 
    such factor during fiscal years 1994 through 1997, except that 
    grants made under section 402H shall not be given prior experience 
    consideration.
        ``(3)  Order of awards; program fraud.--(A) Except with respect 
    to grants made under sections 402G and 402H and as provided in 
    subparagraph (B), the Secretary shall award grants and contracts 
    under this chapter in the order of the scores received by the 
    application for such grant or contract in the peer review process 
    required under paragraph (4) and adjusted for prior experience in 
    accordance with paragraph (2) of this subsection.
        ``(B) The Secretary is not required to provide assistance to a 
    program otherwise eligible for assistance under this chapter, if 
    the Secretary has determined that such program has involved the 
    fraudulent use of funds under this chapter.
        ``(4) Peer review process.--(A) The Secretary shall ensure 
    that, to the extent practicable, members of groups underrepresented 
    in higher education, including African Americans, Hispanics, Native 
    Americans, Alaska Natives, Asian Americans, and Native American 
    Pacific Islanders (including Native Hawaiians), are represented as 
    readers of applications submitted under this chapter. The Secretary 
    shall also ensure that persons from urban and rural backgrounds are 
    represented as readers.
        ``(B) The Secretary shall ensure that each application 
    submitted under this chapter is read by at least three readers who 
    are not employees of the Federal Government (other than as readers 
    of applications).
        ``(5) Number of applications for grants and contracts.--The 
    Secretary shall not limit the number of applications submitted by 
    an entity under any program authorized under this chapter if the 
    additional applications describe programs serving different 
    populations or campuses.
        ``(6) Coordination with other programs for disadvantaged 
    students.--The Secretary shall encourage coordination of programs 
    assisted under this chapter with other programs for disadvantaged 
    students operated by the sponsoring institution or agency, 
    regardless of the funding source of such programs. The Secretary 
    shall not limit an entity's eligibility to receive funds under this 
    chapter because such entity sponsors a program similar to the 
    program to be assisted under this chapter, regardless of the 
    funding source of such program. The Secretary shall permit the 
    Director of a program receiving funds under this chapter to 
    administer one or more additional programs for disadvantaged 
    students operated by the sponsoring institution or agency, 
    regardless of the funding sources of such programs.
        ``(7)  Application status.--The Secretary shall inform each 
    entity operating programs under this chapter regarding the status 
    of their application for continued funding at least 8 months prior 
    to the expiration of the grant or contract. The Secretary, in the 
    case of an entity that is continuing to operate a successful 
    program under this chapter, shall ensure that the start-up date for 
    a new grant or contract for such program immediately follows the 
    termination of the preceding grant or contract so that no 
    interruption of funding occurs for such successful reapplicants. 
    The Secretary shall inform each entity requesting assistance under 
    this chapter for a new program regarding the status of their 
    application at least 8 months prior to the proposed startup date of 
    such program.''.
        (4) Authorization of appropriations.--Section 402A(f) is 
    amended by striking ``$650,000,000 for fiscal year 1993'' and 
    inserting ``$700,000,000 for fiscal year 1999''.
        (5) Waiver.--Section 402A(g) is amended by adding at the end 
    the following:
        ``(4) Waiver.--The Secretary may waive the service requirements 
    in subparagraph (A) or (B) of paragraph (3) if the Secretary 
    determines the application of the service requirements to a veteran 
    will defeat the purpose of a program under this chapter.''.
    (b) Talent Search.--Section 402B(b) (20 U.S.C. 1070a-12(b)) is 
amended--
        (1) by striking paragraph (4) and inserting the following:
        ``(4) guidance on and assistance in secondary school reentry, 
    entry to general educational development (GED) programs, other 
    alternative education programs for secondary school dropouts, or 
    postsecondary education;'';
        (2) in paragraph (5), by inserting ``, or activities designed 
    to acquaint individuals from disadvantaged backgrounds with careers 
    in which the individuals are particularly underrepresented'' before 
    the semicolon;
        (3) in paragraph (8), by striking ``parents'' and inserting 
    ``families''; and
        (4) in paragraph (9), by inserting ``or counselors'' after 
    ``teachers''.
    (c) Upward Bound.--Section 402C (20 U.S.C. 1070a-13) is amended--
        (1) in subsection (b)--
            (A) in paragraph (2), by striking ``personal counseling'' 
        and inserting ``counseling and workshops'';
            (B) in paragraph (9)--
                (i) by inserting ``or counselors'' after ``teachers''; 
            and
                (ii) by striking ``and'' after the semicolon;
            (C) by redesignating paragraph (10) as paragraph (12);
            (D) by inserting after paragraph (9) the following:
        ``(10) work-study positions where youth participating in the 
    project are exposed to careers requiring a postsecondary degree;
        ``(11) special services to enable veterans to make the 
    transition to postsecondary education; and''; and
            (E) in paragraph (12) (as redesignated by subparagraph 
        (C)), by striking ``(9)'' and inserting ``(11)''; and
        (2) in subsection (e), by striking ``and not in excess of $40 
    per month during the remaining period of the year.'' and inserting 
    ``except that youth participating in a work-study position under 
    subsection (b)(10) may be paid a stipend of $300 per month during 
    June, July, and August. Youths participating in a project proposed 
    to be carried out under any application may be paid stipends not in 
    excess of $40 per month during the remaining period of the year.''.
    (d) Student Support Services.--Paragraph (6) of section 402D(c) (20 
U.S.C. 1070a-14(c)(6)) is amended to read as follows:
        ``(6) consider, in addition to such other criteria as the 
    Secretary may prescribe, the institution's effort, and where 
    applicable past history, in--
            ``(A) providing sufficient financial assistance to meet the 
        full financial need of each student in the project; and
            ``(B) maintaining the loan burden of each such student at a 
        manageable level.''.
    (e) Postbaccalaureate Achievement Program.--Section 402E(e)(1) (20 
U.S.C. 1070a-15(e)(1)) is amended by striking ``$2,400'' and inserting 
``$2,800''.
    (f) Staff Development Activities.--Section 402G (20 U.S.C. 1070a-
17) is amended--
        (1) in subsection (a), by inserting ``participating in,'' after 
    ``leadership personnel employed in,''; and
        (2) in subsection (b), by inserting after paragraph (3) the 
    following new paragraph:
        ``(4) The use of appropriate educational technology in the 
    operation of projects assisted under this chapter.''.
    (g) Evaluation and Dissemination.--Section 402H (20 U.S.C. 1070a-
18) is amended to read as follows:

``SEC. 402H. EVALUATIONS AND GRANTS FOR PROJECT IMPROVEMENT AND 
              DISSEMINATION PARTNERSHIP PROJECTS.

    ``(a) Evaluations.--
        ``(1) In general.--For the purpose of improving the 
    effectiveness of the programs and projects assisted under this 
    chapter, the Secretary may make grants to or enter into contracts 
    with institutions of higher education and other public and private 
    institutions and organizations to evaluate the effectiveness of the 
    programs and projects assisted under this chapter.
        ``(2) Practices.--The evaluations described in paragraph (1) 
    shall identify institutional, community, and program or project 
    practices that are particularly effective in enhancing the access 
    of low-income individuals and first-generation college students to 
    postsecondary education, the preparation of the individuals and 
    students for postsecondary education, and the success of the 
    individuals and students in postsecondary education. Such 
    evaluations shall also investigate the effectiveness of alternative 
    and innovative methods within Federal TRIO programs of increasing 
    access to, and retention of, students in postsecondary education.
    ``(b) Grants.--The Secretary may award grants to institutions of 
higher education or other private and public institutions and 
organizations, that are carrying out a program or project assisted 
under this chapter prior to the date of enactment of the Higher 
Education Amendments of 1998, to enable the institutions and 
organizations to expand and leverage the success of such programs or 
projects by working in partnership with other institutions, community-
based organizations, or combinations of such institutions and 
organizations, that are not receiving assistance under this chapter and 
are serving low-income students and first generation college students, 
in order to--
        ``(1) disseminate and replicate best practices of programs or 
    projects assisted under this chapter; and
        ``(2) provide technical assistance regarding programs and 
    projects assisted under this chapter.
    ``(c) Results.--In order to improve overall program or project 
effectiveness, the results of evaluations and grants described in this 
section shall be disseminated by the Secretary to similar programs or 
projects assisted under this subpart, as well as other individuals 
concerned with postsecondary access for and retention of low-income 
individuals and first-generation college students.''.

SEC. 403. GEAR UP PROGRAM.

    Chapter 2 of subpart 2 of part A of title IV (20 U.S.C. 1070a-21 et 
seq.) is amended to read as follows:

 ``CHAPTER 2--GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE 
                                PROGRAMS

``SEC. 404A. EARLY INTERVENTION AND COLLEGE AWARENESS PROGRAM 
              AUTHORIZED.

    ``(a) Program Authorized.--The Secretary is authorized, in 
accordance with the requirements of this chapter, to establish a 
program that--
        ``(1) encourages eligible entities to provide or maintain a 
    guarantee to eligible low-income students who obtain a secondary 
    school diploma (or its recognized equivalent), of the financial 
    assistance necessary to permit the students to attend an 
    institution of higher education; and
        ``(2) supports eligible entities in providing--
            ``(A) additional counseling, mentoring, academic support, 
        outreach, and supportive services to elementary school, middle 
        school, and secondary school students who are at risk of 
        dropping out of school; and
            ``(B) information to students and their parents about the 
        advantages of obtaining a postsecondary education and the 
        college financing options for the students and their parents.

    ``(b) Awards.--
        ``(1) In general.--From funds appropriated under section 404H 
    for each fiscal year, the Secretary shall make awards to eligible 
    entities described in paragraphs (1) and (2) of subsection (c) to 
    enable the entities to carry out the program authorized under 
    subsection (a).
        ``(2) Priority.--In making awards to eligible entities 
    described in paragraph (c)(1), the Secretary shall--
            ``(A) give priority to eligible entities that--
                ``(i) on the day before the date of enactment of the 
            Higher Education Amendments of 1998, carried out successful 
            educational opportunity programs under this chapter (as 
            this chapter was in effect on such day); and
                ``(ii) have a prior, demonstrated commitment to early 
            intervention leading to college access through 
            collaboration and replication of successful strategies;
            ``(B) ensure that students served under this chapter on the 
        day before the date of enactment of the Higher Education 
        Amendments of 1998 continue to receive assistance through the 
        completion of secondary school.
    ``(c) Definition of Eligible Entity.--For the purposes of this 
chapter, the term `eligible entity' means--
        ``(1) a State; or
        ``(2) a partnership consisting of--
            ``(A) one or more local educational agencies acting on 
        behalf of--
                ``(i) one or more elementary schools or secondary 
            schools; and
                ``(ii) the secondary schools that students from the 
            schools described in clause (i) would normally attend;
            ``(B) one or more degree granting institutions of higher 
        education; and
            ``(C) at least two community organizations or entities, 
        such as businesses, professional associations, community-based 
        organizations, philanthropic organizations, State agencies, 
        institutions or agencies sponsoring programs authorized under 
        subpart 4, or other public or private agencies or 
        organizations.

``SEC. 404B. REQUIREMENTS.

    ``(a) Funding Rules.--
        ``(1) Continuation awards.--From the amount appropriated under 
    section 404H for a fiscal year, the Secretary shall continue to 
    award grants to States under this chapter (as this chapter was in 
    effect on the day before the date of enactment of the Higher 
    Education Amendments of 1998) in accordance with the terms and 
    conditions of such grants.
        ``(2) Distribution.--From the amount appropriated under section 
    404H that remains after making continuation awards under paragraph 
    (1) for a fiscal year, the Secretary shall--
            ``(A) make available--
                ``(i) not less than 33 percent of the amount to 
            eligible entities described in section 404A(c)(1); and
                ``(ii) not less than 33 percent of the amount to 
            eligible entities described in section 404A(c)(2); and
            ``(B) award the remainder of the amount to eligible 
        entities described in paragraph (1) or (2) of section 404A(c).
        ``(3) Special rule.--The Secretary shall annually reevaluate 
    the distribution of funds described in paragraph (2)(B) based on 
    number, quality, and promise of the applications and adjust the 
    distribution accordingly.''.
    ``(b) Limitation.--Each eligible entity described in section 
404A(c)(1), and each eligible entity described in section 404A(c)(2) 
that conducts a scholarship component under section 404E, shall use not 
less than 25 percent and not more than 50 percent of grant funds 
received under this chapter for the early intervention component of an 
eligible entity's program under this chapter, except that the Secretary 
may waive the 50 percent limitation if the eligible entity demonstrates 
that the eligible entity has another means of providing the students 
with financial assistance that is described in the plan submitted under 
section 404C.
    ``(c) Coordination.--Each eligible entity shall ensure that the 
activities assisted under this chapter are, to the extent practicable, 
coordinated with, and complement and enhance--
        ``(1) services under this chapter provided by other eligible 
    entities serving the same school district or State; and
        ``(2) related services under other Federal or non-Federal 
    programs.
    ``(d) Designation of Fiscal Agent.--An eligible entity described in 
section 404A(c)(2) shall designate an institution of higher education 
or a local educational agency as the fiscal agent for the eligible 
entity.
    ``(e) Coordinators.--An eligible entity described in section 
404A(c)(2) shall have a full-time program coordinator or a part-time 
program coordinator, whose primary responsibility is a project under 
section 404C.
    ``(f) Displacement.--An eligible entity described in 404A(c)(2) 
shall ensure that the activities assisted under this chapter will not 
displace an employee or eliminate a position at a school assisted under 
this chapter, including a partial displacement such as a reduction in 
hours, wages or employment benefits.
    ``(g) Cohort Approach.--
        ``(1) In general.--The Secretary shall require that eligible 
    entities described in section 404A(c)(2)--
            ``(A) provide services under this chapter to at least one 
        grade level of students, beginning not later than 7th grade, in 
        a participating school that has a 7th grade and in which at 
        least 50 percent of the students enrolled are eligible for free 
        or reduced-price lunch under the National School Lunch Act (or, 
        if an eligible entity determines that it would promote the 
        effectiveness of a program, an entire grade level of students, 
        beginning not later than the 7th grade, who reside in public 
        housing as defined in section 3(b)(1) of the United States 
        Housing Act of 1937); and
            ``(B) ensure that the services are provided through the 
        12th grade to students in the participating grade level.
        ``(2) Coordination requirement.--In order for the Secretary to 
    require the cohort approach described in paragraph (1), the 
    Secretary shall, where applicable, ensure that the cohort approach 
    is done in coordination and collaboration with existing early 
    intervention programs and does not duplicate the services already 
    provided to a school or community.

``SEC. 404C. ELIGIBLE ENTITY PLANS.

    ``(a) Plan Required for Eligibility.--
        ``(1) In general.--In order for an eligible entity to qualify 
    for a grant under this chapter, the eligible entity shall submit to 
    the Secretary a plan for carrying out the program under this 
    chapter. Such plan shall provide for the conduct of a scholarship 
    component if required or undertaken pursuant to section 404E and an 
    early intervention component required pursuant to section 404D.
        ``(2) Contents.--Each plan submitted pursuant to paragraph (1) 
    shall be in such form, contain or be accompanied by such 
    information or assurances, and be submitted at such time as the 
    Secretary may require by regulation. Each such plan shall--
            ``(A) describe the activities for which assistance under 
        this chapter is sought; and
            ``(B) provide such additional assurances as the Secretary 
        determines necessary to ensure compliance with the requirements 
        of this chapter.
    ``(b) Matching Requirement.--
        ``(1) In general.--The Secretary shall not approve a plan 
    submitted under subsection (a) unless such plan--
            ``(A) provides that the eligible entity will provide, from 
        State, local, institutional, or private funds, not less than 50 
        percent of the cost of the program, which matching funds may be 
        provided in cash or in kind;
            ``(B) specifies the methods by which matching funds will be 
        paid; and
            ``(C) includes provisions designed to ensure that funds 
        provided under this chapter shall supplement and not supplant 
        funds expended for existing programs.
        ``(2) Special rule.--Notwithstanding the matching requirement 
    described in paragraph (1)(A), the Secretary may by regulation 
    modify the percentage requirement described in paragraph (1)(A) for 
    eligible entities described in section 404A(c)(2).
    ``(c) Methods for Complying With Matching Requirement.--An eligible 
entity may count toward the matching requirement described in 
subsection (b)(1)(A)--
        ``(1) the amount of the financial assistance paid to students 
    from State, local, institutional, or private funds under this 
    chapter;
        ``(2) the amount of tuition, fees, room or board waived or 
    reduced for recipients of financial assistance under this chapter; 
    and
        ``(3) the amount expended on documented, targeted, long-term 
    mentoring and counseling provided by volunteers or paid staff of 
    nonschool organizations, including businesses, religious 
    organizations, community groups, postsecondary educational 
    institutions, nonprofit and philanthropic organizations, and other 
    organizations.
    ``(d) Peer Review Panels.--The Secretary shall convene peer review 
panels to assist in making determinations regarding the awarding of 
grants under this chapter.

``SEC. 404D. EARLY INTERVENTION.

    ``(a) Services.--
        ``(1) In general.--In order to receive a grant under this 
    chapter, an eligible entity shall demonstrate to the satisfaction 
    of the Secretary, in the plan submitted under section 404C, that 
    the eligible entity will provide comprehensive mentoring, 
    counseling, outreach, and supportive services to students 
    participating in programs under this chapter. Such counseling shall 
    include--
            ``(A) financial aid counseling and information regarding 
        the opportunities for financial assistance under this title; 
        and
            ``(B) activities or information regarding--
                ``(i) fostering and improving parent involvement in 
            promoting the advantages of a college education, academic 
            admission requirements, and the need to take college 
            preparation courses;
                ``(ii) college admissions and achievement tests; and
                ``(iii) college application procedures.
            ``(2) Methods.--The eligible entity shall demonstrate in 
        such plan, pursuant to regulations of the Secretary, the 
        methods by which the eligible entity will target services on 
        priority students described in subsection (c), if applicable.
    ``(b) Uses of Funds.--
        ``(1) In general.--The Secretary shall, by regulation, 
    establish criteria for determining whether comprehensive mentoring, 
    counseling, outreach, and supportive services programs may be used 
    to meet the requirements of subsection (a).
        ``(2) Permissible activities.--Examples of activities that meet 
    the requirements of subsection (a) include the following:
            ``(A) Providing eligible students in preschool through 
        grade 12 with a continuing system of mentoring and advising 
        that--
                ``(i) is coordinated with the Federal and State 
            community service initiatives; and
                ``(ii) may include such support services as after 
            school and summer tutoring, assistance in obtaining summer 
            jobs, career mentoring, and academic counseling.
            ``(B) Requiring each student to enter into an agreement 
        under which the student agrees to achieve certain academic 
        milestones, such as completing a prescribed set of courses and 
        maintaining satisfactory progress described in section 484(c), 
        in exchange for receiving tuition assistance for a period of 
        time to be established by each eligible entity.
            ``(C) Activities designed to ensure secondary school 
        completion and college enrollment of at-risk children, such as 
        identification of at-risk children, after school and summer 
        tutoring, assistance in obtaining summer jobs, academic 
        counseling, volunteer and parent involvement, providing former 
        or current scholarship recipients as mentor or peer counselors, 
        skills assessment, providing access to rigorous core courses 
        that reflect challenging academic standards, personal 
        counseling, family counseling and home visits, staff 
        development, and programs and activities described in this 
        subparagraph that are specially designed for students of 
        limited English proficiency.
            ``(D) Summer programs for individuals who are in their 
        sophomore or junior years of secondary school or are planning 
        to attend an institution of higher education in the succeeding 
        academic year that--
                ``(i) are carried out at an institution of higher 
            education that has programs of academic year supportive 
            services for disadvantaged students through projects 
            authorized under section 402D or through comparable 
            projects funded by the State or other sources;
                ``(ii) provide for the participation of the individuals 
            who are eligible for assistance under section 402D or who 
            are eligible for comparable programs funded by the State;
                ``(iii)(I) provide summer instruction in remedial, 
            developmental or supportive courses;
                ``(II) provide such summer services as counseling, 
            tutoring, or orientation; and
                ``(III) provide financial assistance to the individuals 
            to cover the individuals' summer costs for books, supplies, 
            living costs, and personal expenses; and
                ``(iv) provide the individuals with financial 
            assistance during each academic year the individuals are 
            enrolled at the participating institution after the summer 
            program.
            ``(E) Requiring eligible students to meet other standards 
        or requirements as the State determines necessary to meet the 
        purposes of this section.
    ``(c) Priority Students.--For eligible entities not using a cohort 
approach, the eligible entity shall treat as priority students any 
student in preschool through grade 12 who is eligible--
        ``(1) to be counted under section 1124(c) of the Elementary and 
    Secondary Education Act of 1965;
        ``(2) for free or reduced price meals under the National School 
    Lunch Act; or
        ``(3) for assistance pursuant to part A of title IV of the 
    Social Security Act.
    ``(d) Allowable Providers.--In the case of eligible entities 
described in section 404A(c)(1), the activities required by this 
section may be provided by service providers such as community-based 
organizations, schools, institutions of higher education, public and 
private agencies, nonprofit and philanthropic organizations, 
businesses, institutions and agencies sponsoring programs authorized 
under subpart 4, and other organizations the State deems appropriate.

``SEC. 404E. SCHOLARSHIP COMPONENT.

    ``(a) In General.--
        ``(1) States.--In order to receive a grant under this chapter, 
    an eligible entity described in section 404A(c)(1) shall establish 
    or maintain a financial assistance program that awards scholarships 
    to students in accordance with the requirements of this section. 
    The Secretary shall encourage the eligible entity to ensure that a 
    scholarship provided pursuant to this section is available to an 
    eligible student for use at any institution of higher education.
        ``(2) Partnerships.--An eligible entity described in section 
    404A(c)(2) may award scholarships to eligible students in 
    accordance with the requirements of this section.
    ``(b) Grant Amounts.--The maximum amount of a scholarship that an 
eligible student shall be eligible to receive under this section shall 
be established by the eligible entity. The minimum amount of the 
scholarship for each fiscal year shall not be less than the lesser of--
        ``(1) 75 percent of the average cost of attendance for an in-
    State student, in a 4-year program of instruction, at public 
    institutions of higher education in such State, as determined in 
    accordance with regulations prescribed by the Secretary; or
        ``(2) the maximum Federal Pell Grant funded under section 401 
    for such fiscal year.
    ``(c) Relation to Other Assistance.--Scholarships provided under 
this section shall not be considered for the purpose of awarding 
Federal grant assistance under this title, except that in no case shall 
the total amount of student financial assistance awarded to a student 
under this title exceed such student's total cost of attendance.
    ``(d) Eligible Students.--A student eligible for assistance under 
this section is a student who--
        ``(1) is less than 22 years old at time of first scholarship 
    award under this section;
        ``(2) receives a secondary school diploma or its recognized 
    equivalent on or after January 1, 1993;
        ``(3) is enrolled or accepted for enrollment in a program of 
    undergraduate instruction at an institution of higher education 
    that is located within the State's boundaries, except that, at the 
    State's option, an eligible entity may offer scholarship program 
    portability for recipients who attend institutions of higher 
    education outside such State; and
        ``(4) who participated in the early intervention component 
    required under section 404D.
    ``(e) Priority.--The Secretary shall ensure that each eligible 
entity places a priority on awarding scholarships to students who will 
receive a Federal Pell Grant for the academic year for which the 
scholarship is awarded under this section.
    ``(f) Special Rule.--An eligible entity may consider students who 
have successfully participated in programs funded under chapter 1 to 
have met the requirements of subsection (d)(4).

``SEC. 404F. 21ST CENTURY SCHOLAR CERTIFICATES.

    ``(a) Authority.--The Secretary, using funds appropriated under 
section 404H that do not exceed $200,000 for a fiscal year--
        ``(1) shall ensure that certificates, to be known as 21st 
    Century Scholar Certificates, are provided to all students 
    participating in programs under this chapter; and
        ``(2) may, as practicable, ensure that such certificates are 
    provided to all students in grades 6 through 12 who attend schools 
    at which at least 50 percent of the students enrolled are eligible 
    for a free or reduced price lunch under the National School Lunch 
    Act.
    ``(b) Information Required.--A 21st Century Scholar Certificate 
shall be personalized for each student and indicate the amount of 
Federal financial aid for college which a student may be eligible to 
receive.

``SEC. 404G. EVALUATION AND REPORT.

    ``(a) Evaluation.--Each eligible entity receiving a grant under 
this chapter shall biennially evaluate the activities assisted under 
this chapter in accordance with the standards described in subsection 
(b) and shall submit to the Secretary a copy of such evaluation. The 
evaluation shall permit service providers to track eligible student 
progress during the period such students are participating in the 
activities and shall be consistent with the standards developed by the 
Secretary pursuant to subsection (b).
    ``(b) Evaluation Standards.--The Secretary shall prescribe 
standards for the evaluation described in subsection (a). Such 
standards shall--
        ``(1) provide for input from eligible entities and service 
    providers; and
        ``(2) ensure that data protocols and procedures are consistent 
    and uniform.
    ``(c) Federal Evaluation.--In order to evaluate and improve the 
impact of the activities assisted under this chapter, the Secretary 
shall, from not more than 0.75 percent of the funds appropriated under 
section 404H for a fiscal year, award one or more grants, contracts, or 
cooperative agreements to or with public and private institutions and 
organizations, to enable the institutions and organizations to evaluate 
the effectiveness of the program and, as appropriate, disseminate the 
results of the evaluation.
    ``(d) Report.--The Secretary shall biennially report to Congress 
regarding the activities assisted under this chapter and the 
evaluations conducted pursuant to this section.

``SEC. 404H. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 404. ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS.

    Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 1070a-31 et 
seq.) is amended to read as follows:

        ``CHAPTER 3--ACADEMIC ACHIEVEMENT INCENTIVE SCHOLARSHIPS

``SEC. 406A. SCHOLARSHIPS AUTHORIZED.

    ``The Secretary is authorized to award scholarships to students who 
graduate from secondary school after May 1, 2000, to enable the 
students to pay the cost of attendance at an institution of higher 
education during the students first 2 academic years of undergraduate 
education, if the students--
        ``(1) are eligible to receive Federal Pell Grants for the year 
    in which the scholarships are awarded; and
        ``(2) demonstrate academic achievement by graduating in the top 
    10 percent of their secondary school graduating class.

``SEC. 406B. SCHOLARSHIP PROGRAM REQUIREMENTS.

    ``(a) Amount of Award.--
        ``(1) In general.--Except as provided in paragraph (2), the 
    amount of a scholarship awarded under this chapter for any academic 
    year shall be equal to 100 percent of the amount of the Federal 
    Pell Grant for which the recipient is eligible for the academic 
    year.
        ``(2) Adjustment for insufficient appropriations.--If, after 
    the Secretary determines the total number of eligible applicants 
    for an academic year in accordance with section 406C, funds 
    available to carry out this chapter for the academic year are 
    insufficient to fully fund all awards under this chapter for the 
    academic year, the amount of the scholarship paid to each student 
    under this chapter shall be reduced proportionately.
    ``(b) Assistance Not To Exceed Cost of Attendance.--A scholarship 
awarded under this chapter to any student, in combination with the 
Federal Pell Grant assistance and other student financial assistance 
available to such student, may not exceed the student's cost of 
attendance.

``SEC. 406C. ELIGIBILITY OF SCHOLARS.

    ``(a) Procedures Established by Regulation.--The Secretary shall 
establish by regulation procedures for the determination of eligibility 
of students for the scholarships awarded under this chapter. Such 
procedures shall include measures to prevent any secondary school from 
certifying more than 10 percent of the school's students for 
eligibility under this section.
    ``(b) Coordination.--In prescribing procedures under subsection 
(a), the Secretary shall ensure that the determination of eligibility 
and the amount of the scholarship is determined in a timely and 
accurate manner consistent with the requirements of section 482 and the 
submission of the financial aid form required by section 483. For such 
purposes, the Secretary may provide that, for the first academic year 
of a student's 2 academic years of eligibility under this chapter, 
class rank may be determined prior to graduation from secondary school, 
at such time and in such manner as the Secretary may specify in 
regulations prescribed under this chapter.

``SEC. 406D. STUDENT REQUIREMENTS.

    ``(a) In General.--Each eligible student desiring a scholarship 
under this chapter shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(b) Continuing Eligibility.--In order for a student to continue 
to be eligible to receive a scholarship under this chapter for the 
second year of undergraduate education, the eligible student shall 
maintain eligibility to receive a Federal Pell Grant for that year, 
including fulfilling the requirements for satisfactory progress 
described in section 484(c).

``SEC. 407E. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 405. REPEALS.

    Chapters 4 through 8 of subpart 2 of part A of title IV (20 U.S.C. 
1070a-41 et seq. and 1070a-81 et seq.) are repealed.

SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

    (a) Authorization of Appropriations.--Section 413A(b)(1) (20 U.S.C. 
1070b(b)(1)) is amended by striking ``1993'' and inserting ``1999''.
    (b) Use of Funds for Less-Than-Full-Time Students.--Subsection (d) 
of section 413C (20 U.S.C. 1070b-2) is amended to read as follows:
    ``(d) Use of Funds for Less-Than-Full-Time Students.--If the 
institution's allocation under this subpart is directly or indirectly 
based in part on the financial need demonstrated by students who are 
independent students or attending the institution on less than a full-
time basis, then a reasonable proportion of the allocation shall be 
made available to such students.''.
    (c) Allocation of Funds.--
        (1) Updating the base period.--Section 413D(a) (20 U.S.C. 
    1070b-3(a)) is amended--
            (A) in paragraph (1), by striking ``received and used under 
        this part for fiscal year 1985'' and inserting ``received under 
        subsections (a) and (b) of this section for fiscal year 1999 
        (as such subsections were in effect with respect to allocations 
        for such fiscal year)'';
            (B) in paragraph (2)--
                (i) in subparagraphs (A) and (B), by striking ``1985'' 
            each place the term appears and inserting ``1999''; and
                (ii) in subparagraph (C)(i), by striking ``1986'' and 
            inserting ``2000''.
        (2) Elimination of pro rata share.--Section 413D is further 
    amended--
            (A) by striking subsection (b);
            (B) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (C) in subsection (c)(2)(A)(i), by striking ``subsection 
        (d)'' and inserting ``subsection (c)''; and
            (D) by redesignating subsections (c), (d), (e), and (f) as 
        subsections (b), (c), (d), and (e), respectively.
        (3) Effective Date.--The amendments made by this subsection 
    shall apply with respect to allocations of amounts appropriated 
    pursuant to section 413A(b) of the Higher Education Act of 1965 for 
    fiscal year 2000 or any succeeding fiscal year.
    (d) Carryover and Carryback Authority.--Subpart 3 of part A of 
title IV (20 U.S.C. 1070b et seq.) is amended by adding at the end the 
following:

``SEC. 413E. CARRYOVER AND CARRYBACK AUTHORITY.

    ``(a) Carryover Authority.--Of the sums made available to an 
eligible institution under this subpart for a fiscal year, not more 
than 10 percent may, at the discretion of the institution, remain 
available for expenditure during the succeeding fiscal year to carry 
out the program under this subpart.
    ``(b) Carryback Authority.--
        ``(1) In general.--Of the sums made available to an eligible 
    institution under this subpart for a fiscal year, not more than 10 
    percent may, at the discretion of the institution, be used by the 
    institution for expenditure for the fiscal year preceding the 
    fiscal year for which the sums were appropriated.
        ``(2) Use of carried-back funds.--An eligible institution may 
    make grants to students after the end of the academic year, but 
    prior to the beginning of the succeeding fiscal year, from such 
    succeeding fiscal year's appropriations.''.

SEC. 407. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM.

    (a) Amendment to Subpart Heading.--
        (1) In general.--The heading for subpart 4 of part A of title 
    IV (20 U.S.C. 1070c et seq.) is amended to read as follows:

 ``Subpart 4--Leveraging Educational Assistance Partnership Program''.

        (2) Conforming amendments.--Subpart 4 of part A of title IV (20 
    U.S.C. 1070c et seq.) is amended--
            (A) in section 415B(b) (20 U.S.C. 1070c-1(b)), by striking 
        ``State student grant incentive'' and inserting ``leveraging 
        educational assistance partnership''; and
            (B) in the heading for section 415C (20 U.S.C. 1070c-2), by 
        striking ``state student incentive grant'' and inserting 
        ``leveraging educational assistance partnership''.
    (b) Authorization of Appropriations.--Section 415A(b) (20 U.S.C. 
1070c(b)) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999'';
        (2) by redesignating paragraph (2) as paragraph (3); and
        (3) by inserting after paragraph (1) the following:
        ``(2) Reservation.--For any fiscal year for which the amount 
    appropriated under paragraph (1) exceeds $30,000,000, the excess 
    shall be available to carry out section 415E.''.
    (c) Special Leveraging Educational Assistance Partnership 
Program.--Subpart 4 of part A of title IV (20 U.S.C. 1070c et seq.) is 
amended--
        (1) by redesignating section 415E as 415F; and
        (2) by inserting after section 415D the following:

``SEC. 415E. SPECIAL LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP 
              PROGRAM.

    ``(a) In General.--From amounts reserved under section 415A(b)(2) 
for each fiscal year, the Secretary shall--
        ``(1) make allotments among States in the same manner as the 
    Secretary makes allotments among States under section 415B; and
        ``(2) award grants to States, from allotments under paragraph 
    (1), to enable the States to pay the Federal share of the cost of 
    the authorized activities described in subsection (c).
    ``(b) Applicability Rule.--The provisions of this subpart which are 
not inconsistent with this section shall apply to the program 
authorized by this section.
    ``(c) Authorized Activities.--Each State receiving a grant under 
this section may use the grant funds for--
        ``(1) increasing the dollar amount of grants awarded under 
    section 415B to eligible students who demonstrate financial need;
        ``(2) carrying out transition programs from secondary school to 
    postsecondary education for eligible students who demonstrate 
    financial need;
        ``(3) carrying out a financial aid program for eligible 
    students who demonstrate financial need and wish to enter careers 
    in information technology, or other fields of study determined by 
    the State to be critical to the State's workforce needs;
        ``(4) making funds available for community service work-study 
    activities for eligible students who demonstrate financial need;
        ``(5) creating a postsecondary scholarship program for eligible 
    students who demonstrate financial need and wish to enter teaching;
        ``(6) creating a scholarship program for eligible students who 
    demonstrate financial need and wish to enter a program of study 
    leading to a degree in mathematics, computer science, or 
    engineering;
        ``(7) carrying out early intervention programs, mentoring 
    programs, and career education programs for eligible students who 
    demonstrate financial need; and
        ``(8) awarding merit or academic scholarships to eligible 
    students who demonstrate financial need.
    ``(d) Maintenance of Effort Requirement.--Each State receiving a 
grant under this section for a fiscal year shall provide the Secretary 
an assurance that the aggregate amount expended per student or the 
aggregate expenditures by the State, from funds derived from non-
Federal sources, for the authorized activities described in subsection 
(c) for the preceding fiscal year were not less than the amount 
expended per student or the aggregate expenditures by the State for the 
activities for the second preceding fiscal year.
    ``(e) Federal Share.--The Federal share of the cost of the 
authorized activities described in subsection (c) for any fiscal year 
shall be not more than 33\1/3\ percent.''.
    (c) Technical and Conforming Amendments.--
        (1) Purpose.--Subsection (a) of section 415A (20 U.S.C. 
    1070c(a)) is amended to read as follows:
    ``(a) Purpose of Subpart.--It is the purpose of this subpart to 
make incentive grants available to States to assist States in--
        ``(1) providing grants to--
            ``(A) eligible students attending institutions of higher 
        education or participating in programs of study abroad that are 
        approved for credit by institutions of higher education at 
        which such students are enrolled; and
            ``(B) eligible students for campus-based community service 
        work-study; and
        ``(2) carrying out the activities described in section 415F.''.
        (2) Allotment.--Section 415B(a)(1) (20 U.S.C. 1070c-1(a)(1)) is 
    amended by inserting ``and not reserved under section 415A(b)(2)'' 
    after ``415A(b)(1)''.

SEC. 408. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN 
              MIGRANT AND SEASONAL FARMWORK.

    (a) Coordination.--Section 418A(d) (20 U.S.C. 1070d-2(d)) is 
amended by inserting after ``contains assurances'' the following: 
``that the grant recipient will coordinate the project, to the extent 
feasible, with other local, State, and Federal programs to maximize the 
resources available for migrant students, and''.
    (b) Authorization of Appropriations.--Section 418A(g) is amended by 
striking ``1993'' each place the term appears and inserting ``1999''.
    (c) Data Collection.--Section 418A is amended--
        (1) by redesignating subsection (g) (as amended by subsection 
    (b)) as subsection (h); and
        (2) by inserting after subsection (f) the following:
    ``(g) Data Collection.--The National Center for Education 
Statistics shall collect postsecondary education data on migrant 
students.''.
    (d) Technical Amendment.--Section 418A(e) is amended by striking 
``authorized by subpart 4 of this part in accordance with section 
417A(b)(2)'' and inserting ``in accordance with section 402A(c)(1)''.

SEC. 409. ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM.

    (a) FAS Eligibility.--Section 419D (20 U.S.C. 1070d-34) is amended 
by adding at the end thereof the following:
    ``(e) FAS Eligibility.--
        ``(1) Fiscal years 2000 through 2004.--Notwithstanding any 
    other provision of this subpart, in the case of students from the 
    Freely Associated States who may be selected to receive a 
    scholarship under this subpart for the first time for any of the 
    fiscal years 2000 through 2004--
            ``(A) there shall be 10 scholarships in the aggregate 
        awarded to such students for each of the fiscal years 2000 
        through 2004; and
            ``(B) the Pacific Regional Educational Laboratory shall 
        administer the program under this subpart in the case of 
        scholarships for students in the Freely Associated States.
        ``(2) Termination of eligibility.--A student from the Freely 
    Associated States shall not be eligible to receive a scholarship 
    under this subpart after September 30, 2004.''.
    (b) Authorization of Appropriations.--Section 419K (20 U.S.C. 
1070d-41) is amended by striking ``$10,000,000 for fiscal year 1993'' 
and inserting ``$45,000,000 for fiscal year 1999''.

SEC. 410. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    Part A of title IV (20 U.S.C. 1070 et seq.) is amended by inserting 
after subpart 6 (20 U.S.C. 1070d-31 et seq.) the following:

         ``Subpart 7--Child Care Access Means Parents in School

``SEC. 419N. CHILD CARE ACCESS MEANS PARENTS IN SCHOOL.

    ``(a) Purpose.--The purpose of this section is to support the 
participation of low-income parents in postsecondary education through 
the provision of campus-based child care services.
    ``(b) Program Authorized.--
        ``(1) Authority.--The Secretary may award grants to 
    institutions of higher education to assist the institutions in 
    providing campus-based child care services to low-income students.
        ``(2) Amount of grants.--
            ``(A) In general.--The amount of a grant awarded to an 
        institution of higher education under this section for a fiscal 
        year shall not exceed 1 percent of the total amount of all 
        Federal Pell Grant funds awarded to students enrolled at the 
        institution of higher education for the preceding fiscal year.
            ``(B) Minimum.--A grant under this section shall be awarded 
        in an amount that is not less than $10,000.
        ``(3) Duration; renewal; and payments.--
            ``(A) Duration.--The Secretary shall award a grant under 
        this section for a period of 4 years.
            ``(B) Payments.--Subject to subsection (e)(2), the 
        Secretary shall make annual grant payments under this section.
        ``(4) Eligible institutions.--An institution of higher 
    education shall be eligible to receive a grant under this section 
    for a fiscal year if the total amount of all Federal Pell Grant 
    funds awarded to students enrolled at the institution of higher 
    education for the preceding fiscal year equals or exceeds $350,000.
        ``(5) Use of funds.--Grant funds under this section shall be 
    used by an institution of higher education to support or establish 
    a campus-based child care program primarily serving the needs of 
    low-income students enrolled at the institution of higher 
    education. Grant funds under this section may be used to provide 
    before and after school services to the extent necessary to enable 
    low-income students enrolled at the institution of higher education 
    to pursue postsecondary education.
        ``(6) Construction.--Nothing in this section shall be construed 
    to prohibit an institution of higher education that receives grant 
    funds under this section from serving the child care needs of the 
    community served by the institution.
        ``(7) Definition of low-income student.--For the purpose of 
    this section, the term ``low-income student'' means a student who 
    is eligible to receive a Federal Pell Grant for the fiscal year for 
    which the determination is made.
    ``(c) Applications.--An institution of higher education desiring a 
grant under this section shall submit an application to the Secretary 
at such time, in such manner, and accompanied by such information as 
the Secretary may require. Each application shall--
        ``(1) demonstrate that the institution is an eligible 
    institution described in subsection (b)(4);
        ``(2) specify the amount of funds requested;
        ``(3) demonstrate the need of low-income students at the 
    institution for campus-based child care services by including in 
    the application--
            ``(A) information regarding student demographics;
            ``(B) an assessment of child care capacity on or near 
        campus;
            ``(C) information regarding the existence of waiting lists 
        for existing child care;
            ``(D) information regarding additional needs created by 
        concentrations of poverty or by geographic isolation; and
            ``(E) other relevant data;
        ``(4) contain a description of the activities to be assisted, 
    including whether the grant funds will support an existing child 
    care program or a new child care program;
        ``(5) identify the resources, including technical expertise and 
    financial support, the institution will draw upon to support the 
    child care program and the participation of low-income students in 
    the program, such as accessing social services funding, using 
    student activity fees to help pay the costs of child care, using 
    resources obtained by meeting the needs of parents who are not low-
    income students, and accessing foundation, corporate or other 
    institutional support, and demonstrate that the use of the 
    resources will not result in increases in student tuition;
        ``(6) contain an assurance that the institution will meet the 
    child care needs of low-income students through the provision of 
    services, or through a contract for the provision of services;
        ``(7) describe the extent to which the child care program will 
    coordinate with the institution's early childhood education 
    curriculum, to the extent the curriculum is available, to meet the 
    needs of the students in the early childhood education program at 
    the institution, and the needs of the parents and children 
    participating in the child care program assisted under this 
    section;
        ``(8) in the case of an institution seeking assistance for a 
    new child care program--
            ``(A) provide a timeline, covering the period from receipt 
        of the grant through the provision of the child care services, 
        delineating the specific steps the institution will take to 
        achieve the goal of providing low-income students with child 
        care services;
            ``(B) specify any measures the institution will take to 
        assist low-income students with child care during the period 
        before the institution provides child care services; and
            ``(C) include a plan for identifying resources needed for 
        the child care services, including space in which to provide 
        child care services, and technical assistance if necessary;
        ``(9) contain an assurance that any child care facility 
    assisted under this section will meet the applicable State or local 
    government licensing, certification, approval, or registration 
    requirements; and
        ``(10) contain a plan for any child care facility assisted 
    under this section to become accredited within 3 years of the date 
    the institution first receives assistance under this section.
    ``(d) Priority.--The Secretary shall give priority in awarding 
grants under this section to institutions of higher education that 
submit applications describing programs that--
        ``(1) leverage significant local or institutional resources, 
    including in-kind contributions, to support the activities assisted 
    under this section; and
        ``(2) utilize a sliding fee scale for child care services 
    provided under this section in order to support a high number of 
    low-income parents pursuing postsecondary education at the 
    institution.
    ``(e) Reporting Requirements; Continuing Eligibility.--
        ``(1) Reporting requirements.--
            ``(A) Reports.--Each institution of higher education 
        receiving a grant under this section shall report to the 
        Secretary 18 months, and 36 months, after receiving the first 
        grant payment under this section.
            ``(B) Contents.--The report shall include--
                ``(i) data on the population served under this section;
                ``(ii) information on campus and community resources 
            and funding used to help low-income students access child 
            care services;
                ``(iii) information on progress made toward 
            accreditation of any child care facility; and
                ``(iv) information on the impact of the grant on the 
            quality, availability, and affordability of campus-based 
            child care services.
        ``(2) Continuing eligibility.--The Secretary shall make the 
    third annual grant payment under this section to an institution of 
    higher education only if the Secretary determines, on the basis of 
    the 18-month report submitted under paragraph (1), that the 
    institution is making a good faith effort to ensure that low-income 
    students at the institution have access to affordable, quality 
    child care services.
    ``(f) Construction.--No funds provided under this section shall be 
used for construction, except for minor renovation or repair to meet 
applicable State or local health or safety requirements.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $45,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.''.

SEC. 411. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

    Subpart 8 of part A of title IV (20 U.S.C. 1070 et seq.) is amended 
to read as follows:

          ``Subpart 8--Learning Anytime Anywhere Partnerships

``SEC. 420D. FINDINGS.

    ``Congress makes the following findings:
        ``(1) The nature of postsecondary education delivery is 
    changing, and new technology and other related innovations can 
    provide promising education opportunities for individuals who are 
    currently not being served, particularly for individuals without 
    easy access to traditional campus-based postsecondary education or 
    for whom traditional courses are a poor match with education or 
    training needs.
        ``(2) Individuals, including individuals seeking basic or 
    technical skills or their first postsecondary experience, 
    individuals with disabilities, dislocated workers, individuals 
    making the transition from welfare-to-work, and individuals who are 
    limited by time and place constraints can benefit from 
    nontraditional, noncampus-based postsecondary education 
    opportunities and appropriate support services.
        ``(3) The need for high-quality, nontraditional, technology-
    based education opportunities is great, as is the need for skill 
    competency credentials and other measures of educational progress 
    and attainment that are valid and widely accepted, but neither need 
    is likely to be adequately addressed by the uncoordinated efforts 
    of agencies and institutions acting independently and without 
    assistance.
        ``(4) Partnerships, consisting of institutions of higher 
    education, community organizations, or other public or private 
    agencies or organizations, can coordinate and combine institutional 
    resources--
            ``(A) to provide the needed variety of education options to 
        students; and
            ``(B) to develop new means of ensuring accountability and 
        quality for innovative education methods.

``SEC. 420E. PURPOSE; PROGRAM AUTHORIZED.

    ``(a) Purpose.--It is the purpose of this subpart to enhance the 
delivery, quality, and accountability of postsecondary education and 
career-oriented lifelong learning through technology and related 
innovations.
    ``(b) Program Authorized.--
        ``(1) Grants.--
            ``(A) In general.--The Secretary may, from funds 
        appropriated under section 420J make grants to, or enter into 
        contracts or cooperative agreements with, eligible partnerships 
        to carry out the authorized activities described in section 
        420G.
            ``(B) Duration.--Grants under this subpart shall be awarded 
        for periods that do not exceed 5 years.
        ``(2) Definition of eligible partnership.--For purposes of this 
    subpart, the term `eligible partnership' means a partnership 
    consisting of 2 or more independent agencies, organizations, or 
    institutions. The agencies, organizations, or institutions may 
    include institutions of higher education, community organizations, 
    and other public and private institutions, agencies, and 
    organizations.

``SEC. 420F. APPLICATION.

    ``(a) Requirement.--An eligible partnership desiring to receive a 
grant under this subpart shall submit an application to the Secretary, 
in such form and containing such information, as the Secretary may 
require.
    ``(b) Contents.--Each application shall include--
        ``(1) the name of each partner and a description of the 
    responsibilities of the partner, including the designation of a 
    nonprofit organization as the fiscal agent for the partnership;
        ``(2) a description of the need for the project, including a 
    description of how the project will build on any existing services 
    and activities;
        ``(3) a listing of human, financial (other than funds provided 
    under this subpart), and other resources that each member of the 
    partnership will contribute to the partnership, and a description 
    of the efforts each member of the partnership will make in seeking 
    additional resources; and
        ``(4) a description of how the project will operate, including 
    how funds awarded under this subpart will be used to meet the 
    purpose of this subpart.

``SEC. 420G. AUTHORIZED ACTIVITIES.

    ``Funds awarded to an eligible partnership under this subpart shall 
be used to--
        ``(1) develop and assess model distance learning programs or 
    innovative educational software;
        ``(2) develop methodologies for the identification and 
    measurement of skill competencies;
        ``(3) develop and assess innovative student support services; 
    or
        ``(4) support other activities that are consistent with the 
    purpose of this subpart.

``SEC. 420H. MATCHING REQUIREMENT.

    ``Federal funds shall provide not more than 50 percent of the cost 
of a project under this subpart. The non-Federal share of project costs 
may be in cash or in kind, fairly evaluated, including services, 
supplies, or equipment.

``SEC. 420I. PEER REVIEW.

    ``The Secretary shall use a peer review process to review 
applications under this subpart and to make recommendations for funding 
under this subpart to the Secretary.

``SEC. 420J. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this subpart 
$10,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

             PART B--FEDERAL FAMILY EDUCATION LOAN PROGRAM

SEC. 411. LIMITATION REPEALED.

    Section 421 (20 U.S.C. 1071) is amended by striking subsection (d).

SEC. 412. ADVANCES TO RESERVE FUNDS.

    Section 422 (20 U.S.C. 1072) is amended--
        (1) in subsection (a)(2), by striking ``428(c)(10)(E)'' and 
    inserting ``428(c)(9)(E)'';
        (2) in subsection (c)--
            (A) in paragraph (6)(B)(i), by striking ``written'' and 
        inserting ``written, electronic,'';
            (B) in paragraph (7)(A), by striking ``during the 
        transition from the Federal Family Education Loan Program under 
        this part to the Federal Direct Student Loan Program under part 
        D of this title''; and
            (C) in paragraph (7)(B), by striking ``428(c)(10)(F)(v)'' 
        and inserting ``428(c)(9)(F)(v)'';
        (3) in the first and second sentences of subsection (g)(1), by 
    striking ``or the program authorized by part D of this title'' each 
    place it appears; and
        (4) by adding at the end the following:
    ``(i) Additional Recall of Reserves.--
        ``(1) In general.--Notwithstanding any other provision of law 
    and subject to paragraph (4), the Secretary shall recall, from 
    reserve funds held in the Federal Student Loan Reserve Funds 
    established under section 422A by guaranty agencies--
            ``(A) $85,000,000 in fiscal year 2002;
            ``(B) $82,500,000 in fiscal year 2006; and
            ``(C) $82,500,000 in fiscal year 2007.
        ``(2) Deposit.--Funds recalled by the Secretary under this 
    subsection shall be deposited in the Treasury.
        ``(3) Required share.--The Secretary shall require each 
    guaranty agency to return reserve funds under paragraph (1) on the 
    basis of the agency's required share. For purposes of this 
    paragraph, a guaranty agency's required share shall be determined 
    as follows:
            ``(A) Equal percentage.--The Secretary shall require each 
        guaranty agency to return an amount representing an equal 
        percentage reduction in the amount of reserve funds held by the 
        agency on September 30, 1996.
            ``(B) Calculation.--The equal percentage reduction shall be 
        the percentage obtained by dividing--
                ``(i) $250,000,000, by
                ``(ii) the total amount of all guaranty agencies' 
            reserve funds held on September 30, 1996, less any amounts 
            subject to recall under subsection (h).
            ``(C) Special rule.--Notwithstanding subparagraphs (A) and 
        (B), the percentage reduction under subparagraph (B) shall not 
        result in the depletion of the reserve funds of any agency 
        which charges the 1.0 percent insurance premium pursuant to 
        section 428(b)(1)(H) below an amount equal to the amount of 
        lender claim payments paid during the 90 days prior to the date 
        of the return under this subsection. If any additional amount 
        is required to be returned after deducting the total of the 
        required shares under subparagraph (B) and as a result of the 
        preceding sentence, such additional amount shall be obtained by 
        imposing on each guaranty agency to which the preceding 
        sentence does not apply, an equal percentage reduction in the 
        amount of the agency's remaining reserve funds.
        ``(4) Offset of required shares.--If any guaranty agency 
    returns to the Secretary any reserve funds in excess of the amount 
    required under this subsection or subsection (h), the total amount 
    required to be returned under paragraph (1) shall be reduced by the 
    amount of such excess reserve funds returned.
        ``(5) Definition of reserve funds.--The term `reserve funds' 
    when used with respect to a guaranty agency--
            ``(A) includes any reserve funds in cash or liquid assets 
        held by the guaranty agency, or held by, or under the control 
        of, any other entity; and
            ``(B) does not include buildings, equipment, or other 
        nonliquid assets.''.

SEC. 413. GUARANTY AGENCY REFORMS.

    (a) Federal Student Loan Reserve Fund.--Part B of title IV is 
amended by inserting after section 422 (20 U.S.C. 1072) the following 
new section:

``SEC. 422A. FEDERAL STUDENT LOAN RESERVE FUND.

    ``(a) Establishment.--Each guaranty agency shall, not later than 60 
days after the date of enactment of this section, deposit all funds, 
securities, and other liquid assets contained in the reserve fund 
established pursuant to section 422 into a Federal Student Loan Reserve 
Fund (in this section and section 422B referred to as the `Federal 
Fund'), which shall be an account of a type selected by the agency, 
with the approval of the Secretary.
    ``(b) Investment of Funds.--Funds transferred to the Federal Fund 
shall be invested in obligations issued or guaranteed by the United 
States or a State, or in other similarly low-risk securities selected 
by the guaranty agency, with the approval of the Secretary. Earnings 
from the Federal Fund shall be the sole property of the Federal 
Government.
    ``(c) Additional Deposits.--After the establishment of the Federal 
Fund, a guaranty agency shall deposit into the Federal Fund--
        ``(1) all amounts received from the Secretary as payment of 
    reinsurance on loans pursuant to section 428(c)(1);
        ``(2) from amounts collected on behalf of the obligation of a 
    defaulted borrower, a percentage amount equal to the complement of 
    the reinsurance percentage in effect when payment under the 
    guaranty agreement was made--
            ``(A) with respect to the defaulted loan pursuant to 
        sections 428(c)(6)(A) and 428F(a)(1)(B); and
            ``(B) with respect to a loan that the Secretary has repaid 
        or discharged under section 437;
        ``(3) insurance premiums collected from borrowers pursuant to 
    sections 428(b)(1)(H) and 428H(h);
        ``(4) all amounts received from the Secretary as payment for 
    supplemental preclaims activity performed prior to the date of 
    enactment of this section;
        ``(5) 70 percent of amounts received after such date of 
    enactment from the Secretary as payment for administrative cost 
    allowances for loans upon which insurance was issued prior to such 
    date of enactment; and
        ``(6) other receipts as specified in regulations of the 
    Secretary.
    ``(d) Uses of Funds.--Subject to subsection (f), the Federal Fund 
may only be used by a guaranty agency--
        ``(1) to pay lender claims pursuant to sections 428(b)(1)(G), 
    428(j), 437, and 439(q); and
        ``(2) to pay into the Agency Operating Fund established 
    pursuant to section 422B (in this section and section 422B referred 
    to as the ``Operating Fund'') a default aversion fee in accordance 
    with section 428(l).
    ``(e) Ownership of Federal Fund.--The Federal Fund, and any 
nonliquid asset (such as a building or equipment) developed or 
purchased by the guaranty agency in whole or in part with Federal 
reserve funds, regardless of who holds or controls the Federal reserve 
funds or such asset, shall be considered to be the property of the 
United States, prorated based on the percentage of such asset developed 
or purchased with Federal reserve funds, which property shall be used 
in the operation of the program authorized by this part, as provided in 
subsection (d). The Secretary may restrict or regulate the use of such 
asset only to the extent necessary to reasonably protect the 
Secretary's prorated share of the value of such asset. The Secretary 
may direct a guaranty agency, or such agency's officers or directors, 
to cease any activity involving expenditures, use, or transfer of the 
Federal Fund administered by the guaranty agency that the Secretary 
determines is a misapplication, misuse, or improper expenditure of the 
Federal Fund or the Secretary's share of such asset.
    ``(f) Transition.--
        ``(1) In general.--In order to establish the Operating Fund, 
    each guaranty agency may transfer not more than 180 days' cash 
    expenses for normal operating expenses (not including claim 
    payments) as a working capital reserve as defined in Office of 
    Management and Budget Circular A-87 (Cost Accounting Standards) 
    from the Federal Fund for deposit into the Operating Fund for use 
    in the performance of the guaranty agency's duties under this part. 
    Such transfers may occur during the first 3 years following the 
    establishment of the Operating Fund. However, no agency may 
    transfer in excess of 45 percent of the balance, as of September 
    30, 1998, of the agency's Federal Fund to the agency's Operating 
    Fund during such 3-year period. In determining the amount that may 
    be transferred, the agency shall ensure that sufficient funds 
    remain in the Federal Fund to pay lender claims within the required 
    time periods and to meet the reserve recall requirements of this 
    section and subsections (h) and (i) of section 422.
        ``(2) Special rule.--A limited number of guaranty agencies may 
    transfer interest earned on the Federal Fund to the Operating Fund 
    during the first 3 years after the date of enactment of this 
    section if the guaranty agency demonstrates to the Secretary that--
            ``(A) the cash flow in the Operating Fund will be negative 
        without the transfer of such interest; and
            ``(B) the transfer of such interest will substantially 
        improve the financial circumstances of the guaranty agency.
        ``(3) Repayment provisions.--Each guaranty agency shall begin 
    repayment of sums transferred pursuant to this subsection not later 
    than the start of the fourth year after the establishment of the 
    Operating Fund, and shall repay all amounts transferred not later 
    than 5 years from the date of the establishment of the Operating 
    Fund. With respect to amounts transferred from the Federal Fund, 
    the guaranty agency shall not be required to repay any interest on 
    the funds transferred and subsequently repaid. The guaranty agency 
    shall provide to the Secretary a reasonable schedule for repayment 
    of the sums transferred and an annual financial analysis 
    demonstrating the agency's ability to comply with the schedule and 
    repay all outstanding sums transferred.
        ``(4) Prohibition.--If a guaranty agency transfers funds from 
    the Federal Fund in accordance with this section, and fails to make 
    scheduled repayments to the Federal Fund, the agency may not 
    receive any other funds under this part until the Secretary 
    determines that the agency has made such repayments. The Secretary 
    shall pay to the guaranty agency any funds withheld in accordance 
    with this paragraph immediately upon making the determination that 
    the guaranty agency has made all such repayments.
        ``(5) Waiver.--The Secretary may--
            ``(A) waive the requirements of paragraph (3), but only 
        with respect to repayment of interest that was transferred in 
        accordance with paragraph (2); and
            ``(B) waive paragraph (4);
    for a guaranty agency, if the Secretary determines that there are 
    extenuating circumstances (such as State constitutional 
    prohibitions) beyond the control of the agency that justify such a 
    waiver.
        ``(6) Extension of repayment period for interest.--
            ``(A) Extension permitted.--The Secretary shall extend the 
        period for repayment of interest that was transferred in 
        accordance with paragraph (2) from 2 years to 5 years if the 
        Secretary determines that--
                ``(i) the cash flow of the Operating Fund will be 
            negative as a result of repayment as required by paragraph 
            (3);
                ``(ii) the repayment of the interest transferred will 
            substantially diminish the financial circumstances of the 
            guaranty agency; and
                ``(iii) the guaranty agency has demonstrated--

                    ``(I) that the agency is able to repay all 
                transferred funds by the end of the 8th year following 
                the date of establishment of the Operating Fund; and
                    ``(II) that the agency will be financially sound on 
                the completion of repayment.

            ``(B) Repayment of income on transferred funds.--All 
        repayments made to the Federal Fund during the 6th, 7th, and 
        8th years following the establishment of the Operating Fund of 
        interest that was transferred shall include the sums 
        transferred plus any income earned from the investment of the 
        sums transferred after the 5th year.
        ``(7) Investment of federal funds.--Funds transferred from the 
    Federal Fund to the Operating Fund for operating expenses shall be 
    invested in obligations issued or guaranteed by the United States 
    or a State, or in other similarly low-risk securities selected by 
    the guaranty agency, with the approval of the Secretary.
        ``(8) Special rule.--In calculating the minimum reserve level 
    required by section 428(c)(9)(A), the Secretary shall include all 
    amounts owed to the Federal Fund by the guaranty agency in the 
    calculation.''.
    (b) Agency Operating Fund Established.--Part B of title IV is 
further amended by inserting after section 422A (as added by subsection 
(a)) the following new section:

``SEC. 422B. AGENCY OPERATING FUND.

    ``(a) Establishment.--Each guaranty agency shall, not later than 60 
days after the date of enactment of this section, establish a fund 
designated as the Operating Fund.
    ``(b) Investment of Funds.--Funds deposited into the Operating Fund 
shall be invested at the discretion of the guaranty agency in 
accordance with prudent investor standards.
    ``(c) Additional Deposits.--After the establishment of the 
Operating Fund, the guaranty agency shall deposit into the Operating 
Fund--
        ``(1) the loan processing and issuance fee paid by the 
    Secretary pursuant to section 428(f);
        ``(2) 30 percent of amounts received after the date of 
    enactment of this section from the Secretary as payment for 
    administrative cost allowances for loans upon which insurance was 
    issued prior to such date of enactment;
        ``(3) the account maintenance fee paid by the Secretary in 
    accordance with section 458;
        ``(4) the default aversion fee paid in accordance with section 
    428(l);
        ``(5) amounts remaining pursuant to section 428(c)(6)(B) from 
    collection on defaulted loans held by the agency, after payment of 
    the Secretary's equitable share, excluding amounts deposited in the 
    Federal Fund pursuant to section 422A(c)(2); and
        ``(6) other receipts as specified in regulations of the 
    Secretary.
    ``(d) Uses of Funds.--
        ``(1) In general.--Funds in the Operating Fund shall be used 
    for application processing, loan disbursement, enrollment and 
    repayment status management, default aversion activities (including 
    those described in section 422(h)(8)), default collection 
    activities, school and lender training, financial aid awareness and 
    related outreach activities, compliance monitoring, and other 
    student financial aid related activities, as selected by the 
    guaranty agency.
        ``(2) Special rule.--The guaranty agency may, in the agency's 
    discretion, transfer funds from the Operating Fund to the Federal 
    Fund for use pursuant to section 422A. Such transfer shall be 
    irrevocable, and any funds so transferred shall become the sole 
    property of the United States.
        ``(3) Definitions.--For purposes of this subsection:
            ``(A) Default collection activities.--The term `default 
        collection activities' means activities of a guaranty agency 
        that are directly related to the collection of the loan on 
        which a default claim has been paid to the participating 
        lender, including the due diligence activities required 
        pursuant to regulations of the Secretary.
            ``(B) Default aversion activities.--The term `default 
        aversion activities' means activities of a guaranty agency that 
        are directly related to providing collection assistance to the 
        lender on a delinquent loan, prior to the loan's being legally 
        in a default status, including due diligence activities 
        required pursuant to regulations of the Secretary.
            ``(C) Enrollment and repayment status management.--The term 
        `enrollment and repayment status management' means activities 
        of a guaranty agency that are directly related to ascertaining 
        the student's enrollment status, including prompt notification 
        to the lender of such status, an audit of the note or written 
        agreement to determine if the provisions of that note or 
        agreement are consistent with the records of the guaranty 
        agency as to the principal amount of the loan guaranteed, and 
        an examination of the note or agreement to assure that the 
        repayment provisions are consistent with the provisions of this 
        part.
    ``(e) Ownership and Regulation of Operating Fund.--
        ``(1) Ownership.--The Operating Fund, with the exception of 
    funds transferred from the Federal Fund in accordance with section 
    422A(f), shall be considered to be the property of the guaranty 
    agency.
        ``(2) Regulation.--Except as provided in paragraph (3), the 
    Secretary may not regulate the uses or expenditure of moneys in the 
    Operating Fund, but the Secretary may require such necessary 
    reports and audits as provided in section 428(b)(2).
        ``(3) Exception.--Notwithstanding paragraphs (1) and (2), 
    during any period in which funds are owed to the Federal Fund as a 
    result of transfer under section 422A(f)--
            ``(A) moneys in the Operating Fund may only be used for 
        expenses related to the student loan programs authorized under 
        this part; and
            ``(B) the Secretary may regulate the uses or expenditure of 
        moneys in the Operating Fund.''.

SEC. 414. SCOPE AND DURATION OF FEDERAL LOAN INSURANCE PROGRAM.

    Section 424(a) (20 U.S.C. 1074(a)) is amended--
        (1) by striking ``October 1, 2002'' and inserting ``October 1, 
    2004''; and
        (2) by striking ``September 30, 2006'' and inserting 
    ``September 30, 2008''.

SEC. 415. LIMITATIONS ON INDIVIDUAL FEDERALLY INSURED LOANS AND FEDERAL 
              LOAN INSURANCE.

    Section 425(a)(1)(A) (20 U.S.C. 1075(a)(1)(A)) is amended--
        (1) in clause (i)--
            (A) by inserting ``and'' after the semicolon at the end of 
        subclause (I); and
            (B) by striking subclauses (II) and (III) and inserting the 
        following:
                ``(II) if such student is enrolled in a program of 
            undergraduate education which is less than one academic 
            year, the maximum annual loan amount that such student may 
            receive may not exceed the amount that bears the same ratio 
            to the amount specified in subclause (I) as the length of 
            such program measured in semester, trimester, quarter, or 
            clock hours bears to one academic year;''; and
        (2) by inserting ``and'' after the semicolon at the end of 
    clause (iii).

SEC. 416. APPLICABLE INTEREST RATES.

    (a) Applicable Interest Rates.--
        (1) Amendment.--Section 427A (20 U.S.C. 1077a) is amended--
            (A) by redesignating subsections (k) and (l) as subsections 
        (l) and (m), respectively; and
            (B) by inserting after subsection (j) the following:
    ``(k) Interest Rates for New Loans on or After October 1, 1998, and 
Before July 1, 2003.--
        ``(1) In general.--Notwithstanding subsection (h) and subject 
    to paragraph (2) of this subsection, with respect to any loan made, 
    insured, or guaranteed under this part (other than a loan made 
    pursuant to section 428B or 428C) for which the first disbursement 
    is made on or after October 1, 1998, and before July 1, 2003, the 
    applicable rate of interest shall, during any 12-month period 
    beginning on July 1 and ending on June 30, be determined on the 
    preceding June 1 and be equal to--
            ``(A) the bond equivalent rate of 91-day Treasury bills 
        auctioned at the final auction held prior to such June 1; plus
            ``(B) 2.3 percent,
    except that such rate shall not exceed 8.25 percent.
        ``(2) In school and grace period rules.--Notwithstanding 
    subsection (h), with respect to any loan under this part (other 
    than a loan made pursuant to section 428B or 428C) for which the 
    first disbursement is made on or after October 1, 1998, and before 
    July 1, 2003, the applicable rate of interest for interest which 
    accrues--
            ``(A) prior to the beginning of the repayment period of the 
        loan; or
            ``(B) during the period in which principal need not be paid 
        (whether or not such principal is in fact paid) by reason of a 
        provision described in section 427(a)(2)(C) or 428(b)(1)(M),
    shall be determined under paragraph (1) by substituting `1.7 
    percent' for `2.3 percent'.
        ``(3) PLUS loans.--Notwithstanding subsection (h), with respect 
    to any loan under section 428B for which the first disbursement is 
    made on or after October 1, 1998, and before July 1, 2003, the 
    applicable rate of interest shall be determined under paragraph 
    (1)--
            ``(A) by substituting `3.1 percent' for `2.3 percent'; and
            ``(B) by substituting `9.0 percent' for `8.25 percent'.
        ``(4) Consolidation loans.--With respect to any consolidation 
    loan under section 428C for which the application is received by an 
    eligible lender on or after October 1, 1998, and before July 1, 
    2003, the applicable rate of interest shall be at an annual rate on 
    the unpaid principal balance of the loan that is equal to the 
    lesser of--
            ``(A) the weighted average of the interest rates on the 
        loans consolidated, rounded to the nearest higher one-eighth of 
        1 percent; or
            ``(B) 8.25 percent.
        ``(5) Consultation.--The Secretary shall determine the 
    applicable rate of interest under this subsection after 
    consultation with the Secretary of the Treasury and shall publish 
    such rate in the Federal Register as soon as practicable after the 
    date of determination.''.
        (2) Conforming amendment.--Section 428B(d)(4) (20 U.S.C. 1078-
    2(d)(4)) is amended by striking ``section 427A(c)'' and inserting 
    ``section 427A''.
    (b) Special Allowances.--
        (1) Amendment.--Section 438(b)(2) (20 U.S.C. 1087-1(b)(2)) is 
    amended by adding at the end the following:
            ``(H) Loans disbursed on or after october 1, 1998, and 
        before july 1, 2003.--
                ``(i) In general.--Subject to paragraph (4) and clauses 
            (ii), (iii), and (iv) of this subparagraph, and except as 
            provided in subparagraph (B), the special allowance paid 
            pursuant to this subsection on loans for which the first 
            disbursement is made on or after October 1, 1998, and 
            before July 1, 2003, shall be computed--

                    ``(I) by determining the average of the bond 
                equivalent rates of 91-day Treasury bills auctioned for 
                such 3-month period;
                    ``(II) by subtracting the applicable interest rates 
                on such loans from such average bond equivalent rate;
                    ``(III) by adding 2.8 percent to the resultant 
                percent; and
                    ``(IV) by dividing the resultant percent by 4.

                ``(ii) In school and grace period.--In the case of any 
            loan for which the first disbursement is made on or after 
            October 1, 1998, and before July 1, 2003, and for which the 
            applicable rate of interest is described in section 
            427A(k)(2), clause (i)(III) of this subparagraph shall be 
            applied by substituting `2.2 percent' for `2.8 percent'.
                ``(iii) PLUS loans.--In the case of any loan for which 
            the first disbursement is made on or after October 1, 1998, 
            and before July 1, 2003, and for which the applicable rate 
            of interest is described in section 427A(k)(3), clause 
            (i)(III) of this subparagraph shall be applied by 
            substituting `3.1 percent' for `2.8 percent', subject to 
            clause (v) of this subparagraph.
                ``(iv) Consolidation loans.--In the case of any 
            consolidation loan for which the application is received by 
            an eligible lender on or after October 1, 1998, and before 
            July 1, 2003, and for which the applicable interest rate is 
            determined under section 427A(k)(4), clause (i)(III) of 
            this subparagraph shall be applied by substituting `3.1 
            percent' for `2.8 percent', subject to clause (vi) of this 
            subparagraph.
                ``(v) Limitation on special allowances for plus 
            loans.--In the case of PLUS loans made under section 428B 
            and first disbursed on or after October 1, 1998, and before 
            July 1, 2003, for which the interest rate is determined 
            under section 427A(k)(3), a special allowance shall not be 
            paid for such loan during any 12-month period beginning on 
            July 1 and ending on June 30 unless, on the June 1 
            preceding such July 1--

                    ``(I) the bond equivalent rate of 91-day Treasury 
                bills auctioned at the final auction held prior to such 
                June 1 (as determined by the Secretary for purposes of 
                such section); plus
                    ``(II) 3.1 percent,

            exceeds 9.0 percent.
                ``(vi) Limitation on special allowances for 
            consolidation loans.--In the case of consolidation loans 
            made under section 428C and for which the application is 
            received on or after October 1, 1998, and before July 1, 
            2003, for which the interest rate is determined under 
            section 427A(k)(4), a special allowance shall not be paid 
            for such loan during any 3-month period ending March 31, 
            June 30, September 30, or December 31 unless--

                    ``(I) the average of the bond equivalent rate of 
                91-day Treasury bills auctioned for such 3-month 
                period; plus
                    ``(II) 3.1 percent,

            exceeds the rate determined under section 427A(k)(4).''.
        (2) Consolidation loans.--Section 428C(c)(1) (20 U.S.C. 1078-
    3(c)(1)) is amended by striking everything preceding subparagraph 
    (B) and inserting the following:
        ``(1) Interest rate.--(A) Notwithstanding subparagraphs (B) and 
    (C), with respect to any loan made under this section for which the 
    application is received by an eligible lender on or after October 
    1, 1998, and before July 1, 2003, the applicable interest rate 
    shall be determined under section 427A(k)(4).''.
        (3) Conforming amendment.--Section 438(b)(2) (20 U.S.C. 1087-
    1(b)(2)(C)(ii)) is amended--
            (A) in subparagraph (A), by striking ``(F), and (G)'' and 
        inserting ``(F), (G), and (H)'';
            (B) in subparagraph (B)(iv), by striking ``(F), or (G)'' 
        and inserting ``(F), (G), or (H)''; and
            (C) in subparagraph (C)(ii), by striking ``subparagraph 
        (G)'' and inserting ``subparagraphs (G) and (H)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to any loan made, insured, or guaranteed under part 
B of title IV of the Higher Education Act of 1965 for which the first 
disbursement is made on or after October 1, 1998, and before July 1, 
2003, except that such amendments shall apply with respect to any loan 
made under section 428C of such Act for which the application is 
received by an eligible lender on or after October 1, 1998, and before 
July 1, 2003.

SEC. 417. FEDERAL PAYMENTS TO REDUCE STUDENT INTEREST COSTS.

    (a) Federal Interest Subsidies.--
        (1) Requirements to receive subsidy.--Section 428(a)(2) (20 
    U.S.C. 1078(a)(2)) is amended--
            (A) in subparagraph (A)(i), by striking subclauses (I), 
        (II), and (III) and inserting the following:
                ``(I) sets forth the loan amount for which the student 
            shows financial need; and
                ``(II) sets forth a schedule for disbursement of the 
            proceeds of the loan in installments, consistent with the 
            requirements of section 428G; and''; and
            (B) by amending subparagraph (B) to read as follows:
        ``(B) For the purpose of clause (ii) of subparagraph (A), a 
    student shall qualify for a portion of an interest payment under 
    paragraph (1) if the eligible institution has determined and 
    documented the student's amount of need for a loan based on the 
    student's estimated cost of attendance, estimated financial 
    assistance, and, for the purpose of an interest payment pursuant to 
    this section, expected family contribution (as determined under 
    part F), subject to the provisions of subparagraph (D).'';
            (C) by amending subparagraph (C) to read as follows:
        ``(C) For the purpose of subparagraph (B) and this paragraph--
            ``(i) a student's cost of attendance shall be determined 
        under section 472;
            ``(ii) a student's estimated financial assistance means, 
        for the period for which the loan is sought--
                ``(I) the amount of assistance such student will 
            receive under subpart 1 of part A (as determined in 
            accordance with section 484(b)), subpart 3 of part A, and 
            parts C and E;
                ``(II) any veterans' education benefits paid because of 
            enrollment in a postsecondary education institution, 
            including veterans' education benefits (as defined in 
            section 480(c), but excluding benefits described in 
            paragraph (2)(E) of such section); plus
                ``(III) other scholarship, grant, or loan assistance, 
            but excluding any national service education award or post-
            service benefit under title I of the National and Community 
            Service Act of 1990; and
            ``(iii) the determination of need and of the amount of a 
        loan by an eligible institution under subparagraph (B) with 
        respect to a student shall be calculated in accordance with 
        part F.''; and
            (D) by striking subparagraph (F).
        (2) Duration of authority.--Section 428(a)(5) is amended--
            (A) by striking ``September 30, 2002'' and inserting 
        ``September 30, 2004''; and
            (B) by striking ``September 30, 2006'' and inserting 
        ``September 30, 2008''.
    (b) Insurance Program Agreements.--
        (1) Annual loan limits.--Section 428(b)(1)(A) is amended--
            (A) in the matter preceding clause (i), by inserting ``, as 
        defined in section 481(a)(2),'' after ``academic year'';
            (B) in clause (i)--
                (i) in subclause (I), by striking ``length (as 
            determined under section 481);'' and inserting ``length; 
            and''; and
                (ii) by striking subclauses (II) and (III) and 
            inserting the following:

                    ``(II) if such student is enrolled in a program of 
                undergraduate education which is less than 1 academic 
                year, the maximum annual loan amount that such student 
                may receive may not exceed the amount that bears the 
                same ratio to the amount specified in subclause (I) as 
                the length of such program measured in semester, 
                trimester, quarter, or clock hours bears to 1 academic 
                year;'';

            (C) in clause (iv), by striking ``and'' after the 
        semicolon;
            (D) in clause (v), by inserting ``and'' after the 
        semicolon; and
            (E) by inserting before the matter following clause (v) the 
        following:
                ``(vi) in the case of a student enrolled in coursework 
            specified in sections 484(b)(3)(B) and 484(b)(4)(B)--

                    ``(I) $2,625 for coursework necessary for 
                enrollment in an undergraduate degree or certificate 
                program, and, in the case of a student who has obtained 
                a baccalaureate degree, $5,500 for coursework necessary 
                for enrollment in a graduate or professional degree or 
                certification program; and
                    ``(II) in the case of a student who has obtained a 
                baccalaureate degree, $5,500 for coursework necessary 
                for a professional credential or certification from a 
                State required for employment as a teacher in an 
                elementary school or secondary school;''.

        (2) Selection of repayment plans.--Clause (ii) of section 
    428(b)(1)(D) is amended to read as follows: ``(ii) the student 
    borrower may annually change the selection of a repayment plan 
    under this part, and''.
        (3) Repayment plans.--Subparagraph (E) of section 428(b)(1) is 
    amended to read as follows:
            ``(E) subject to subparagraphs (D) and (L), and except as 
        provided by subparagraph (M), provides that--
                ``(i) not more than 6 months prior to the date on which 
            the borrower's first payment is due, the lender shall offer 
            the borrower of a loan made, insured, or guaranteed under 
            this section or section 428H, the option of repaying the 
            loan in accordance with a standard, graduated, income-
            sensitive, or extended repayment schedule (as described in 
            paragraph (9)) established by the lender in accordance with 
            regulations of the Secretary; and
                ``(ii) repayment of loans shall be in installments in 
            accordance with the repayment plan selected under paragraph 
            (9) and commencing at the beginning of the repayment period 
            determined under paragraph (7);'';
        (4) Coinsurance.--Section 428(b)(1)(G) is amended by striking 
    ``not less than''.
        (5) Payment amounts.--Section 428(b)(1)(L)(i) is amended--
            (A) by inserting ``except as otherwise provided by a 
        repayment plan selected by the borrower under clause (ii) or 
        (iii) of paragraph (9)(A),'' before ``during any''; and
            (B) by inserting ``, notwithstanding any payment plan under 
        paragraph (9)(A)'' after ``due and payable''.
        (6) Deferments.--Section 428(b)(1)(M) is amended--
            (A) in clause (i)(I), by inserting before the semicolon the 
        following: ``, except that no borrower, notwithstanding the 
        provisions of the promissory note, shall be required to borrow 
        an additional loan under this title in order to be eligible to 
        receive a deferment under this clause''; and
            (B) in clause (ii), by inserting before the semicolon the 
        following: ``, except that no borrower who provides evidence of 
        eligibility for unemployment benefits shall be required to 
        provide additional paperwork for a deferment under this 
        clause''.
        (7) Limitation, suspension, and termination.--Section 
    428(b)(1)(U) is amended--
            (A) by striking ``emergency action,,'' each place the term 
        appears and inserting ``emergency action,''; and
            (B) in clause (iii)(I), by inserting ``that originates or 
        holds more than $5,000,000 in loans made under this title for 
        any lender fiscal year (except that each lender described in 
        section 435(d)(1)(A)(ii)(III) shall annually submit the results 
        of an audit required by this clause),'' before ``at least once 
        a year''.
        (8) Additional insurance program requirements.-- Section 
    428(b)(1) is further amended--
            (A) by striking ``and'' at the end of subparagraph (W);
            (B) in subparagraph (X)--
                (i) by striking ``428(c)(10)'' and inserting 
            ``428(c)(9)''; and
                (ii) by striking the period at the end and inserting 
            ``; and'';
            (C) by adding at the end the following new sub- paragraph:
            ``(Y) provides that--
                ``(i) the lender shall determine the eligibility of a 
            borrower for a deferment described in subparagraph (M)(i) 
            based on receipt of--

                    ``(I) a request for deferment from the borrower and 
                documentation of the borrower's eligibility for the 
                deferment;
                    ``(II) a newly completed loan application that 
                documents the borrower's eligibility for a deferment; 
                or
                    ``(III) student status information received by the 
                lender that the borrower is enrolled on at least a 
                half-time basis; and

                ``(ii) the lender will notify the borrower of the 
            granting of any deferment under clause (i)(II) or (III) of 
            this subparagraph and of the option to continue paying on 
            the loan.''.
        (9) Restrictions on inducements.--Section 428(b)(3) is 
    amended--
            (A) by striking subparagraph (C) and inserting the 
        following:
            ``(C) conduct unsolicited mailings of student loan 
        application forms to students enrolled in secondary school or a 
        postsecondary institution, or to parents of such students, 
        except that applications may be mailed to borrowers who have 
        previously received loans guaranteed under this part by the 
        guaranty agency; or''; and
            (B) by adding at the end the following new sentence:
    ``It shall not be a violation of this paragraph for a guaranty 
    agency to provide assistance to institutions of higher education 
    comparable to the kinds of assistance provided to institutions of 
    higher education by the Department of Education.''.
        (10) Delay in commencement of repayment period.--Section 
    428(b)(7) is amended by adding at the end the following:
        ``(D) There shall be excluded from the 6-month period that 
    begins on the date on which a student ceases to carry at least one-
    half the normal full-time academic workload as described in 
    subparagraph (A)(i) any period not to exceed 3 years during which a 
    borrower who is a member of a reserve component of the Armed Forces 
    named in section 10101 of title 10, United States Code, is called 
    or ordered to active duty for a period of more than 30 days (as 
    defined in section 101(d)(2) of such title). Such period of 
    exclusion shall include the period necessary to resume enrollment 
    at the borrower's next available regular enrollment period.''.
        (11) Repayment plans.--Section 428(b) is amended by adding at 
    the end the following:
        ``(9) Repayment plans.--
            ``(A) Design and selection.--In accordance with regulations 
        promulgated by the Secretary, the lender shall offer a borrower 
        of a loan made under this part the plans described in this 
        subparagraph for repayment of such loan, including principal 
        and interest thereon. No plan may require a borrower to repay a 
        loan in less than 5 years unless the borrower, during the 6 
        months immediately preceding the start of the repayment period, 
        specifically requests that repayment be made over of a shorter 
        period. The borrower may choose from--
                ``(i) a standard repayment plan, with a fixed annual 
            repayment amount paid over a fixed period of time, not to 
            exceed 10 years;
                ``(ii) a graduated repayment plan paid over a fixed 
            period of time, not to exceed 10 years;
                ``(iii) an income-sensitive repayment plan, with 
            income-sensitive repayment amounts paid over a fixed period 
            of time, not to exceed 10 years, except that the borrower's 
            scheduled payments shall not be less than the amount of 
            interest due; and
                ``(iv) for new borrowers on or after the date of 
            enactment of the Higher Education Amendments of 1998 who 
            accumulate (after such date) outstanding loans under this 
            part totaling more than $30,000, an extended repayment 
            plan, with a fixed annual or graduated repayment amount 
            paid over an extended period of time, not to exceed 25 
            years, except that the borrower shall repay annually a 
            minimum amount determined in accordance with paragraph 
            (1)(L)(i).
            ``(B) Lender selection of option if borrower does not 
        select.--If a borrower of a loan made under this part does not 
        select a repayment plan described in subparagraph (A), the 
        lender shall provide the borrower with a repayment plan 
        described in subparagraph (A)(i).''.
    (c) Guarantee Agreements.--
        (1) Reinsurance payments.--
            (A) Amendments.--Section 428(c)(1) (20 U.S.C. 1078(c)(1)) 
        is amended--
                (i) in subparagraph (A), by striking ``98 percent'' and 
            inserting ``95 percent'';
                (ii) in subparagraph (B)(i), by striking ``88 percent'' 
            and inserting ``85 percent'';
                (iii) in subparagraph (B)(ii), by striking ``78 
            percent'' and inserting ``75 percent'';
                (iv) in subparagraph (E)--

                    (I) in clause (i), by striking ``98 percent'' and 
                inserting ``95 percent'';
                    (II) in clause (ii), by striking ``88 percent'' and 
                inserting ``85 percent''; and
                    (III) in clause (iii), by striking ``78 percent'' 
                and inserting ``75 percent''; and

                (v) in subparagraph (F)--

                    (I) in clause (i), by striking ``98 percent'' and 
                inserting ``95 percent'';
                    (II) in clause (ii), by striking ``88 percent'' and 
                inserting ``85 percent''; and
                    (III) in clause (iii), by striking ``78 percent'' 
                and inserting ``75 percent''.

            (B) Effective date.--The amendments made by subparagraph 
        (A) of this paragraph apply to loans for which the first 
        disbursement is made on or after October 1, 1998.
        (2) Notice to institutions of defaults.--Section 428(c)(2) is 
    amended--
            (A) in subparagraph (A), by striking ``proof that 
        reasonable attempts were made'' and inserting ``proof that the 
        institution was contacted and other reasonable attempts were 
        made''; and
            (B) in subparagraph (G), by striking ``certifies to the 
        Secretary that diligent attempts have been made'' and inserting 
        ``certifies to the Secretary that diligent attempts, including 
        contact with the institution, have been made''.
        (3) Guaranty agency information to eligible institutions.--
    Section 428(c)(2)(H)(ii) is amended to read as follows:
                ``(ii) the guaranty agency shall not require the 
            payment from the institution of any fee for such 
            information; and''.
        (4) Forbearance.--Section 428(c)(3) is amended--
            (A) in subparagraph (A)(i), by striking ``written'';
            (B) in subparagraph (B), by striking ``and'' after the 
        semicolon;
            (C) in subparagraph (C), by striking the period and 
        inserting ``; and''; and
            (D) by inserting before the matter following subparagraph 
        (C) the following:
            ``(D) shall contain provisions that specify that--
                ``(i) forbearance for a period not to exceed 60 days 
            may be granted if the lender reasonably determines that 
            such a suspension of collection activity is warranted 
            following a borrower's request for deferment, forbearance, 
            a change in repayment plan, or a request to consolidate 
            loans, in order to collect or process appropriate 
            supporting documentation related to the request, and
                ``(ii) during such period interest shall accrue but not 
            be capitalized.''.
        (5) Equitable share.--Paragraph (6) of section 428(c) is 
    amended to read as follows:
        ``(6) Secretary's equitable share.--For the purpose of 
    paragraph (2)(D), the Secretary's equitable share of payments made 
    by the borrower shall be that portion of the payments remaining 
    after the guaranty agency with which the Secretary has an agreement 
    under this subsection has deducted from such payments--
            ``(A) a percentage amount equal to the complement of the 
        reinsurance percentage in effect when payment under the 
        guaranty agreement was made with respect to the loan; and
            ``(B) an amount equal to 24 percent of such payments for 
        use in accordance with section 422B, except that, beginning on 
        October 1, 2003, this subparagraph shall be applied by 
        substituting `23 percent' for `24 percent'.''.
        (6) Assignment.--Section 428(c)(8) is amended--
            (A) by striking ``(A) If'' and inserting ``If''; and
            (B) by striking subparagraph (B).
        (7) Guaranty agency reserve level; agency termination.--Section 
    428(c)(9) is amended--
            (A) in subparagraph (A), by striking ``maintain a current 
        minimum reserve level of at least .5 percent'' and inserting 
        ``maintain in the agency's Federal Student Loan Reserve Fund 
        established under section 422A a current minimum reserve level 
        of at least 0.25 percent'';
            (B) in subparagraph (C)--
                (i) by striking ``80 percent pursuant to section 
            428(c)(1)(B)(ii)'' and inserting ``85 percent pursuant to 
            paragraph (1)(B)(i)'';
                (ii) by striking ``, as appropriate,''; and
                (iii) by striking ``30 working days'' and inserting 
            ``45 working days'';
            (C) in subparagraph (E)--
                (i) by inserting ``or'' at the end of clause (iv);
                (ii) by striking ``; or'' at the end of clause (v) and 
            inserting a period; and
                (iii) by striking clause (vi);
            (D) in subparagraph (F)(vii), by striking ``to avoid 
        disruption'' and everything that follows and inserting ``and to 
        avoid disruption of the student loan program.'';
            (E) in subparagraph (I), by inserting ``that, if commenced 
        after September 24, 1998, shall be on the record'' after ``for 
        a hearing''; and
            (F) in subparagraph (K)--
                (i) by striking ``and Labor'' and inserting ``and the 
            Workforce''; and
                (ii) by striking everything after ``guaranty agency 
            system'' and inserting a period.
    (d) Payment for Lender Referral Services; Income-Sensitive 
Repayment.--Subsection (e) of section 428 is amended to read as 
follows:
    ``(e) Notice of Availability of Income-Sensitive Repayment 
Option.--At the time of offering a borrower a loan under this part, and 
at the time of offering the borrower the option of repaying a loan in 
accordance with this section, the lender shall provide the borrower 
with a notice that informs the borrower, in a form prescribed by the 
Secretary by regulation--
        ``(1) that all borrowers are eligible for income-sensitive 
    repayment, including through loan consolidation under section 428C;
        ``(2) the procedures by which the borrower may elect income-
    sensitive repayment; and
        ``(3) where and how the borrower may obtain additional 
    information concerning income-sensitive repayment.''.
    (e) Payment of Certain Costs.--Subsection (f) of section 428 is 
amended to read as follows:
    ``(f) Payments of Certain Costs.--
        ``(1) Payment for certain activities.--
            ``(A) In general.--The Secretary--
                ``(i) for loans originated during fiscal years 
            beginning on or after October 1, 1998, and before October 
            1, 2003, and in accordance with the provisions of this 
            paragraph, shall, except as provided in subparagraph (C), 
            pay to each guaranty agency, a loan processing and issuance 
            fee equal to 0.65 percent of the total principal amount of 
            the loans on which insurance was issued under this part 
            during such fiscal year by such agency; and
                ``(ii) for loans originated during fiscal years 
            beginning on or after October 1, 2003, and in accordance 
            with the provisions of this paragraph, shall, except as 
            provided in subparagraph (C), pay to each guaranty agency, 
            a loan processing and issuance fee equal to 0.40 percent of 
            the total principal amount of the loans on which insurance 
            was issued under this part during such fiscal year by such 
            agency.
            ``(B) Payment.--The payment required by subparagraph (A) 
        shall be paid on a quarterly basis. The guaranty agency shall 
        be deemed to have a contractual right against the United States 
        to receive payments according to the provisions of this 
        paragraph. Payments shall be made promptly and without 
        administrative delay to any guaranty agency submitting an 
        accurate and complete application under this subparagraph.
            ``(C) Requirement for payment.--No payment may be made 
        under this paragraph for loans for which the disbursement 
        checks have not been cashed or for which electronic funds 
        transfers have not been completed.''.
    (f) Action on Agreements.--Section 428(g) is amended by striking 
``and Labor'' and inserting ``and the Workforce''.
    (g) Lenders-of-Last-Resort.--Paragraph (3) of section 428(j) is 
amended--
        (1) in the paragraph heading, by striking ``during transition 
    to direct lending'';
        (2) in subparagraph (A)--
            (A) by striking ``during the transition from the Federal 
        Family Education Loan Program under this part to the Federal 
        Direct Student Loan Program under part D of this title,'' and 
        inserting a comma;
            (B) by inserting ``designated for a State'' after ``a 
        guaranty agency''; and
            (C) by inserting ``subparagraph (C) and'' before ``section 
        422(c)(7),''; and
        (3) by adding at the end thereof the following:
        ``(C) The Secretary shall exercise the authority described in 
    subparagraph (A) only if the Secretary determines that eligible 
    borrowers are seeking and are unable to obtain loans under this 
    part, and that the guaranty agency designated for that State has 
    the capability to provide lender-of-last-resort loans in a timely 
    manner, in accordance with the guaranty agency's obligations under 
    paragraph (1), but cannot do so without advances provided by the 
    Secretary under this paragraph. If the Secretary makes the 
    determinations described in the preceding sentence and determines 
    that it would be cost-effective to do so, the Secretary may provide 
    advances under this paragraph to such guaranty agency. If the 
    Secretary determines that such guaranty agency does not have such 
    capability, or will not provide such loans in a timely fashion, the 
    Secretary may provide such advances to enable another guaranty 
    agency, that the Secretary determines to have such capability, to 
    make lender-of-last-resort loans to eligible borrowers in that 
    State who are experiencing loan access problems.''.
    (h) Default Aversion Assistance.--Subsection (l) of section 428 is 
amended to read as follows:
    ``(l) Default Aversion Assistance.--
        ``(1) Assistance required.--Upon receipt of a complete request 
    from a lender received not earlier than the 60th day of 
    delinquency, a guaranty agency having an agreement with the 
    Secretary under subsection (c) shall engage in default aversion 
    activities designed to prevent the default by a borrower on a loan 
    covered by such agreement.
        ``(2) Reimbursement.--
            ``(A) In general.--A guaranty agency, in accordance with 
        the provisions of this paragraph, may transfer from the Federal 
        Student Loan Reserve Fund under section 422A to the Agency 
        Operating Fund under section 422B a default aversion fee. Such 
        fee shall be paid for any loan on which a claim for default has 
        not been paid as a result of the loan being brought into 
        current repayment status by the guaranty agency on or before 
        the 300th day after the loan becomes 60 days delinquent.
            ``(B) Amount.--The default aversion fee shall be equal to 1 
        percent of the total unpaid principal and accrued interest on 
        the loan at the time the request is submitted by the lender. A 
        guaranty agency may transfer such fees earned under this 
        subsection not more frequently than monthly. Such a fee shall 
        not be paid more than once on any loan for which the guaranty 
        agency averts the default unless--
                ``(i) at least 18 months has elapsed between the date 
            the borrower entered current repayment status and the date 
            the lender filed a subsequent default aversion assistance 
            request; and
                ``(ii) during the period between such dates, the 
            borrower was not more than 30 days past due on any payment 
            of principal and interest on the loan.
            ``(C) Definition.--For the purpose of earning the default 
        aversion fee, the term `current repayment status' means that 
        the borrower is not delinquent in the payment of any principal 
        or interest on the loan.''.
    (i) Income Contingent Repayment.--Section 428(m) is amended by 
striking ``shall require at least 10 percent of the borrowers'' and 
inserting ``may require borrowers''.
    (j) State Share of Default Costs.--Subsection (n) of section 428 is 
repealed.
    (k) Blanket Certificate of Guaranty.--Section 428 is amended by 
adding at the end the following:
    ``(n) Blanket Certificate of Loan Guaranty.--
        ``(1) In general.--Subject to paragraph (3), any guaranty 
    agency that has entered into or enters into any insurance program 
    agreement with the Secretary under this part may--
            ``(A) offer eligible lenders participating in the agency's 
        guaranty program a blanket certificate of loan guaranty that 
        permits the lender to make loans without receiving prior 
        approval from the guaranty agency of individual loans for 
        eligible borrowers enrolled in eligible programs at eligible 
        institutions; and
            ``(B) provide eligible lenders with the ability to transmit 
        electronically data to the agency concerning loans the lender 
        has elected to make under the agency's insurance program via 
        standard reporting formats, with such reporting to occur at 
        reasonable and standard intervals.
        ``(2) Limitations on blanket certificate of guaranty.--(A) An 
    eligible lender may not make a loan to a borrower under this 
    section after such lender receives a notification from the guaranty 
    agency that the borrower is not an eligible borrower.
        ``(B) A guaranty agency may establish limitations or 
    restrictions on the number or volume of loans issued by a lender 
    under the blanket certificate of guaranty.
        ``(3) Participation level.--During fiscal years 1999 and 2000, 
    the Secretary may permit, on a pilot basis, a limited number of 
    guaranty agencies to offer blanket certificates of guaranty under 
    this subsection. Beginning in fiscal year 2001, any guaranty agency 
    that has an insurance program agreement with the Secretary may 
    offer blanket certificates of guaranty under this subsection.
        ``(4) Report required.--The Secretary shall, at the conclusion 
    of the pilot program under paragraph (3), provide a report to the 
    Committee on Education and the Workforce of the House of 
    Representatives and the Committee on Labor and Human Resources of 
    the Senate on the impact of the blanket certificates of guaranty on 
    program efficiency and integrity.''.

SEC. 418. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY AGENCIES.

    Part B of title IV (20 U.S.C. 1071 et seq.) is amended by inserting 
after section 428 (20 U.S.C. 1078) the following:

``SEC. 428A. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUARANTY AGENCIES.

    ``(a) Voluntary Agreements.--
        ``(1) Authority.--Subject to paragraph (2), the Secretary may 
    enter into a voluntary, flexible agreement with a guaranty agency 
    under this section, in lieu of agreements with a guaranty agency 
    under subsections (b) and (c) of section 428. The Secretary may 
    waive or modify any requirement under such subsections, except that 
    the Secretary may not waive--
            ``(A) any statutory requirement pertaining to the terms and 
        conditions attached to student loans or default claim payments 
        made to lenders; or
            ``(B) the prohibitions on inducements contained in section 
        428(b)(3) unless the Secretary determines that such a waiver is 
        consistent with the purposes of this section and is limited to 
        activities of the guaranty agency within the State or States 
        for which the guaranty agency serves as the designated 
        guarantor.
        ``(2) Special rule.--If the Secretary grants a waiver pursuant 
    to paragraph (1)(B), any guaranty agency doing business within the 
    affected State or States may request, and the Secretary shall 
    grant, an identical waiver to such guaranty agency under the same 
    terms and conditions (including service area limitations) as govern 
    the original waiver.
        ``(3) Eligibility.--During fiscal years 1999, 2000, and 2001, 
    the Secretary may enter into a voluntary, flexible agreement with 
    not more than 6 guaranty agencies that had 1 or more agreements 
    with the Secretary under subsections (b) and (c) of section 428 as 
    of the day before the date of enactment of the Higher Education 
    Amendments of 1998. Beginning in fiscal year 2002, any guaranty 
    agency or consortium thereof may enter into a voluntary flexible 
    agreement with the Secretary.
        ``(4) Report required.--Not later than September 30, 2001, the 
    Secretary shall report to the Committee on Labor and Human 
    Resources of the Senate and the Committee on Education and the 
    Workforce of the House of Representatives regarding the impact that 
    the voluntary flexible agreements have had upon program integrity, 
    program and cost efficiencies, and the availability and delivery of 
    student financial aid. Such report shall include--
            ``(A) a description of each voluntary flexible agreement 
        and the performance goals established by the Secretary for each 
        agreement;
            ``(B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency and any waivers provided to other guaranty 
        agencies under paragraph (2);
            ``(C) a description of the standards by which each agency's 
        performance under the agency's voluntary flexible agreement was 
        assessed and the degree to which each agency achieved the 
        performance standards; and
            ``(D) an analysis of the fees paid by the Secretary, and 
        the costs and efficiencies achieved under each voluntary 
        agreement.
    ``(b) Terms of Agreement.--An agreement between the Secretary and a 
guaranty agency under this section--
        ``(1) shall be developed by the Secretary, in consultation with 
    the guaranty agency, on a case-by-case basis;
        ``(2) may only include provisions--
            ``(A) specifying the responsibilities of the guaranty 
        agency under the agreement, with respect to--
                ``(i) administering the issuance of insurance on loans 
            made under this part on behalf of the Secretary;
                ``(ii) monitoring insurance commitments made under this 
            part;
                ``(iii) default aversion activities;
                ``(iv) review of default claims made by lenders;
                ``(v) payment of default claims;
                ``(vi) collection of defaulted loans;
                ``(vii) adoption of internal systems of accounting and 
            auditing that are acceptable to the Secretary, and 
            reporting the result thereof to the Secretary in a timely 
            manner, and on an accurate, and auditable basis;
                ``(viii) timely and accurate collection and reporting 
            of such other data as the Secretary may require to carry 
            out the purposes of the programs under this title;
                ``(ix) monitoring of institutions and lenders 
            participating in the program under this part; and
                ``(x) informational outreach to schools and students in 
            support of access to higher education;
            ``(B) regarding the fees the Secretary shall pay, in lieu 
        of revenues that the guaranty agency may otherwise receive 
        under this part, to the guaranty agency under the agreement, 
        and other funds that the guaranty agency may receive or retain 
        under the agreement, except that in no case may the cost to the 
        Secretary of the agreement, as reasonably projected by the 
        Secretary, exceed the cost to the Secretary, as similarly 
        projected, in the absence of the agreement;
            ``(C) regarding the use of net revenues, as described in 
        the agreement under this section, for such other activities in 
        support of postsecondary education as may be agreed to by the 
        Secretary and the guaranty agency;
            ``(D) regarding the standards by which the guaranty 
        agency's performance of the agency's responsibilities under the 
        agreement will be assessed, and the consequences for a guaranty 
        agency's failure to achieve a specified level of performance on 
        1 or more performance standards;
            ``(E) regarding the circumstances in which a guaranty 
        agency's agreement under this section may be ended in advance 
        of the agreement's expiration date;
            ``(F) regarding such other businesses, previously purchased 
        or developed with reserve funds, that relate to the program 
        under this part and in which the Secretary permits the guaranty 
        agency to engage; and
            ``(G) such other provisions as the Secretary may determine 
        to be necessary to protect the United States from the risk of 
        unreasonable loss and to promote the purposes of this part;
        ``(3) shall provide for uniform lender participation with the 
    guaranty agency under the terms of the agreement; and
        ``(4) shall not prohibit or restrict borrowers from selecting a 
    lender of the borrower's choosing, subject to the prohibitions and 
    restrictions applicable to the selection under this Act.
    ``(c) Public Notice.--
        ``(1) In general.--The Secretary shall publish in the Federal 
    Register a notice to all guaranty agencies that sets forth--
            ``(A) an invitation for the guaranty agencies to enter into 
        agreements under this section; and
            ``(B) the criteria that the Secretary will use for 
        selecting the guaranty agencies with which the Secretary will 
        enter into agreements under this section.
        ``(2) Agreement notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Member of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 30 days prior to concluding an agreement under this 
    section. The notice shall contain--
            ``(A) a description of the voluntary flexible agreement and 
        the performance goals established by the Secretary for the 
        agreement;
            ``(B) a list of participating guaranty agencies and the 
        specific statutory or regulatory waivers provided to each 
        guaranty agency;
            ``(C) a description of the standards by which each guaranty 
        agency's performance under the agreement will be assessed; and
            ``(D) a description of the fees that will be paid to each 
        participating guaranty agency.
        ``(3) Waiver notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Member of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives not 
    later than 30 days prior to the granting of a waiver pursuant to 
    subsection (a)(2) to a guaranty agency that is not a party to a 
    voluntary flexible agreement.
        ``(4) Public availability.--The text of any voluntary flexible 
    agreement, and any subsequent revisions, and any waivers related to 
    section 428(b)(3) that are not part of such an agreement, shall be 
    readily available to the public.
        ``(5) Modification notice.--The Secretary shall notify the 
    Chairperson and the Ranking Minority Members of the Committee on 
    Labor and Human Resources of the Senate and the Committee on 
    Education and the Workforce of the House of Representatives 30 days 
    prior to any modifications to an agreement under this section.
    ``(d) Termination.--At the expiration or early termination of an 
agreement under this section, the Secretary shall reinstate the 
guaranty agency's prior agreements under subsections (b) and (c) of 
section 428, subject only to such additional requirements as the 
Secretary determines to be necessary in order to ensure the efficient 
transfer of responsibilities between the agreement under this section 
and the agreements under subsections (b) and (c) of section 428, and 
including the guaranty agency's compliance with reserve requirements 
under sections 422 and 428.''.

SEC. 419. FEDERAL PLUS LOANS.

    Section 428B (20 U.S.C. 1078-2) is amended--
        (1) by amending subsection (a) to read as follows:
    ``(a) Authority To Borrow.--
        ``(1) Authority and eligibility.--Parents of a dependent 
    student shall be eligible to borrow funds under this section in 
    amounts specified in subsection (b), if--
            ``(A) the parents do not have an adverse credit history as 
        determined pursuant to regulations promulgated by the 
        Secretary; and
            ``(B) the parents meet such other eligibility criteria as 
        the Secretary may establish by regulation, after consultation 
        with guaranty agencies, eligible lenders, and other 
        organizations involved in student financial assistance.
        ``(2) Terms, conditions, and benefits.--Except as provided in 
    subsections (c), (d), and (e), loans made under this section shall 
    have the same terms, conditions, and benefits as all other loans 
    made under this part.
        ``(3) Special rule.--Whenever necessary to carry out the 
    provisions of this section, the terms `student' and `borrower' as 
    used in this part shall include a parent borrower under this 
    section.''; and
        (2) by adding at the end the following:
    ``(f) Verification of Immigration Status and Social Security 
Number.--A parent who wishes to borrow funds under this section shall 
be subject to verification of the parent's--
        ``(1) immigration status in the same manner as immigration 
    status is verified for students under section 484(g); and
        ``(2) social security number in the same manner as social 
    security numbers are verified for students under section 484(p).''.

SEC. 420. FEDERAL CONSOLIDATION LOANS.

    (a) Definition of Eligible Borrower.--Section 428C(a)(3) (20 U.S.C. 
1078-3(a)(3)) is amended by striking everything preceding subparagraph 
(C) and inserting the following:
        ``(3) Definition of eligible borrower.--(A) For the purpose of 
    this section, the term `eligible borrower' means a borrower who--
            ``(i) is not subject to a judgment secured through 
        litigation with respect to a loan under this title or to an 
        order for wage garnishment under section 488A; and
            ``(ii) at the time of application for a consolidation 
        loan--
                ``(I) is in repayment status;
                ``(II) is in a grace period preceding repay- ment; or
                ``(III) is a defaulted borrower who has made 
            arrangements to repay the obligation on the defaulted loans 
            satisfactory to the holders of the defaulted loans.
        ``(B)(i) An individual's status as an eligible borrower under 
    this section terminates upon receipt of a consolidation loan under 
    this section, except that--
            ``(I) an individual who receives eligible student loans 
        after the date of receipt of the consolidation loan may receive 
        a subsequent consolidation loan;
            ``(II) loans received prior to the date of the 
        consolidation loan may be added during the 180-day period 
        following the making of the consolidation loan;
            ``(III) loans received following the making of the 
        consolidation loan may be added during the 180-day period 
        following the making of the consolidation loan; and
            ``(IV) loans received prior to the date of the first 
        consolidation loan may be added to a subsequent consolidation 
        loan.''.
    (b) Definition of Eligible Student Loan.--Section 428C(a)(4) is 
amended by striking subparagraph (C) and inserting the following:
            ``(C) made under part D of this title;''.
    (c) Contents of Agreements.--Section 428C(b) is amended--
        (1) in paragraph (1)(A)(i), by inserting ``except that this 
    clause shall not apply in the case of a borrower with multiple 
    holders of loans under this part,'' after ``under this section,'';
        (2) in paragraph (4)(C)(ii)--
            (A) in the matter preceding subclause (I), by inserting 
        ``during any such period'' after ``and be paid'';
            (B) in subclause (I), by striking ``, or on or after 
        October 1, 1998,''; and
            (C) in subclause (II), by striking ``and before October 1, 
        1998,'';
        (3) in paragraph (6)(A), by inserting before the semicolon at 
    the end the following: ``, except that a lender is not required to 
    consolidate loans described in subparagraph (D) or (E) of 
    subsection (a)(4) or subsection (d)(1)(C)(ii)''.
    (d) Extension of Authority.--Section 428C(e) is amended by striking 
``September 30, 2002'' and inserting ``September 30, 2004''.
    (e) Special Rule.--Section 428C(f) is amended--
        (1) by redesignating paragraph (2) as paragraph (3); and
        (2) by inserting after paragraph (1) the following:
        ``(2) Special rule.--For consolidation loans based on 
    applications received during the period from October 1, 1998 
    through January 31, 1999, inclusive, the rebate described in 
    paragraph (1) shall be equal to 0.62 percent of the principal plus 
    accrued unpaid interest on such loan.''.

SEC. 421. DEFAULT REDUCTION PROGRAM.

    The heading for subsection (b) of section 428F (20 U.S.C. 1078-6) 
is amended by striking ``Special Rule'' and inserting ``Satisfactory 
Repayment Arrangements To Renew Eligibility''.

SEC. 422. REQUIREMENTS FOR DISBURSEMENTS OF STUDENT LOANS.

    (a) Special Rule.--Section 428G(a) (20 U.S.C. 1078-7(a)) is amended 
by adding at the end the following:
        ``(3) Special rule.--An institution whose cohort default rate 
    (as determined under section 435(m)) for each of the 3 most recent 
    fiscal years for which data are available is less than 10 percent 
    may disburse any loan made, insured, or guaranteed under this part 
    in a single installment for any period of enrollment that is not 
    more than 1 semester, 1 trimester, 1 quarter, or 4 months.''.
    (b) Disbursement.--Section 428G(b)(1) is amended by adding at the 
end the following new sentence: ``An institution whose cohort default 
rate (as determined under section 435(m)) for each of the three most 
recent fiscal years for which data are available is less than 10 
percent shall be exempt from the requirements of this paragraph.''.
    (c) Exclusions.--Section 428G(e) is amended--
        (1) by striking ``or made'' and inserting ``, made''; and
        (2) by inserting ``, or made to a student to cover the cost of 
    attendance in a program of study abroad approved by the home 
    eligible institution if the home eligible institution has a cohort 
    default rate (as calculated under section 435(m)) of less than 5 
    percent'' before the period.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall be effective during the period beginning on October 1, 1998, and 
ending on September 30, 2002.

SEC. 423. UNSUBSIDIZED LOANS.

    (a) Eligible Borrowers.--Subsection (b) of section 428H (20 U.S.C. 
1078-8(b)) is amended to read as follows:
    ``(b) Eligible Borrowers.--Any student meeting the requirements for 
student eligibility under section 484 (including graduate and 
professional students as defined in regulations promulgated by the 
Secretary) shall be entitled to borrow an unsubsidized Federal Stafford 
Loan if the eligible institution at which the student has been accepted 
for enrollment, or at which the student is in attendance, has--
        ``(1) determined and documented the student's need for the loan 
    based on the student's estimated cost of attendance (as determined 
    under section 472) and the student's estimated financial 
    assistance, including a loan which qualifies for interest subsidy 
    payments under section 428; and
        ``(2) provided the lender a statement--
            ``(A) certifying the eligibility of the student to receive 
        a loan under this section and the amount of the loan for which 
        such student is eligible, in accordance with subsection (c); 
        and
            ``(B) setting forth a schedule for disbursement of the 
        proceeds of the loan in installments, consistent with the 
        requirements of section 428G.''.
    (b) Loan Limits.--Section 428H(d) is amended--
        (1) in paragraph (2)--
            (A) in the matter preceding subparagraph (A)--
                (i) by inserting ``(as defined in section 481(a)(2))'' 
            after ``academic year''; and
                (ii) by striking ``or in any period of 7 consecutive 
            months, whichever is longer,'';
            (B) in subparagraph (A)--
                (i) in clause (i), by striking ``length (as determined 
            under section 481);'' and inserting ``length; and''; and
                (ii) by striking clauses (ii) and (iii) and inserting 
            the following:
                ``(ii) if such student is enrolled in a program of 
            undergraduate education which is less than one academic 
            year, the maximum annual loan amount that such student may 
            receive may not exceed the amount that bears the same ratio 
            to the amount specified in clause (i) as the length of such 
            program measured in semester, trimester, quarter, or clock 
            hours bears to one academic year;''.
            (C) in subparagraph (C), by inserting ``and'' after the 
        semicolon; and
            (D) by inserting before the matter following subparagraph 
        (C) the following:
            ``(D) in the case of a student enrolled in coursework 
        specified in sections 484(b)(3)(B) and 484(b)(4)(B)--
                ``(i) $4,000 for coursework necessary for enrollment in 
            an undergraduate degree or certificate program, and, in the 
            case of a student who has obtained a baccalaureate degree, 
            $5,000 for coursework necessary for enrollment in a 
            graduate or professional program; and
                ``(ii) in the case of a student who has obtained a 
            baccalaureate degree, $5,000 for coursework necessary for a 
            professional credential or certification from a State 
            required for employment as a teacher in an elementary or 
            secondary school;''; and
        (2) in paragraph (3), by adding at the end the following: 
    ``Interest capitalized shall not be deemed to exceed such maximum 
    aggregate amount.''.
    (c) Capitalization of Interest.--Paragraph (2) of section 428H(e) 
is amended to read as follows:
        ``(2) Capitalization of interest.--(A) Interest on loans made 
    under this section for which payments of principal are not required 
    during the in-school and grace periods or for which payments are 
    deferred under sections 427(a)(2)(C) and 428(b)(1)(M) shall, if 
    agreed upon by the borrower and the lender--
            ``(i) be paid monthly or quarterly; or
            ``(ii) be added to the principal amount of the loan by the 
        lender only--
                ``(I) when the loan enters repayment;
                ``(II) at the expiration of a grace period, in the case 
            of a loan that qualifies for a grace period;
                ``(III) at the expiration of a period of deferment or 
            forbearance; or
                ``(IV) when the borrower defaults.
        ``(B) The capitalization of interest described in subparagraph 
    (A) shall not be deemed to exceed the annual insurable limit on 
    account of the student.''.
    (d) Extended Repayment Plan.--Section 428H(e)(6) is amended by 
striking ``10 year repayment period under section 428(b)(1)(D)'' and 
inserting ``repayment period under section 428(b)(9)''.
    (e) Qualification.--Section 428H(e) is amended by adding at the end 
the following:
        ``(7) Qualification for forbearance.--A lender may grant the 
    borrower of a loan under this section a forbearance for a period 
    not to exceed 60 days if the lender reasonably determines that such 
    a forbearance from collection activity is warranted following a 
    borrower's request for forbearance, deferment, or a change in 
    repayment plan, or a request to consolidate loans in order to 
    collect or process appropriate supporting documentation related to 
    the request. During any such period, interest on the loan shall 
    accrue but not be capitalized.''.
    (f) Repeal.--Subsection (f) of section 428H is repealed.

SEC. 424. LOAN FORGIVENESS FOR TEACHERS.

    Section 428J (20 U.S.C. 1078-10) is amended to read as follows:

``SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--The Secretary shall carry out a program, 
through the holder of the loan, of assuming the obligation to repay a 
qualified loan amount for a loan made under section 428 or 428H, in 
accordance with subsection (c), for any new borrower on or after 
October 1, 1998, who--
        ``(1) has been employed as a full-time teacher for 5 
    consecutive complete school years--
            ``(A) in a school that qualifies under section 465(a)(2)(A) 
        for loan cancellation for Perkins loan recipients who teach in 
        such schools;
            ``(B) if employed as a secondary school teacher, is 
        teaching a subject area that is relevant to the borrower's 
        academic major as certified by the chief administrative officer 
        of the public or nonprofit private secondary school in which 
        the borrower is employed; and
            ``(C) if employed as an elementary school teacher, has 
        demonstrated, as certified by the chief administrative officer 
        of the public or nonprofit private elementary school in which 
        the borrower is employed, knowledge and teaching skills in 
        reading, writing, mathematics, and other areas of the 
        elementary school curriculum; and
        ``(2) is not in default on a loan for which the borrower seeks 
    forgiveness.
    ``(c) Qualified Loans Amount.--
        ``(1) In general.--The Secretary shall repay not more than 
    $5,000 in the aggregate of the loan obligation on a loan made under 
    section 428 or 428H that is outstanding after the completion of the 
    fifth complete school year of teaching described in subsection 
    (b)(1). No borrower may receive a reduction of loan obligations 
    under both this section and section 460.
        ``(2) Treatment of consolidation loans.--A loan amount for a 
    loan made under section 428C may be a qualified loan amount for the 
    purposes of this subsection only to the extent that such loan 
    amount was used to repay a Federal Direct Stafford Loan, a Federal 
    Direct Unsubsidized Stafford Loan, or a loan made under section 428 
    or 428H for a borrower who meets the requirements of subsection 
    (b), as determined in accordance with regulations prescribed by the 
    Secretary.
    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any repayment of a loan.
    ``(f) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year 
for which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
        ``(1) Continued eligibility.--Any teacher who performs service 
    in a school that--
            ``(A) meets the requirements of subsection (b)(1)(A) in any 
        year during such service; and
            ``(B) in a subsequent year fails to meet the requirements 
        of such subsection,
    may continue to teach in such school and shall be eligible for loan 
    forgiveness pursuant to subsection (b).
        ``(2) Prevention of double benefits.--No borrower may, for the 
    same service, receive a benefit under both this subsection and 
    subtitle D of title I of the National and Community Service Act of 
    1990 (42 U.S.C. 12571 et seq.).
    ``(h) Definition.--For purposes of this section, the term `year', 
where applied to service as a teacher, means an academic year as 
defined by the Secretary.''.

SEC. 425. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    Part B (20 U.S.C. 1071 et seq.) is amended by inserting after 
section 428J (20 U.S.C. 1078-10) the following:

``SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVIDERS.

    ``(a) Purpose.--It is the purpose of this section--
        ``(1) to bring more highly trained individuals into the early 
    child care profession; and
        ``(2) to keep more highly trained child care providers in the 
    early child care field for longer periods of time.
    ``(b) Definitions.--In this section:
        ``(1) Child care facility.--The term `child care facility' 
    means a facility, including a home, that--
            ``(A) provides child care services; and
            ``(B) meets applicable State or local government licensing, 
        certification, approval, or registration requirements, if any.
        ``(2) Child care services.--The term `child care services' 
    means activities and services provided for the education and care 
    of children from birth through age 5 by an individual who has a 
    degree in early childhood education.
        ``(3) Degree.--The term `degree' means an associate's or 
    bachelor's degree awarded by an institution of higher education.
        ``(4) Early childhood education.--The term `early childhood 
    education' means education in the areas of early child education, 
    child care, or any other educational area related to child care 
    that the Secretary determines appropriate.
        ``(5) Institution of higher education.--Notwithstanding section 
    102, the term `institution of higher education' has the meaning 
    given the term in section 101.
    ``(c) Demonstration Program.--
        ``(1) In general.--The Secretary may carry out a demonstration 
    program of assuming the obligation to repay, pursuant to subsection 
    (d), a loan made, insured, or guaranteed under this part or part D 
    (excluding loans made under sections 428B and 428C or comparable 
    loans made under part D) for any new borrower after the date of 
    enactment of the Higher Education Amendments of 1998, who--
            ``(A) completes a degree in early childhood education;
            ``(B) obtains employment in a child care facility; and
            ``(C) has worked full time for the 2 consecutive years 
        preceding the year for which the determination is made as a 
        child care provider in a low-income community.
        ``(2) Low-income community.--For the purposes of this 
    subsection, the term `low-income community' means a community in 
    which 70 percent of households within the community earn less than 
    85 percent of the State median household income.
        ``(3) Award basis; priority.--
            ``(A) Award basis.--Subject to subparagraph (B), loan 
        repayment under this section shall be on a first-come, first-
        served basis and subject to the availability of appropriations.
            ``(B) Priority.--The Secretary shall give priority in 
        providing loan repayment under this section for a fiscal year 
        to student borrowers who received loan repayment under this 
        section for the preceding fiscal year.
        ``(4) Regulations.--The Secretary is authorized to prescribe 
    such regulations as may be necessary to carry out the provisions of 
    this section.
    ``(d) Loan Repayment.--
        ``(1) In general.--The Secretary shall assume the obligation to 
    repay--
            ``(A) after the second consecutive year of employment 
        described in subparagraphs (B) and (C) of subsection (c)(1), 20 
        percent of the total amount of all loans made after date of 
        enactment of the Higher Education Amendments of 1998, to a 
        student under this part or part D;
            ``(B) after the third consecutive year of such employment, 
        20 percent of the total amount of all such loans; and
            ``(C) after each of the fourth and fifth consecutive years 
        of such employment, 30 percent of the total amount of all such 
        loans.
        ``(2) Construction.--Nothing in this section shall be construed 
    to authorize the refunding of any repayment of a loan made under 
    this part or part D.
        ``(3) Interest.--If a portion of a loan is repaid by the 
    Secretary under this section for any year, the proportionate amount 
    of interest on such loan which accrues for such year shall be 
    repaid by the Secretary.
        ``(4) Special rule.--In the case where a student borrower who 
    is not participating in loan repayment pursuant to this section 
    returns to an institution of higher education after graduation from 
    an institution of higher education for the purpose of obtaining a 
    degree in early childhood education, the Secretary is authorized to 
    assume the obligation to repay the total amount of loans made under 
    this part or part D incurred for a maximum of two academic years in 
    returning to an institution of higher education for the purpose of 
    obtaining a degree in early childhood education. Such loans shall 
    only be repaid for borrowers who qualify for loan repayment 
    pursuant to the provisions of this section, and shall be repaid in 
    accordance with the provisions of paragraph (1).
        ``(5) Ineligibility of national service award recipients.--No 
    student borrower may, for the same volunteer service, receive a 
    benefit under both this section and subtitle D of title I of the 
    National and Community Service Act of 1990 (42 U.S.C. 12601 et 
    seq.).
    ``(e) Repayment to Eligible Lenders.--The Secretary shall pay to 
each eligible lender or holder for each fiscal year an amount equal to 
the aggregate amount of loans which are subject to repayment pursuant 
to this section for such year.
    ``(f) Application for Repayment.--
        ``(1) In general.--Each eligible individual desiring loan 
    repayment under this section shall submit a complete and accurate 
    application to the Secretary at such time, in such manner, and 
    containing such information as the Secretary may require.
        ``(2) Conditions.--An eligible individual may apply for loan 
    repayment under this section after completing each year of 
    qualifying employment. The borrower shall receive forbearance while 
    engaged in qualifying employment unless the borrower is in 
    deferment while so engaged.
    ``(g) Evaluation.--
        ``(1) In general.--The Secretary shall conduct, by grant or 
    contract, an independent national evaluation of the impact of the 
    demonstration program assisted under this section on the field of 
    early childhood education.
        ``(2) Competitive basis.--The grant or contract described in 
    subsection (b) shall be awarded on a competitive basis.
        ``(3) Contents.--The evaluation described in this subsection 
    shall--
            ``(A) determine the number of individuals who were 
        encouraged by the demonstration program assisted under this 
        section to pursue early childhood education;
            ``(B) determine the number of individuals who remain 
        employed in a child care facility as a result of participation 
        in the program;
            ``(C) identify the barriers to the effectiveness of the 
        program;
            ``(D) assess the cost-effectiveness of the program in 
        improving the quality of--
                ``(i) early childhood education; and
                ``(ii) child care services;
            ``(E) identify the reasons why participants in the program 
        have chosen to take part in the program;
            ``(F) identify the number of individuals participating in 
        the program who received an associate's degree and the number 
        of such individuals who received a bachelor's degree; and
            ``(G) identify the number of years each individual 
        participates in the program.
        ``(4) Interim and final evaluation reports.--The Secretary 
    shall prepare and submit to the President and the Congress such 
    interim reports regarding the evaluation described in this 
    subsection as the Secretary deems appropriate, and shall prepare 
    and so submit a final report regarding the evaluation by January 1, 
    2002.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 
1999, and such sums as may be necessary for each of the 4 succeeding 
fiscal years.''.

SEC. 426. NOTICE TO SECRETARY AND PAYMENT OF LOSS.

    The third sentence of section 430(a) (20 U.S.C. 1080(a)) is amended 
by inserting ``the institution was contacted and other'' after ``submit 
proof that''.

SEC. 427. LEGAL POWERS AND RESPONSIBILITIES.

    (a) Audit of Financial Transactions.--Section 432(f)(1) is 
amended--
        (1) in subparagraph (B), by striking ``section 435(d)(1) (D), 
    (F), or (H);'' and inserting ``section 435(d)(1); and'';
        (2) in subparagraph (C)--
            (A) by striking ``and Labor'' and inserting ``and the 
        Workforce''; and
            (B) by striking ``; and'' inserting a period; and
        (3) by striking subparagraph (D).
    (b) Program of Assistance.--Section 432(k)(3) is amended by 
striking ``Within 1 year'' and everything that follows through ``1992, 
the'' and inserting ``The''.
    (c) Common Forms and Formats.--Section 432(m) is amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A), by striking ``a common application 
        form and promissory note'' and inserting ``common application 
        forms and promissory notes, or master promissory notes,'';
            (B) in subparagraph (B)--
                (i) by striking ``The form'' and inserting ``The 
            forms'';
                (ii) by striking clause (iii); and
            (C) by amending subparagraph (C) to read as follows:
            ``(C) Free application form.--For academic year 1999-2000 
        and succeeding academic years, the Secretary shall prescribe 
        the form developed under section 483 as the application form 
        under this part, other than for loans under sections 428B and 
        428C.'';
            (D) by amending subparagraph (D) to read as follows:
            ``(D) Master promissory note.--
                ``(i) In general.--The Secretary shall develop and 
            require the use of master promissory note forms for loans 
            made under this part and part D. Such forms shall be 
            available for periods of enrollment beginning not later 
            than July 1, 2000. Each form shall allow eligible borrowers 
            to receive, in addition to initial loans, additional loans 
            for the same or subsequent periods of enrollment through a 
            student confirmation process approved by the Secretary. 
            Such forms shall be used for loans made under this part or 
            part D as directed by the Secretary.
                ``(ii) Consultation.--In developing the master 
            promissory note under this subsection, the Secretary shall 
            consult with representatives of guaranty agencies, eligible 
            lenders, institutions of higher education, students, and 
            organizations involved in student financial assistance.
                ``(iii) Sale; assignment; enforceability.--
            Notwithstanding any other provision of law, each loan made 
            under a master promissory note under this subsection may be 
            sold or assigned independently of any other loan made under 
            the same promissory note and each such loan shall be 
            separately enforceable in all Federal and State courts on 
            the basis of an original or copy of the master promissory 
            note in accordance with the terms of the master promissory 
            note.
                ``(iv) Perfection of security interests in student 
            loans.--Notwithstanding the provisions of any State law to 
            the contrary, including the Uniform Commercial Code as in 
            effect in any State, a security interest in loans made 
            under this part created on behalf of any eligible lender as 
            defined in section 435(d) may be perfected either through 
            the taking of possession of such loans (which can be 
            through taking possession of an original or copy of the 
            master promissory note) or by the filing of notice of such 
            security interest in such loans in the manner provided by 
            such State law for perfection of security interests in 
            accounts.''; and
        (2) by adding at the end the following:
        ``(4) Electronic forms.--Nothing in this section shall be 
    construed to limit the development and use of electronic forms and 
    procedures.''.
    (d) Default Reduction Management.--Section 432(n) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999''; and
        (2) in paragraph (3), by striking ``and Labor'' and inserting 
    ``and the Workforce''.
    (e) Reporting Requirement.--Section 432(p) is amended by striking 
``State postsecondary reviewing entities designated under subpart 1 of 
part H,''.

SEC. 428. STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.

    (a) Required Disclosure Before Disbursement.--Section 433(a) (20 
U.S.C. 1083(a)) is amended by amending the matter preceding paragraph 
(1) to read as follows:
    ``(a) Required Disclosure Before Disbursement.--Each eligible 
lender, at or prior to the time such lender disburses a loan that is 
insured or guaranteed under this part (other than a loan made under 
section 428C), shall provide thorough and accurate loan information on 
such loan to the borrower in simple and understandable terms. Any 
disclosure required by this subsection may be made by an eligible 
lender by written or electronic means, including as part of the 
application material provided to the borrower, as part of the 
promissory note evidencing the loan, or on a separate written form 
provided to the borrower. Each lender shall provide to each borrower a 
telephone number, and may provide an electronic address, through which 
additional loan information can be obtained. The disclosure shall 
include--''.
    (b) Required Disclosure Before Repayment.--Section 433(b) is 
amended by amending the matter preceding paragraph (1) to read as 
follows:
    ``(b) Required Disclosure Before Repayment.--Each eligible lender 
shall, at or prior to the start of the repayment period of the student 
borrower on loans made, insured, or guaranteed under this part, 
disclose to the borrower by written or electronic means the information 
required under this subsection in simple and understandable terms. Each 
eligible lender shall provide to each borrower a telephone number, and 
may provide an electronic address, through which additional loan 
information can be obtained. For any loan made, insured, or guaranteed 
under this part, other than a loan made under section 428B or 428C, 
such disclosure required by this subsection shall be made not less than 
30 days nor more than 240 days before the first payment on the loan is 
due from the borrower. The disclosure shall include--''.

SEC. 429. DEFINITIONS.

    (a) Cohort Default Rate.--Section 435(a) (20 U.S.C. 1085(a)) is 
amended--
        (1) in paragraph (2)--
            (A) in subparagraph (A)--
                (i) by striking ``or'' at the end of clause (i);
                (ii) by striking clause (ii) and inserting the 
            following:
            ``(ii) there are exceptional mitigating circumstances 
        within the meaning of paragraph (4); or
            ``(iii) there are, in the judgment of the Secretary, other 
        exceptional mitigating circumstances that would make the 
        application of this paragraph inequitable.''; and
                (iii) by adding after the matter following clause (iii) 
            (as added by clause (ii)) the following:
    ``If an institution continues to participate in a program under 
    this part, and the institution's appeal of the loss of eligibility 
    is unsuccessful, the institution shall be required to pay to the 
    Secretary an amount equal to the amount of interest, special 
    allowance, reinsurance, and any related payments made by the 
    Secretary (or which the Secretary is obligated to make) with 
    respect to loans made under this part to students attending, or 
    planning to attend, that institution during the pendency of such 
    appeal.''; and
            (B) in subparagraph (C), by striking ``July 1, 1998,'' and 
        inserting ``July 1, 1999,'';
        (2) in the matter following subparagraph (C) of para- graph 
    (3)--
            (A) by inserting ``for a reasonable period of time, not to 
        exceed 30 days,'' after ``access''; and
            (B) by striking ``of the affected guaranty agencies and 
        loan servicers for a reasonable period of time, not to exceed 
        30 days'' and inserting ``used by a guaranty agency in 
        determining whether to pay a claim on a defaulted loan or by 
        the Department in determining an institution's default rate in 
        the loan program under part D of this title''; and
        (3) by adding at the end the following new paragraphs:
        ``(4) Definition of mitigating circumstances.--(A) For purposes 
    of paragraph (2)(A)(ii), an institution of higher education shall 
    be treated as having exceptional mitigating circumstances that make 
    application of that paragraph inequitable if such institution, in 
    the opinion of an independent auditor, meets the following 
    criteria:
            ``(i) For a 12-month period that ended during the 6 months 
        immediately preceding the fiscal year for which the cohort of 
        borrowers used to calculate the institution's cohort default 
        rate is determined, at least two-thirds of the students 
        enrolled on at least a half-time basis at the institution--
                ``(I) are eligible to receive a Federal Pell Grant 
            award that is at least equal to one-half the maximum 
            Federal Pell Grant award for which a student would be 
            eligible based on the student's enrollment status; or
                ``(II) have an adjusted gross income that when added 
            with the adjusted gross income of the student's parents 
            (unless the student is an independent student), of less 
            than the poverty level, as determined by the Department of 
            Health and Human Services.
            ``(ii) In the case of an institution of higher education 
        that offers an associate, baccalaureate, graduate or 
        professional degree, 70 percent or more of the institution's 
        regular students who were initially enrolled on a full-time 
        basis and were scheduled to complete their programs during the 
        same 12-month period described in clause (i)--
                ``(I) completed the educational programs in which the 
            students were enrolled;
                ``(II) transferred from the institution to a higher 
            level educational program;
                ``(III) at the end of the 12-month period, remained 
            enrolled and making satisfactory progress toward completion 
            of the student's educational programs; or
                ``(IV) entered active duty in the Armed Forces of the 
            United States.
            ``(iii)(I) In the case of an institution of higher 
        education that does not award a degree described in clause 
        (ii), had a placement rate of 44 percent or more with respect 
        to the institution's former regular students who--
                ``(aa) remained in the program beyond the point the 
            students would have received a 100 percent tuition refund 
            from the institution;
                ``(bb) were initially enrolled on at least a half-time 
            basis; and
                ``(cc) were originally scheduled, at the time of 
            enrollment, to complete their educational programs during 
            the same 12-month period described in clause (i).
            ``(II) The placement rate shall not include students who 
        are still enrolled and making satisfactory progress in the 
        educational programs in which the students were originally 
        enrolled on the date following 12 months after the date of the 
        student's last date of attendance at the institution.
            ``(III) The placement rate is calculated by determining the 
        percentage of all those former regular students who--
                ``(aa) are employed, in an occupation for which the 
            institution provided training, on the date following 12 
            months after the date of their last day of attendance at 
            the institution;
                ``(bb) were employed, in an occupation for which the 
            institution provided training, for at least 13 weeks before 
            the date following 12 months after the date of their last 
            day of attendance at the institution; or
                ``(cc) entered active duty in the Armed Forces of the 
            United States.
            ``(IV) The placement rate shall not include as placements a 
        student or former student for whom the institution is the 
        employer.
        ``(B) For purposes of determining a rate of completion and a 
    placement rate under this paragraph, a student is originally 
    scheduled, at the time of enrollment, to complete the educational 
    program on the date when the student will have been enrolled in the 
    program for the amount of time normally required to complete the 
    program. The amount of time normally required to complete the 
    program for a student who is initially enrolled full-time is the 
    period of time specified in the institution's enrollment contract, 
    catalog, or other materials, for completion of the program by a 
    full-time student. For a student who is initially enrolled less 
    than full-time, the period is the amount of time it would take the 
    student to complete the program if the student remained enrolled at 
    that level of enrollment throughout the program.
        ``(5) Reduction of default rates at certain minority 
    institutions.--
            ``(A) Beneficiaries of exception required to establish 
        management plan.--After July 1, 1999, any institution that has 
        a cohort default rate that equals or exceeds 25 percent for 
        each of the three most recent fiscal years for which data are 
        available and that relies on the exception in subparagraph (B) 
        to continue to be an eligible institution shall--
                ``(i) submit to the Secretary a default management plan 
            which the Secretary, in the Secretary's discretion, after 
            consideration of the institution's history, resources, 
            dollars in default, and targets for default reduction, 
            determines is acceptable and provides reasonable assurance 
            that the institution will, by July 1, 2002, have a cohort 
            default rate that is less than 25 percent;
                ``(ii) engage an independent third party (which may be 
            paid with funds received under section 317 or part B of 
            title III) to provide technical assistance in implementing 
            such default management plan; and
                ``(iii) provide to the Secretary, on an annual basis or 
            at such other intervals as the Secretary may require, 
            evidence of cohort default rate improvement and successful 
            implementation of such default management plan.
            ``(B) Discretionary eligibility conditioned on 
        improvement.--Notwithstanding the expiration of the exception 
        in paragraph (2)(C), the Secretary may, in the Secretary's 
        discretion, continue to treat an institution described in 
        subparagraph (A) of this paragraph as an eligible institution 
        for each of the 1-year periods beginning on July 1 of 1999, 
        2000, and 2001, only if the institution submits by the 
        beginning of such period evidence satisfactory to the Secretary 
        that--
                ``(i) such institution has complied and is continuing 
            to comply with the requirements of subparagraph (A); and
                ``(ii) such institution has made substantial 
            improvement, during each of the preceding 1-year periods, 
            in the institution's cohort default rate.
        ``(6) Participation rate index.--
            ``(A) In general.--An institution that demonstrates to the 
        Secretary that the institution's participation rate index is 
        equal to or less than 0.0375 for any of the 3 most recent 
        fiscal years for which data is available shall not be subject 
        to paragraph (2). The participation rate index shall be 
        determined by multiplying the institution's cohort default rate 
        for loans under part B or D, or weighted average cohort default 
        rate for loans under parts B and D, by the percentage of the 
        institution's regular students, enrolled on at least a half-
        time basis, who received a loan made under part B or D for a 
        12-month period ending during the 6 months immediately 
        preceding the fiscal year for which the cohort of borrowers 
        used to calculate the institution's cohort default rate is 
        determined.
            ``(B) Data.--An institution shall provide the Secretary 
        with sufficient data to determine the institution's 
        participation rate index within 30 days after receiving an 
        initial notification of the institution's draft cohort default 
        rate.
            ``(C) Notification.--Prior to publication of a final cohort 
        default rate for an institution that provides the data 
        described in subparagraph (B), the Secretary shall notify the 
        institution of the institution's compliance or noncompliance 
        with subparagraph (A).''.
    (b) Eligible Lender.--Section 435(d) (20 U.S.C. 1085(d)) is 
amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A)(ii)--
                (i) by striking ``or'' after ``1992,''; and
                (ii) by inserting before the semicolon the following: 
            ``, or (III) it is a bank (as defined in section 3(a)(1) of 
            the Federal Deposit Insurance Act (12 U.S.C. 1813(a)(1)) 
            that is a wholly owned subsidiary of a nonprofit 
            foundation, the foundation is described in section 
            501(c)(3) of the Internal Revenue Code of 1986 and exempt 
            from taxation under section 501(1) of such Code, and the 
            bank makes loans under this part only to undergraduate 
            students who are age 22 or younger and has a portfolio of 
            such loans that is not more than $5,000,000'';
            (B) by striking ``and'' at the end of subparagraph (I);
            (C) by striking the period at the end of subparagraph (J) 
        and inserting ``; and''; and
            (D) by adding at the end the following new subparagraph:
            ``(K) a consumer finance company subsidiary of a national 
        bank which, as of the date of enactment of this subparagraph, 
        through one or more subsidiaries: (i) acts as a small business 
        lending company, as determined under regulations of the Small 
        Business Administration under section 120.470 of title 13, Code 
        of Federal Regulations (as such section is in effect on the 
        date of enactment of this subparagraph); and (ii) participates 
        in the program authorized by this part pursuant to subparagraph 
        (C), provided the national bank and all of the bank's direct 
        and indirect subsidiaries taken together as a whole, do not 
        have, as their primary consumer credit function, the making or 
        holding of loans made to students under this part.''; and
        (2) in paragraph (5), by adding at the end the following new 
    sentence:
    ``It shall not be a violation of this paragraph for a lender to 
    provide assistance to institutions of higher education comparable 
    to the kinds of assistance provided to institutions of higher 
    education by the Department of Education.''.
    (c) Definition of Default.--
        (1) Amendment.--Section 435(l) is amended--
            (A) by striking ``180 days'' and inserting ``270 days''; 
        and
            (B) by striking ``240 days'' and inserting ``330 days''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    apply with respect to loans for which the first day of delinquency 
    occurs on or after the date of enactment of this Act.
    (d) Cohort Default Rate.--Section 435(m) is amended--
        (1) in paragraph (1)(B), by striking ``insurance, and, in 
    considering appeals with respect to cohort default rates pursuant 
    to subsection (a)(3), exclude'' and inserting ``insurance. In 
    considering appeals with respect to cohort default rates pursuant 
    to subsection (a)(3), the Secretary shall exclude, from the 
    calculation of the number of students who entered repayment and 
    from the calculation of the number of students who default,''; and
        (2) in paragraph (2)(C), by adding at the end the following: 
    ``The Secretary may require guaranty agencies to collect data with 
    respect to defaulted loans in a manner that will permit the 
    identification of any defaulted loan for which (i) the borrower is 
    currently making payments and has made not less than 6 consecutive 
    on-time payments by the end of such following fiscal year, and (ii) 
    a guaranty agency has renewed the borrower's title IV eligibility 
    as provided in section 428F(b).''; and
        (3) in paragraph (4), by adding at the end the following:
        ``(D) The Secretary shall publish the report described in 
    subparagraph (C) by September 30 of each year.''.

SEC. 430. DELEGATION OF FUNCTIONS.

    Section 436 (20 U.S.C. 1086) is amended to read as follows:

``SEC. 436. DELEGATION OF FUNCTIONS.

    ``(a) In General.--An eligible lender or guaranty agency that 
contracts with another entity to perform any of the lender's or 
agency's functions under this title, or otherwise delegates the 
performance of such functions to such other entity--
        ``(1) shall not be relieved of the lender's or agency's duty to 
    comply with the requirements of this title; and
        ``(2) shall monitor the activities of such other entity for 
    compliance with such requirements.
    ``(b) Special Rule.--A lender that holds a loan made under part B 
in the lender's capacity as a trustee is responsible for complying with 
all statutory and regulatory requirements imposed on any other holder 
of a loan made under this part.''.

SEC. 431. DISCHARGE.

    Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended--
        (1) by inserting after ``falsely certified by the eligible 
    institution,'' the following: ``or if the institution failed to 
    make a refund of loan proceeds which the institution owed to such 
    student's lender,''; and
        (2) by adding at the end the following new sentences: ``In the 
    case of a discharge based upon a failure to refund, the amount of 
    the discharge shall not exceed that portion of the loan which 
    should have been refunded. The Secretary shall report to the 
    Committee on Education and the Workforce of the House of 
    Representatives and the Committee on Labor and Human Resources of 
    the Senate annually as to the dollar amount of loan discharges 
    attributable to failures to make refunds.''.

SEC. 432. DEBT MANAGEMENT OPTIONS.

    Section 437A (20 U.S.C. 1087-0) is repealed.

SEC. 433. SPECIAL ALLOWANCES.

    (a) Deduction From Interest and Special Allowance Subsidies.--
Paragraph (1) of section 438(c) (20 U.S.C. 1087-1) is amended to read 
as follows:
        ``(1) Deduction from interest and special allowance 
    subsidies.--(A) Notwithstanding subsection (b), the Secretary shall 
    collect the amount the lender is authorized to charge as an 
    origination fee in accordance with paragraph (2) of this 
    subsection--
            ``(i) by reducing the total amount of interest and special 
        allowance payable under section 428(a)(3)(A) and subsection (b) 
        of this section, respectively, to any holder; or
            ``(ii) directly from the holder of the loan, if the lender 
        fails or is not required to bill the Secretary for interest and 
        special allowance or withdraws from the program with unpaid 
        loan origination fees.
        ``(B) If the Secretary collects the origination fee under this 
    subsection through the reduction of interest and special allowance, 
    and the total amount of interest and special allowance payable 
    under section 428(a)(3)(A) and subsection (b) of this section, 
    respectively, is less than the amount the lender was authorized to 
    charge borrowers for origination fees in that quarter, the 
    Secretary shall deduct the excess amount from the subsequent 
    quarters' payments until the total amount has been deducted.''.
    (b) Origination Fees.--Section 438(c) is amended--
        (1) in paragraph (2)--
            (A) by striking ``(other than'' and inserting ``(including 
        loans made under section 428H, but excluding''; and
            (B) by adding at the end the following new sentence: 
        ``Except as provided in paragraph (8), a lender that charges an 
        origination fee under this paragraph shall assess the same fee 
        to all student borrowers.''; and
        (2) by adding at the end the following new paragraph:
        ``(8) Exception.--Notwithstanding paragraph (2), a lender may 
    assess a lesser origination fee for a borrower demonstrating 
    greater financial need as determined by such borrower's adjusted 
    gross family income.''.
    (c) Collection of Fees.--Paragraph (1) of section 438(d) is amended 
to read as follows:
        ``(1) Deduction from interest and special allowance 
    subsidies.--
            ``(A) In general.--Notwithstanding subsection (b), the 
        Secretary shall collect a loan fee in an amount determined in 
        accordance with paragraph (2)--
                ``(i) by reducing the total amount of interest and 
            special allowance payable under section 428(a)(3)(A) and 
            subsection (b), respectively, to any holder of a loan; or
                ``(ii) directly from the holder of the loan, if the 
            lender--

                    ``(I) fails or is not required to bill the 
                Secretary for interest and special allowance payments; 
                or
                    ``(II) withdraws from the program with unpaid loan 
                fees.

            ``(B) Special rule.--If the Secretary collects loan fees 
        under this subsection through the reduction of interest and 
        special allowance payments, and the total amount of interest 
        and special allowance payable under section 428(a)(3)(A) and 
        subsection (b), respectively, is less than the amount of such 
        loan fees, then the Secretary shall deduct the amount of the 
        loan fee balance from the amount of interest and special 
        allowance payments that would otherwise be payable, in 
        subsequent quarterly increments until the balance has been 
        deducted.''.
    (d) Lending From Proceeds of Tax-Exempt Obligations.--
        (1) Amendment.--Subsection (e) of section 438 is amended to 
    read as follows:
    ``(e) Nondiscrimination.--In order for the holders of loans which 
were made or purchased with funds obtained by the holder from an 
Authority issuing obligations, the income from which is exempt from 
taxation under the Internal Revenue Code of 1986, to be eligible to 
receive a special allowance under subsection (b)(2) on any such loans, 
the Authority shall not engage in any pattern or practice which results 
in a denial of a borrower's access to loans under this part because of 
the borrower's race, sex, color, religion, national origin, age, 
disability status, income, attendance at a particular eligible 
institution within the area served by the Authority, length of the 
borrower's educational program, or the borrower's academic year in 
school.''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    be effective as of the date the plan required by section 438(e)(1) 
    (as such section was in effect prior to such amendment) was 
    approved by the Secretary or the Governor (whichever was the case). 
    No Authority shall have a right or cause of action against the 
    Secretary for any amounts paid to or offset by the Secretary 
    pursuant to a final settlement agreement entered into prior to July 
    1, 1998, resolving any audit or program review findings alleging 
    violations of any provision of section 438(e) (as in effect prior 
    to such amendment).

SEC. 434. FEDERAL FAMILY EDUCATION LOAN INSURANCE FUND.

    Any funds in the insurance fund, as established under section 431 
of the Higher Education Act of 1965 (20 U.S.C. 1081), on the date of 
enactment of this Act shall be transferred to and deposited in the 
Treasury. All funds received by the Secretary of Education under 
subsection (a) of such section after the date of enactment of this Act 
shall be deposited into the fund in accordance with such subsection.

                  PART C--FEDERAL WORK-STUDY PROGRAMS

SEC. 441. AUTHORIZATION OF APPROPRIATIONS; COMMUNITY SERVICES.

    (a) Authorization of Appropriations.--Section 441(b) (42 U.S.C. 
2751(b)) is amended by striking ``$800,000,000 for fiscal year 1993'' 
and inserting ``$1,000,000,000 for fiscal year 1999''.
    (b) Definition of Community Services.--Section 441(c) is amended--
        (1) in paragraph (1), by inserting ``(including child care 
    services provided on campus that are open and accessible to the 
    community)'' after ``child care''; and
        (2) in paragraph (3), by inserting ``, including students with 
    disabilities who are enrolled at the institution'' before the 
    semicolon.

SEC. 442. ALLOCATION OF FUNDS.

    (a) Updating the Base Period.--Section 442(a) (20 U.S.C. 2752(a)) 
is amended--
        (1) in paragraph (1), by striking ``received and used under 
    this part for fiscal year 1985'' and inserting ``received under 
    subsections (a) and (b) for fiscal year 1999 (as such subsections 
    were in effect with respect to allocations for such fiscal year)'';
        (2) in paragraph (2)--
            (A) in subparagraphs (A) and (B), by striking ``1985'' each 
        place the term appears and inserting ``1999''; and
            (B) in subparagraph (C)(i), by striking ``1986'' and 
        inserting ``2000''.
    (b) Elimination of Pro Rata Share.--Section 442 is amended--
        (1) by striking subsection (b);
        (2) by redesignating subsections (c) through (f) as subsections 
    (b) through (e), respectively;
        (3) in subsection (b)(1) (as redesignated by paragraph (2)), by 
    striking ``three-quarters of'';
        (4) in subsection (b)(2)(A)(i) (as so redesignated), by 
    striking ``subsection (d)'' and inserting ``subsection (c)'';
        (5) in subsection (c)(3) (as so redesignated), by striking 
    ``the Secretary, for academic year 1988-1989 shall use the 
    procedures employed for academic year 1986-1987, and, for any 
    subsequent academic years,''; and
        (6) in subsection (d)(1) (as so redesignated)--
            (A) by striking ``10 percent'' and inserting ``5 percent'';
            (B) by striking ``in community service'' and inserting ``in 
        tutoring in reading and family literacy activities''; and
            (C) by striking ``subsection (c)'' and inserting 
        ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to allocations of amounts appropriated pursuant to 
section 441(b) for fiscal year 2000 or any succeeding fiscal year.

SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.

    (a) Eligible Employment.--Section 443(b)(1) (42 U.S.C. 2753(b)(1)) 
is amended by inserting ``, including internships, practica, or 
research assistantships as determined by the Secretary,'' after ``part-
time employment''.
    (b) Community Service.--Section 443(b)(2)(A) is amended--
        (1) by striking ``in fiscal year 1994 and succeeding fiscal 
    years,'' and inserting ``for fiscal year 1999,''; and
        (2) by inserting ``(including a reasonable amount of time spent 
    in travel or training directly related to such community service)'' 
    after ``community service''.
    (c) Tutoring and Literacy Activities.--Section 443 is amended--
        (1) in subsection (b)(2)--
            (A) by striking ``and'' at the end of subparagraph (A);
            (B) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (C) by inserting after subparagraph (A) the following:
            ``(B) for fiscal year 2000 and succeeding fiscal years, an 
        institution shall use at least 7 percent of the total amount of 
        funds granted to such institution under this section for such 
        fiscal year to compensate students employed in community 
        service, and shall ensure that not less than 1 tutoring or 
        family literacy project (as described in subsection (d)) is 
        included in meeting the requirement of this subparagraph, 
        except that the Secretary may waive this subparagraph if the 
        Secretary determines that enforcing this subparagraph would 
        cause hardship for students at the institution; and''; and
        (2) by adding at the end the following new subsection:
    ``(d) Tutoring and Literacy Activities.--
        ``(1) Use of funds.--In any academic year to which subsection 
    (b)(2)(B) applies, an institution shall ensure that funds granted 
    to such institution under this section are used in accordance with 
    such subsection to compensate (including compensation for time 
    spent in training and travel directly related to tutoring in 
    reading and family literacy activities) students--
            ``(A) employed as reading tutors for children who are 
        preschool age or are in elementary school; or
            ``(B) employed in family literacy projects.
        ``(2) Priority for schools.--To the extent practicable, an 
    institution shall--
            ``(A) give priority to the employment of students in the 
        provision of tutoring in reading in schools that are 
        participating in a reading reform project that--
                ``(i) is designed to train teachers how to teach 
            reading on the basis of scientifically-based research on 
            reading; and
                ``(ii) is funded under the Elementary and Secondary 
            Education Act of 1965; and
            ``(B) ensure that any student compensated with the funds 
        described in paragraph (1) who is employed in a school 
        participating in a reading reform project described in 
        subparagraph (A) receives training from the employing school in 
        the instructional practices used by the school.
        ``(3) Federal share.--The Federal share of the compensation of 
    work-study students compensated under this subsection may exceed 75 
    percent.''.
    (d) Use of Funds for Independent and Less Than Full-Time 
Students.--Paragraph (3) of section 443(b) is amended to read as 
follows:
        ``(3) provide that in the selection of students for employment 
    under such work-study program, only students who demonstrate 
    financial need in accordance with part F and meet the requirements 
    of section 484 will be assisted, except that if the institution's 
    grant under this part is directly or indirectly based in part on 
    the financial need demonstrated by students who are (A) attending 
    the institution on less than a full-time basis, or (B) independent 
    students, a reasonable portion of the grant shall be made available 
    to such students;''.
    (e) Federal Share.--Paragraph (5) of section 443(b) is amended to 
read as follows:
        ``(5) provide that the Federal share of the compensation of 
    students employed in the work-study program in accordance with the 
    agreement shall not exceed 75 percent, except that--
            ``(A) the Federal share may exceed 75 percent, but not 
        exceed 90 percent, if, consistent with regulations of the 
        Secretary--
                ``(i) the student is employed at a nonprofit private 
            organization or a government agency that--

                    ``(I) is not a part of, and is not owned, operated, 
                or controlled by, or under common ownership, operation, 
                or control with, the institution;
                    ``(II) is selected by the institution on an 
                individual case-by-case basis for such student; and
                    ``(III) would otherwise be unable to afford the 
                costs of such employment; and

                ``(ii) not more than 10 percent of the students 
            compensated through the institution's grant under this part 
            during the academic year are employed in positions for 
            which the Federal share exceeds 75 percent; and
            ``(B) the Federal share may exceed 75 percent if the 
        Secretary determines, pursuant to regulations promulgated by 
        the Secretary establishing objective criteria for such 
        determinations, that a Federal share in excess of such amounts 
        is required in furtherance of the purpose of this part;''.
    (f) Availability of Employment.--Section 443(b)(6) is amended by 
striking ``, and to make'' and all that follows through ``such 
employment''.
    (g) Academic Relevance.--Section 443(c)(4) is amended by inserting 
before the semicolon at the end the following: ``, to the maximum 
extent practicable''.

SEC. 444. FLEXIBLE USE OF FUNDS.

    Section 445 (42 U.S.C. 2755) is amended by adding at the end the 
following:
    ``(c) Flexible Use of Funds.--An eligible institution may, upon the 
request of a student, make payments to the student under this part by 
crediting the student's account at the institution or by making a 
direct deposit to the student's account at a depository institution. An 
eligible institution may only credit the student's account at the 
institution for (1) tuition and fees, (2) in the case of 
institutionally owned housing, room and board, and (3) other 
institutionally provided goods and services.''.

SEC. 445. WORK COLLEGES.

    Section 448 (42 U.S.C. 2756b) is amended--
        (1) in subsection (b)(2)--
            (A) in subparagraph (C), by striking ``and'' after the 
        semicolon;
            (B) in subparagraph (D)(ii), by striking the period and 
        inserting a semicolon; and
            (C) by adding at the end the following:
            ``(E) coordinate and carry out joint projects and 
        activities to promote work service learning; and
            ``(F) carry out a comprehensive, longitudinal study of 
        student academic progress and academic and career outcomes, 
        relative to student self-sufficiency in financing their higher 
        education, repayment of student loans, continued community 
        service, kind and quality of service performed, and career 
        choice and community service selected after graduation.''; and
        (2) in subsection (f), by striking ``1993'' and inserting 
    ``1999''.

          PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

SEC. 451. SELECTION OF INSTITUTIONS.

    (a) General Authority.--Section 453(a) (20 U.S.C. 1087c(a)) is 
amended--
        (1) by striking ``Phase-In'' and everything that follows 
    through ``General authority.--'' and inserting ``General 
    Authority.--''; and
        (2) by striking paragraphs (2), (3), and (4).
    (b) Selection Criteria.--Section 453(b)(2) is amended by striking 
``prescribe,'' and everything that follows through the end of 
subparagraph (B) and inserting ``prescribe.''.
    (c) Origination.--Section 453(c) is amended--
        (1) in paragraph (2)--
            (A) in the heading, by striking ``Transition selection 
        criteria'' and inserting ``Selection criteria'';
            (B) by striking ``For academic year 1994-1995, the 
        Secretary'' and inserting ``The Secretary'';
            (C) by striking subparagraph (A);
            (D) by striking subparagraph (E); and
            (E) by redesignating subparagraphs (B), (C), (D), (F), (G), 
        and (H) as subparagraphs (A) through (F), respectively; and
        (2) in paragraph (3)--
            (A) in the paragraph heading, by striking ``After 
        transition''; and
            (B) by striking ``For academic year 1995-1996 and 
        subsequent academic years, the'' and inserting ``The''.

SEC. 452. TERMS AND CONDITIONS.

    (a) Direct Loan Interest Rates.--
        (1) Amendment.--Section 455(b) (20 U.S.C. 1087e(b)) is amended 
    by adding at the end the following:
        ``(6) Interest rate provision for new loans on or after october 
    1, 1998, and before july 1, 2003.--
            ``(A) Rates for fdsl and fdusl.--Notwithstanding the 
        preceding paragraphs of this subsection, for Federal Direct 
        Stafford Loans and Federal Direct Unsubsidized Stafford Loans 
        for which the first disbursement is made on or after October 1, 
        1998, and before July 1, 2003, the applicable rate of interest 
        shall, during any 12-month period beginning on July 1 and 
        ending on June 30, be determined on the preceding June 1 and be 
        equal to--
                ``(i) the bond equivalent rate of 91-day Treasury bills 
            auctioned at the final auction held prior to such June 1; 
            plus
                ``(ii) 2.3 percent,
        except that such rate shall not exceed 8.25 percent.
            ``(B) In school and grace period rules.--Notwithstanding 
        the preceding paragraphs of this subsection, with respect to 
        any Federal Direct Stafford Loan or Federal Direct Unsubsidized 
        Stafford Loan for which the first disbursement is made on or 
        after October 1, 1998, and before July 1, 2003, the applicable 
        rate of interest for interest which accrues--
                ``(i) prior to the beginning of the repayment period of 
            the loan; or
                ``(ii) during the period in which principal need not be 
            paid (whether or not such principal is in fact paid) by 
            reason of a provision described in section 428(b)(1)(M) or 
            427(a)(2)(C),
        shall be determined under subparagraph (A) by substituting `1.7 
        percent' for `2.3 percent'.
            ``(C) PLUS loans.--Notwithstanding the preceding paragraphs 
        of this subsection, with respect to Federal Direct PLUS Loan 
        for which the first disbursement is made on or after October 1, 
        1998, and before July 1, 2003, the applicable rate of interest 
        shall be determined under subparagraph (A)--
                ``(i) by substituting `3.1 percent' for `2.3 percent'; 
            and
                ``(ii) by substituting `9.0 percent' for `8.25 
            percent'.
            ``(D) Consolidation loans.--Notwithstanding the preceding 
        paragraphs of this subsection, any Federal Direct Consolidation 
        loan for which the application is received on or after February 
        1, 1999, and before July 1, 2003, shall bear interest at an 
        annual rate on the unpaid principal balance of the loan that is 
        equal to the lesser of--
                ``(i) the weighted average of the interest rates on the 
            loans consolidated, rounded to the nearest higher one-
            eighth of one percent; or
                ``(ii) 8.25 percent.
            ``(E) Temporary rules for consolidation loans.--
        Notwithstanding the preceding paragraphs of this subsection, 
        any Federal Direct Consolidation loan for which the application 
        is received on or after October 1, 1998, and before February 1, 
        1999, shall bear interest at an annual rate on the unpaid 
        principal balance of the loan that is equal to--
                ``(i) the bond equivalent rate of 91-day Treasury bills 
            auctioned at the final auction held prior to such June 1; 
            plus
                ``(ii) 2.3 percent,
        except that such rate shall not exceed 8.25 percent.''.
        (2) Limitation on consolidation loans during temporary interest 
    rate.--Notwithstanding section 455(g) of the Higher Education Act 
    of 1965, a borrower who is enrolled or accepted for enrollment in 
    an institution of higher education may not consolidate loans under 
    such section during the period beginning October 1, 1998, and 
    ending February 1, 1999, unless the borrower certifies that the 
    borrower has no outstanding loans made, insured, or guaranteed 
    under title IV of such Act other than loans made under part D of 
    such title.
    (b) Repayment Incentives.--Section 455(b) (20 U.S.C. 1087e(b)) is 
further amended by adding at the end the following:
        ``(7) Repayment incentives.--
            ``(A) In general.--Notwithstanding any other provision of 
        this part, the Secretary is authorized to prescribe by 
        regulation such reductions in the interest rate paid by a 
        borrower of a loan made under this part as the Secretary 
        determines appropriate to encourage on-time repayment of the 
        loan. Such reductions may be offered only if the Secretary 
        determines the reductions are cost neutral and in the best 
        financial interest of the Federal Government. Any increase in 
        subsidy costs resulting from such reductions shall be 
        completely offset by corresponding savings in funds available 
        for the William D. Ford Federal Direct Loan Program in that 
        fiscal year from section 458 and other administrative accounts.
            ``(B) Accountability.--Prior to publishing regulations 
        proposing repayment incentives, the Secretary shall ensure the 
        cost neutrality of such reductions. The Secretary shall not 
        prescribe such regulations in final form unless an official 
        report from the Director of the Office of Management and Budget 
        to the Secretary and a comparable report from the Director of 
        the Congressional Budget Office to the Congress each certify 
        that any such reductions will be completely cost neutral. Such 
        reports shall be transmitted to the Committee on Labor and 
        Human Resources of the Senate and the Committee on Education 
        and the Workforce of the House of Representatives not less than 
        60 days prior to the publication of regulations proposing such 
        reductions.''.
    (c) Consolidation Loans.--The first sentence of section 455(g) is 
amended by striking everything after ``section 428C(a)(4)'' and 
inserting a period.
    (d) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to any loan made under part D of title IV of the 
Higher Education Act of 1965 for which the first disbursement is made 
on or after October 1, 1998, and before July 1, 2003, except that such 
amendments shall apply with respect to a Federal Direct Consolidation 
Loan for which the application is received on or after October 1, 1998, 
and before July 1, 2003.

SEC. 453. CONTRACTS.

    Section 456(b) (20 U.S.C. 1087f(b)) is amended--
        (1) in paragraph (3), by inserting ``and'' after the semicolon;
        (2) by striking paragraph (4); and
        (3) by redesignating paragraph (5) as paragraph (4).

SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.

    Section 458 (20 U.S.C. 1087h) is amended--
        (1) by amending subsection (a) to read as follows:
    ``(a) Administrative Expenses.--
        ``(1) In general.--Each fiscal year there shall be available to 
    the Secretary, from funds not otherwise appropriated, funds to be 
    obligated for--
            ``(A) administrative costs under this part and part B, 
        including the costs of the direct student loan programs under 
        this part; and
            ``(B) account maintenance fees payable to guaranty agencies 
        under part B and calculated in accordance with subsections (b) 
        and (c),
    not to exceed (from such funds not otherwise appropriated) 
    $617,000,000 in fiscal year 1999, $735,000,000 in fiscal year 2000, 
    $770,000,000 in fiscal year 2001, $780,000,000 in fiscal year 2002, 
    and $795,000,000 in fiscal year 2003.
        ``(2) Account maintenance fees.--Account maintenance fees under 
    paragraph (1)(B) shall be paid quarterly and deposited in the 
    Agency Operating Fund established under section 422B.
        ``(3) Carryover.--The Secretary may carry over funds made 
    available under this section to a subsequent fiscal year.'';
        (2) by amending subsection (b) to read as follows:
    ``(b) Calculation Basis.--Except as provided in subsection (c), 
account maintenance fees payable to guaranty agencies under paragraph 
(1)(B) shall be calculated--
        ``(1) for fiscal years 1999 and 2000, on the basis of 0.12 
    percent of the original principal amount of outstanding loans on 
    which insurance was issued under part B; and
        ``(2) for fiscal years 2001, 2002, and 2003, on the basis of 
    0.10 percent of the original principal amount of outstanding loans 
    on which insurance was issued under part B.'';
        (3) by striking subsection (d);
        (4) by redesignating subsection (c) as subsection (d); and
        (5) by inserting after subsection (b) the following:
    ``(c) Special Rules.--
        ``(1) Fee cap.--The total amount of account maintenance fees 
    payable under this section--
            ``(A) for fiscal year 1999, shall not exceed $177,000,000;
            ``(B) for fiscal year 2000, shall not exceed $180,000,000;
            ``(C) for fiscal year 2001, shall not exceed $170,000,000;
            ``(D) for fiscal year 2002, shall not exceed $180,000,000; 
        and
            ``(E) for fiscal year 2003, shall not exceed $195,000,000.
        ``(2) Insufficient funding.--
            ``(A) In general.--If the amounts set forth in paragraph 
        (1) are insufficient to pay the account maintenance fees 
        payable to guaranty agencies pursuant to subsection (b) for a 
        fiscal year, the Secretary shall pay the insufficiency by 
        requiring guaranty agencies to transfer funds from the Federal 
        Student Loan Reserve Funds under section 422A to the Agency 
        Operating Funds under section 422B.
            ``(B) Entitlement.--A guaranty agency shall be deemed to 
        have a contractual right against the United States to receive 
        payments according to the provisions of subparagraph (A).''.

SEC. 455. AUTHORITY TO SELL LOANS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is amended by adding 
at the end the following:

``SEC. 459. AUTHORITY TO SELL LOANS.

    ``The Secretary, in consultation with the Secretary of the 
Treasury, is authorized to sell loans made under this part on such 
terms as the Secretary determines are in the best interest of the 
United States, except that any such sale shall not result in any cost 
to the Federal Government. Notwithstanding any other provision of law, 
the proceeds of any such sale may be used by the Secretary to offer 
reductions in the interest rate paid by a borrower of a loan made under 
this part as the Secretary determines appropriate to encourage on-time 
repayment in accordance with section 455(b)(7). Such reductions may be 
offered only if the Secretary determines the reductions are in the best 
financial interests of the Federal Government.''.

SEC. 456. LOAN CANCELLATION FOR TEACHERS.

    Part D of title IV (20 U.S.C. 1087a et seq.) is further amended by 
adding after section 459 (as added by section 455) the following:

``SEC. 460. LOAN CANCELLATION FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--
        ``(1) In general.--The Secretary shall carry out a program of 
    canceling the obligation to repay a qualified loan amount in 
    accordance with subsection (c) for Federal Direct Stafford Loans 
    and Federal Direct Unsubsidized Stafford Loans made under this part 
    for any new borrower on or after October 1, 1998, who--
            ``(A) has been employed as a full-time teacher for 5 
        consecutive complete school years--
                ``(i) in a school that qualifies under section 
            465(a)(2)(A) for loan cancellation for Perkins loan 
            recipients who teach in such schools;
                ``(ii) if employed as a secondary school teacher, is 
            teaching a subject area that is relevant to the borrower's 
            academic major as certified by the chief administrative 
            officer of the public or non-profit private secondary 
            school in which the borrower is employed; and
                ``(iii) if employed as an elementary school teacher, 
            has demonstrated, as certified by the chief administrative 
            officer of the public or nonprofit private elementary 
            school in which the borrower is employed, knowledge and 
            teaching skills in reading, writing, mathematics and other 
            areas of the elementary school curriculum; and
            ``(B) is not in default on a loan for which the borrower 
        seeks forgiveness.
        ``(2) Special rule.--No borrower may obtain a reduction of loan 
    obligations under both this section and section 428J.
    ``(c) Qualified Loan Amounts.--
        ``(1) In general.--The Secretary shall cancel not more than 
    $5,000 in the aggregate of the loan obligation on a Federal Direct 
    Stafford Loan or a Federal Direct Unsubsidized Stafford Loan that 
    is outstanding after the completion of the fifth complete school 
    year of teaching described in subsection (b)(1)(A).
        ``(2) Treatment of consolidation loans.--A loan amount for a 
    Federal Direct Consolidation Loan may be a qualified loan amount 
    for the purposes of this subsection only to the extent that such 
    loan amount was used to repay a Federal Direct Stafford Loan, a 
    Federal Direct Unsubsidized Stafford Loan, or a loan made under 
    section 428 or 428H, for a borrower who meets the requirements of 
    subsection (b), as determined in accordance with regulations 
    prescribed by the Secretary.
    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any canceled loan.
    ``(f) List.--If the list of schools in which a teacher may perform 
service pursuant to subsection (b) is not available before May 1 of any 
year, the Secretary may use the list for the year preceding the year 
for which the determination is made to make such service determination.
    ``(g) Additional Eligibility Provisions.--
        ``(1) Continued eligibility.--Any teacher who performs service 
    in a school that--
            ``(A) meets the requirements of subsection (b)(1)(A) in any 
        year during such service; and
            ``(B) in a subsequent year fails to meet the requirements 
        of such subsection, may continue to teach in such school and 
        shall be eligible for loan cancellation pursuant to subsection 
        (b).
        ``(2) Prevention of double benefits.--No borrower may, for the 
    same volunteer service, receive a benefit under both this section 
    and subtitle D of title I of the National and Community Service Act 
    of 1990 (42 U.S.C. 12571 et seq.).
    ``(h) Definition.--For the purpose of this section, the term `year' 
where applied to service as a teacher means an academic year as defined 
by the Secretary.''.

                     PART E--FEDERAL PERKINS LOANS

SEC. 461. AUTHORIZATION OF APPROPRIATIONS.

    Subsection (b) of section 461 (20 U.S.C. 1087aa) is amended--
        (1) in paragraph (1), by striking ``1993'' and inserting 
    ``1999''; and
        (2) in paragraph (2), by striking ``1997'' each place the term 
    appears and inserting ``2003''.

SEC. 462. ALLOCATION OF FUNDS.

    (a) Changes in Allocation Formula.--
        (1) Updating the base period.--Section 462(a) (20 U.S.C. 
    1087bb(a)) is amended--
            (A) in paragraph (1)(A), by striking ``the amount of the 
        Federal capital contribution allocated to such institution 
        under this part for fiscal year 1985'' and inserting ``the 
        amount received under subsections (a) and (b) of this section 
        for fiscal year 1999 (as such subsections were in effect with 
        respect to allocations for such fiscal year)'';
            (B) in paragraph (2)--
                (i) in subparagraphs (A) and (B), by striking ``1985'' 
            each place the term appears and inserting ``1999''; and
                (ii) in subparagraph (C)(i), by striking ``1986'' and 
            inserting ``2000''.
        (2) Elimination of pro rata share.--Section 462 is further 
    amended--
            (A) in subsection (a)--
                (i) in paragraph (1)(B), by striking ``subsection (f)'' 
            and inserting ``subsection (e)'';
                (ii) in the matter following paragraph (1)(B), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
                (iii) in paragraph (2)(D)(ii), by striking ``subsection 
            (f)'' and inserting ``subsection (e)''; and
                (iv) in the matter following paragraph (2)(D)(ii), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
            (B) by striking subsection (b);
            (C) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (D) in the matter following subsection (c)(2)(B), by 
        striking ``subsection (g)'' and inserting ``subsection (f)'';
            (E) in subsection (c)(3)--
                (i) in subparagraph (A), by striking ``subsection (d)'' 
            and inserting ``subsection (c)'';
                (ii) in subparagraph (C), by striking ``subsection 
            (f)'' and inserting ``subsection (e)''; and
                (iii) in the matter following subparagraph (C), by 
            striking ``subsection (g)'' and inserting ``subsection 
            (f)'';
            (F) in subsection (j)(1)(B)(i), by striking ``1985'' and 
        inserting ``1999'';
            (G) in subsection (j)(2)--
                (i) in subparagraph (A), by striking ``paragraph (3) of 
            subsection (c)'' and inserting ``subsection (b)(3)''; and
                (ii) in subparagraph (B), by striking ``subsection (c) 
            of section 462'' and inserting ``subsection (b)''; and
            (H) by redesignating subsections (c) through (j) as 
        subsections (b) through (i), respectively.
        (3) Effective Date.--The amendments made by this subsection 
    shall apply with respect to allocations of amounts appropriated 
    pursuant to section 461(b) for fiscal year 2000 or any succeeding 
    fiscal year.
    (b) Self-Help Need.--The matter preceding subparagraph (A) of 
section 462(c)(3) (as redesignated by subsection (a)(2)(G)) is amended 
by striking ``the Secretary, for'' and all that follows through 
``years,''.
    (c) Default Penalties.--Subsections (e) and (f) of section 462 (as 
redesignated by subsection (a)(2)(G)) are amended to read as follows:
    ``(e) Default Penalties.--
        ``(1) Years preceding fiscal year 2000.--For any fiscal year 
    preceding fiscal year 2000, any institution with a cohort default 
    rate that--
            ``(A) equals or exceeds 15 percent, shall establish a 
        default reduction plan pursuant to regulations prescribed by 
        the Secretary, except that such plan shall not be required with 
        respect to an institution that has a default rate of less than 
        20 percent and that has less than 100 students who have loans 
        under this part in such academic year;
            ``(B) equals or exceeds 20 percent, but is less than 25 
        percent, shall have a default penalty of 0.9;
            ``(C) equals or exceeds 25 percent, but is less than 30 
        percent, shall have a default penalty of 0.7; and
            ``(D) equals or exceeds 30 percent shall have a default 
        penalty of zero.
        ``(2) Years following fiscal year 2000.--For fiscal year 2000 
    and any succeeding fiscal year, any institution with a cohort 
    default rate (as defined under subsection (g)) that equals or 
    exceeds 25 percent shall have a default penalty of zero.
        ``(3) Ineligibility.--
            ``(A) In general.--For fiscal year 2000 and any succeeding 
        fiscal year, any institution with a cohort default rate (as 
        defined in subsection (g)) that equals or exceeds 50 percent 
        for each of the 3 most recent years for which data are 
        available shall not be eligible to participate in a program 
        under this part for the fiscal year for which the determination 
        is made and the 2 succeeding fiscal years, unless, within 30 
        days of receiving notification from the Secretary of the loss 
        of eligibility under this paragraph, the institution appeals 
        the loss of eligibility to the Secretary. The Secretary shall 
        issue a decision on any such appeal within 45 days after the 
        submission of the appeal. Such decision may permit the 
        institution to continue to participate in a program under this 
        part if--
                ``(i) the institution demonstrates to the satisfaction 
            of the Secretary that the calculation of the institution's 
            cohort default rate is not accurate, and that recalculation 
            would reduce the institution's cohort default rate for any 
            of the 3 fiscal years below 50 percent; or
                ``(ii) there are, in the judgment of the Secretary, 
            such a small number of borrowers entering repayment that 
            the application of this subparagraph would be inequitable.
            ``(B) Continued participation.--During an appeal under 
        subparagraph (A), the Secretary may permit the institution to 
        continue to participate in a program under this part.
            ``(C) Return of funds.--Within 90 days after the date of 
        any termination pursuant to subparagraph (A), or the conclusion 
        of any appeal pursuant to subparagraph (B), whichever is later, 
        the balance of the student loan fund established under this 
        part by the institution that is the subject of the termination 
        shall be distributed as follows:
                ``(i) The Secretary shall first be paid an amount which 
            bears the same ratio to such balance (as of the date of 
            such distribution) as the total amount of Federal capital 
            contributions to such fund by the Secretary under this part 
            bears to the sum of such Federal capital contributions and 
            the capital contributions to such fund made by the 
            institution.
                ``(ii) The remainder of such student loan fund shall be 
            paid to the institution.
            ``(D) Use of returned funds.--Any funds returned to the 
        Secretary under this paragraph shall be reallocated to 
        institutions of higher education pursuant to subsection (i).
            ``(E) Definition.--For the purposes of subparagraph (A), 
        the term `loss of eligibility' shall be defined as the 
        mandatory liquidation of an institution's student loan fund, 
        and assignment of the institution's outstanding loan portfolio 
        to the Secretary.
    ``(f) Applicable Maximum Cohort Default Rate.--
        ``(1) Award years prior to 2000.--For award years prior to 
    award year 2000, the applicable maximum cohort default rate is 30 
    percent.
        ``(2) Award year 2000 and succeeding award years.--For award 
    year 2000 and subsequent years, the applicable maximum cohort 
    default rate is 25 percent.''.
    (d) Cohort Default Rate Definition.--Section 462(g) (as 
redesignated by subsection (a)(2)(G)) is amended--
        (1) by striking the subsection heading and paragraphs (1) and 
    (2) and inserting the following:
    ``(g) Definition of Cohort Default Rate.--'';
        (2) by striking ``(3)(A) For award year 1994 and any succeeding 
    award year, the term'' and inserting the following:
        ``(1)(A) The term'';
        (3) in paragraph (1) (as redesignated by paragraph (2))--
            (A) by striking subparagraphs (B) and (E); and
            (B) by redesignating subparagraphs (C), (D), (F), and (G) 
        as subparagraphs (B), (C), (D), and (F), respectively;
            (C) by inserting after subparagraph (D) (as redesignated by 
        subparagraph (B)) the following:
        ``(E) In determining the number of students who default before 
    the end of such award year, the institution, in calculating the 
    cohort default rate, shall exclude--
            ``(i) any loan on which the borrower has, after the time 
        periods specified in paragraph (2)--
                ``(I) voluntarily made 6 consecutive payments;
                ``(II) voluntarily made all payments currently due;
                ``(III) repaid in full the amount due on the loan; or
                ``(IV) received a deferment or forbearance, based on a 
            condition that began prior to such time periods;
            ``(ii) any loan which has, after the time periods specified 
        in paragraph (2), been rehabilitated or canceled; and
            ``(iii) any other loan that the Secretary determines should 
        be excluded from such determination.''; and
        (4) by striking paragraph (4) and inserting the following:
        ``(2) For purposes of calculating the cohort default rate under 
    this subsection, a loan shall be considered to be in default--
            ``(A) 240 days (in the case of a loan repayable monthly), 
        or
            ``(B) 270 days (in the case of a loan repayable quarterly),
    after the borrower fails to make an installment payment when due or 
    to comply with other terms of the promissory note.''.
    (e) Conforming Amendments.--Section 462 (20 U.S.C. 1087bb) is 
amended--
        (1) in the matter following paragraphs (1)(B) and (2)(D)(ii) of 
    subsection (a), by inserting ``cohort'' before ``default'' each 
    place the term appears;
        (2) in the matter following paragraphs (2)(B) and (3)(C) of 
    subsection (b) (as redesignated by subsection (a)(2)(G)), by 
    inserting ``cohort'' before ``default'' each place the term 
    appears;
        (3) in subsection (d)(2) (as redesignated by subsection 
    (a)(2)(G)), by inserting ``cohort'' before ``default''; and
        (4) in subsection (g)(1)(F) (as redesignated by subsections 
    (a)(2)(G) and (d)(3)(B)), by inserting ``cohort'' before 
    ``default''.

SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION.

    (a) Contents of Agreements.--Section 463(a) (20 U.S.C. 1087cc(a)) 
is amended--
        (1) by amending subparagraph (B) of paragraph (2) to read as 
    follows:
            ``(B) a capital contribution by an institution in an amount 
        equal to one-third of the Federal capital contributions 
        described in subparagraph (A);'';
        (2) by striking paragraph (4); and
        (3) by redesignating paragraphs (5) through (10) as paragraphs 
    (4) through (9);
    (b) Agreements With Credit Bureaus.--Section 463(c) is amended--
        (1) in paragraph (1)--
            (A) by striking ``the Secretary shall'' and inserting ``the 
        Secretary and each institution of higher education 
        participating in the program under this part shall''; and
            (B) by inserting ``and regarding loans held by the 
        Secretary or an institution'' after ``section 467'';
        (2) in paragraph (2)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``by the Secretary'' and all that follows through ``of--'' and 
        inserting ``by the Secretary or an institution, as the case may 
        be, to such organizations, with respect to any loan held by the 
        Secretary or the institution, respectively, of--'';
            (B) by amending subparagraph (A) to read as follows:
            ``(A) the date of disbursement and the amount of such loans 
        made to any borrower under this part at the time of 
        disbursement of the loan;'';
            (C) in subparagraph (B)--
                (i) by inserting ``the repayment and'' after 
            ``concerning''; and
                (ii) by striking ``any defaulted'' and inserting 
            ``such''; and
            (D) in subparagraph (C), by inserting ``, or upon 
        cancellation or discharge of the borrower's obligation on the 
        loan for any reason'' before the period;
        (3) in paragraph (3)--
            (A) in the matter preceding subparagraph (A)--
                (i) by inserting ``or an institution'' after ``from the 
            Secretary''; and
                (ii) by striking ``until--'' and inserting ``until the 
            loan is paid in full.''; and
            (B) by striking subparagraphs (A) and (B);
        (4) by amending paragraph (4) to read as follows:
    ``(4)(A) Except as provided in subparagraph (B), an institution of 
higher education, after consultation with the Secretary and pursuant to 
the agreements entered into under paragraph (1), shall disclose at 
least annually to any credit bureau organization with which the 
Secretary has such an agreement the information set forth in paragraph 
(2), and shall disclose promptly to such credit bureau organization any 
changes to the information previously disclosed.
    ``(B) The Secretary may promulgate regulations establishing 
criteria under which an institution of higher education may cease 
reporting the information described in paragraph (2) before a loan is 
paid in full.''; and
        (4) by inserting after paragraph (4) the following:
    ``(5) Each institution of higher education shall notify the 
appropriate credit bureau organizations whenever a borrower of a loan 
that is made and held by the institution and that is in default makes 6 
consecutive monthly payments on such loan, for the purpose of 
encouraging such organizations to update the status of information 
maintained with respect to that borrower.''.
    (c) Conforming Amendment.--Section 463(d) is amended by striking 
``subsection (a)(10)'' and inserting ``subsection (a)(9)''.

SEC. 464. TERMS OF LOANS.

    (a) Terms and Conditions; Annual Limits.--Paragraph (2) of section 
464(a) (20 U.S.C. 1087dd(a)) is amended to read as follows:
    ``(2)(A) Except as provided in paragraph (4), the total of loans 
made to a student in any academic year or its equivalent by an 
institution of higher education from a loan fund established pursuant 
to an agreement under this part shall not exceed--
        ``(i) $4,000, in the case of a student who has not successfully 
    completed a program of undergraduate education; or
        ``(ii) $6,000, in the case of a graduate or professional 
    student (as defined in regulations issued by the Secretary).
    ``(B) Except as provided in paragraph (4), the aggregate unpaid 
principal amount for all loans made to a student by institutions of 
higher education from loan funds established pursuant to agreements 
under this part may not exceed--
        ``(i) $40,000, in the case of any graduate or professional 
    student (as defined by regulations issued by the Secretary, and 
    including any loans from such funds made to such person before such 
    person became a graduate or professional student);
        ``(ii) $20,000, in the case of a student who has successfully 
    completed 2 years of a program of education leading to a bachelor's 
    degree but who has not completed the work necessary for such a 
    degree (determined under regulations issued by the Secretary), and 
    including any loans from such funds made to such person before such 
    person became such a student; and
        ``(iii) $8,000, in the case of any other student.''.
    (b) Need and Eligibility.--Section 464(b) is amended--
        (1) in paragraph (1), by adding at the end the following: ``A 
    student who is in default on a loan under this part shall not be 
    eligible for an additional loan under this part unless such loan 
    meets one of the conditions for exclusion under section 
    462(g)(1)(E).''; and
        (2) by amending paragraph (2) to read as follows:
    ``(2) If the institution's capital contribution under section 462 
is directly or indirectly based in part on the financial need 
demonstrated by students who are (A) attending the institution less 
than full time, or (B) independent students, then a reasonable portion 
of the loans made from the institution's student loan fund containing 
the contribution shall be made available to such students.''.
    (c) Contents of Loan Agreement.--Section 464(c) is amended--
        (1) in paragraph (1)(D)--
            (A) by striking ``(i) 3 percent'' and all that follows 
        through ``or (iii)''; and
            (B) by striking ``subparagraph (A)(i)'' and inserting 
        ``paragraph (2)(A)(i)'';
        (2) in the matter following clause (iv) of paragraph (2)(A), by 
    striking ``subparagraph (B)'' and inserting ``subparagraph (A) of 
    paragraph (1)'';
        (3) by adding at the end of paragraph (2) the following:
    ``(C) An individual with an outstanding loan balance who meets the 
eligibility criteria for a deferment described in subparagraph (A) as 
in effect on the date of enactment of this subparagraph shall be 
eligible for deferment under this paragraph notwithstanding any 
contrary provision of the promissory note under which the loan or loans 
were made, and notwithstanding any amendment (or effective date 
provision relating to any amendment) to this section made prior to the 
date of such deferment.''; and
        (4) by adding at the end the following:
    ``(7) There shall be excluded from the 9-month period that begins 
on the date on which a student ceases to carry at least one-half the 
normal full-time academic workload (as described in paragraph (1)(A)) 
any period not to exceed 3 years during which a borrower who is a 
member of a reserve component of the Armed Forces named in section 
10101 of title 10, United States Code, is called or ordered to active 
duty for a period of more than 30 days (as defined in section 101(d)(2) 
of such title). Such period of exclusion shall include the period 
necessary to resume enrollment at the borrower's next available regular 
enrollment period.''.
    (d) Discharge; Rehabilitation; Incentive Repayment.-- Section 464 
is amended by adding at the end the following:
    ``(g) Discharge.--
        ``(1) In general.--If a student borrower who received a loan 
    made under this part on or after January 1, 1986, is unable to 
    complete the program in which such student is enrolled due to the 
    closure of the institution, then the Secretary shall discharge the 
    borrower's liability on the loan (including the interest and 
    collection fees) and shall subsequently pursue any claim available 
    to such borrower against the institution and the institution's 
    affiliates and principals, or settle the loan obligation pursuant 
    to the financial responsibility standards described in section 
    498(c).
        ``(2) Assignment.--A borrower whose loan has been discharged 
    pursuant to this subsection shall be deemed to have assigned to the 
    United States the right to a loan refund in an amount that does not 
    exceed the amount discharged against the institution and the 
    institution's affiliates and principals.
        ``(3) Eligibility for additional assistance.--The period during 
    which a student was unable to complete a course of study due to the 
    closing of the institution shall not be considered for purposes of 
    calculating the student's period of eligibility for additional 
    assistance under this title.
        ``(4) Special rule.--A borrower whose loan has been discharged 
    pursuant to this subsection shall not be precluded, because of that 
    discharge, from receiving additional grant, loan, or work 
    assistance under this title for which the borrower would be 
    otherwise eligible (but for the default on the discharged loan). 
    The amount discharged under this subsection shall be treated as an 
    amount canceled under section 465(a).
        ``(5) Reporting.--The Secretary or institution, as the case may 
    be, shall report to credit bureaus with respect to loans that have 
    been discharged pursuant to this subsection.
    ``(h) Rehabilitation of Loans.--
        ``(1) Rehabilitation.--
            ``(A) In general.--If the borrower of a loan made under 
        this part who has defaulted on the loan makes 12 ontime, 
        consecutive, monthly payments of amounts owed on the loan, as 
        determined by the institution, or by the Secretary in the case 
        of a loan held by the Secretary, the loan shall be considered 
        rehabilitated, and the institution that made that loan (or the 
        Secretary, in the case of a loan held by the Secretary) shall 
        request that any credit bureau organization or credit reporting 
        agency to which the default was reported remove the default 
        from the borrower's credit history.
            ``(B) Comparable conditions.--As long as the borrower 
        continues to make scheduled repayments on a loan rehabilitated 
        under this paragraph, the rehabilitated loan shall be subject 
        to the same terms and conditions, and qualify for the same 
        benefits and privileges, as other loans made under this part.
            ``(C) Additional assistance.--The borrower of a 
        rehabilitated loan shall not be precluded by section 484 from 
        receiving additional grant, loan, or work assistance under this 
        title (for which the borrower is otherwise eligible) on the 
        basis of defaulting on the loan prior to such rehabilitation.
            ``(D) Limitations.--A borrower only once may obtain the 
        benefit of this paragraph with respect to rehabilitating a loan 
        under this part.
        ``(2) Restoration of eligibility.--If the borrower of a loan 
    made under this part who has defaulted on that loan makes 6 ontime, 
    consecutive, monthly payments of amounts owed on such loan, the 
    borrower's eligibility for grant, loan, or work assistance under 
    this title shall be restored to the extent that the borrower is 
    otherwise eligible. A borrower only once may obtain the benefit of 
    this paragraph with respect to restored eligibility.
    ``(i) Incentive Repayment Program.--
        ``(1) In general.--Each institution of higher education may 
    establish, with the approval of the Secretary, an incentive 
    repayment program designed to reduce default and to replenish 
    student loan funds established under this part. Each such incentive 
    repayment program may--
            ``(A) offer a reduction of the interest rate on a loan on 
        which the borrower has made 48 consecutive, monthly repayments, 
        but in no event may the rate be reduced by more than 1 percent;
            ``(B) provide for a discount on the balance owed on a loan 
        on which the borrower pays the principal and interest in full 
        prior to the end of the applicable repayment period, but in no 
        event may the discount exceed 5 percent of the unpaid principal 
        balance due on the loan at the time the early repayment is 
        made; and
            ``(C) include such other incentive repayment options as the 
        institution determines will carry out the objectives of this 
        subsection.
        ``(2) Limitation.--No incentive repayment option under an 
    incentive repayment program authorized by this subsection may be 
    paid for with Federal funds, including any Federal funds from the 
    student loan fund, or with institutional funds from the student 
    loan fund.''.

SEC. 465. CANCELLATION FOR PUBLIC SERVICE.

    Section 465 (20 U.S.C. 1087ee) is amended--
        (1) in subsection (a)--
            (A) in paragraph (2)(C), by striking ``section 676(b)(9)'' 
        and inserting ``section 635(a)(10)'';
            (B) in the last sentence of paragraph (2), by striking 
        ``section 602(a)(1)'' and inserting ``section 602''; and
            (C) by adding at the end the following new paragraph:
    ``(7) An individual with an outstanding loan obligation under this 
part who performs service of any type that is described in paragraph 
(2) as in effect on the date of enactment of this paragraph shall be 
eligible for cancellation under this section for such service 
notwithstanding any contrary provision of the promissory note under 
which the loan or loans were made, and notwithstanding any amendment 
(or effective date provision relating to any amendment) to this section 
made prior to the date of such service.''; and
        (2) in subsection (b), by adding at the end the following new 
    sentence: ``To the extent feasible, the Secretary shall pay the 
    amounts for which any institution qualifies under this subsection 
    not later than 3 months after the institution files an 
    institutional application for campus-based funds.''.

SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.

    Section 466 (20 U.S.C. 1087ff) is amended--
        (1) in subsection (a)--
            (A) in the matter preceding paragraph (1)--
                (i) by striking ``1996'' and inserting ``2003''; and
                (ii) by striking ``1997'' and inserting ``2004''; and
            (B) in paragraph (1), by striking ``1996'' and inserting 
        ``2003'';
        (2) in subsection (b)--
            (A) by striking ``2005'' and inserting ``2012''; and
            (B) by striking ``1996'' and inserting ``2003''; and
        (3) in subsection (c), by striking ``1997'' and inserting 
    ``2004''.

SEC. 467. PERKINS LOAN REVOLVING FUND.

    (a) Repeal.--Subsection (c) of section 467 (20 U.S.C. 1087gg(c)) is 
repealed.
    (b) Transfer of Balance.--Any funds in the Perkins Loan Revolving 
Fund on the date of enactment of this Act shall be transferred to and 
deposited in the Treasury.

                         PART F--NEED ANALYSIS

SEC. 471. COST OF ATTENDANCE.

    Section 472 (20 U.S.C. 1087ll) is amended--
        (1) in paragraph (2), by inserting after ``personal expenses'' 
    the following: ``, including a reasonable allowance for the 
    documented rental or purchase of a personal computer,'';
        (2) in paragraph (3)--
            (A) in subparagraph (A), by striking ``of not less than 
        $1,500'' and inserting ``determined by the institution''; and
            (B) in subparagraph (C), by striking ``, except that the 
        amount may not be less than $2,500'';
        (3) in paragraph (10), by striking everything after 
    ``determining costs'' and inserting a semicolon; and
        (4) in paragraph (11), by striking ``placed'' and inserting 
    ``engaged''.

SEC. 472. DATA ELEMENTS.

    Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amended by inserting 
``, excluding the student's parents,'' after ``family of the student''.

SEC. 473. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.

    (a) Parents' Contribution from Adjusted Available Income.--Section 
475(b)(3) (20 U.S.C. 1087oo(b)(3)) is amended by inserting ``, 
excluding the student's parents,'' after ``number of family members''.
    (b) Student Contribution From Available Income.--Section 475(g) is 
amended--
        (1) in paragraph (2)--
            (A) in subparagraph (D), by striking ``$1,750; and'' and 
        inserting ``$2,200 (or a successor amount prescribed by the 
        Secretary under section 478);'';
            (B) by striking the period at the end of subparagraph (E) 
        and inserting ``; and''; and
            (C) by inserting after subparagraph (E) the following new 
        subparagraph:
            ``(F) an allowance for parents' negative available income, 
        determined in accordance with paragraph (6).''; and
        (2) by adding at the end the following new paragraph:
        ``(6) Allowance for parents' negative available income.--The 
    allowance for parents' negative available income is the amount, if 
    any, by which the sum of the amounts deducted under subparagraphs 
    (A) through (F) of subsection (c)(1) exceeds the sum of the 
    parents' total income (as defined in section 480) and the parents' 
    contribution from assets (as determined in accordance with 
    subsection (d)).''.
    (c) Adjustments to Student's Contribution for Enrollment Periods 
Other Than Nine Months.--Section 475 is amended by adding at the end 
the following:
    ``(j) Adjustments to Student's Contribution for Enrollment Periods 
of Less Than Nine Months.--For periods of enrollment of less than 9 
months, the student's contribution from adjusted available income (as 
determined under subsection (g)) is determined, for purposes other than 
subpart 2 of part A, by dividing the amount determined under such 
subsection by 9, and multiplying the result by the number of months in 
the period of enrollment.''.

SEC. 474. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
              DEPENDENTS OTHER THAN A SPOUSE.

    (a) Adjustments for Enrollment Periods of Less Than Nine Months.--
Section 476(a) (20 U.S.C. 1087pp(a)) is amended--
        (1) by striking ``and'' at the end of paragraph (1)(B);
        (2) by inserting ``and'' after the semicolon at the end of 
    paragraph (2); and
        (3) by inserting after paragraph (2) the following new 
    paragraph:
        ``(3) for periods of enrollment of less than 9 months, for 
    purposes other than subpart 2 of part A--
            ``(A) dividing the quotient resulting under paragraph (2) 
        by 9; and
            ``(B) multiplying the result by the number of months in the 
        period of enrollment;''.
    (b) Contribution from Available Income.--Section 476(b)(1)(A)(iv) 
is amended--
        (1) by striking ``allowance of--'' and inserting ``allowance of 
    the following amount (or a successor amount prescribed by the 
    Secretary under section 478)--'';
        (2) in subclauses (I) and (II), by striking ``$3,000'' each 
    place the term appears and inserting ``$5,000''; and
        (3) in subclause (III), by striking ``$6,000'' and inserting 
    ``$8,000''.

SEC. 475. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITH DEPENDENTS 
              OTHER THAN A SPOUSE.

    Section 477(a) (20 U.S.C. 1087qq(a)) is amended--
        (1) by striking ``and'' at the end of paragraph (2);
        (2) by inserting ``and'' after the semicolon at the end of 
    paragraph (3); and
        (3) by inserting after paragraph (3) the following new 
    paragraph:
        ``(4) for periods of enrollment of less than 9 months, for 
    purposes other than subpart 2 of part A--
            ``(A) dividing the quotient resulting under paragraph (3) 
        by 9; and
            ``(B) multiplying the result by the number of months in the 
        period of enrollment;''.

SEC. 476. REGULATIONS; UPDATED TABLES AND AMOUNTS.

    Section 478(b) (20 U.S.C. 1087rr(b)) is amended--
        (1) by striking ``For each academic year'' and inserting the 
    following:
        ``(1) Revised tables.--For each academic year''; and
        (2) by adding at the end the following new paragraph:
        ``(2) Revised amounts.--For each academic year after academic 
    year 2000-2001, the Secretary shall publish in the Federal Register 
    revised income protection allowances for the purpose of sections 
    475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised allowances shall be 
    developed by increasing each of the dollar amounts contained in 
    such section by a percentage equal to the estimated percentage 
    increase in the Consumer Price Index (as determined by the 
    Secretary) between December 1999 and the December next preceding 
    the beginning of such academic year, and rounding the result to the 
    nearest $10.''.

SEC. 477. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CONTRIBUTION.

    Section 479 (20 U.S.C. 1087ss) is amended--
        (1) in subsection (b)(3)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``this paragraph'' and inserting ``this subsection, or 
        subsection (c), as the case may be,'';
            (B) in subparagraph (A), by striking ``or'' at the end 
        thereof;
            (C) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (D) by inserting after subparagraph (A) the following new 
        subparagraph:
            ``(B) a form 1040 (including any prepared or electronic 
        version of such form) required pursuant to the Internal Revenue 
        Code of 1986, except that such form shall be considered a 
        qualifying form only if the student or family files such form 
        in order to take a tax credit under section 25A of the Internal 
        Revenue Code of 1986, and would otherwise be eligible to file a 
        form described in subparagraph (A); or'';
        (2) in subsection (c)--
            (A) by amending paragraph (1)(A) to read as follows:
            ``(A) the student's parents file, or are eligible to file, 
        a form described in subsection (b)(3), or certify that the 
        parents are not required to file an income tax return and the 
        student files, or is eligible to file, such a form, or 
        certifies that the student is not required to file an income 
        tax return; and''; and
            (B) by amending paragraph (2)(A) to read as follows:
            ``(A) the student (and the student's spouse, if any) files, 
        or is eligible to file, a form described in subsection (b)(3), 
        or certifies that the student (and the student's spouse, if 
        any) is not required to file an income tax return; and''.

SEC. 478. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    Section 479A (20 U.S.C. 1087tt) is amended--
        (1) in subsection (a), by inserting after the second sentence 
    the following: ``Special circumstances may include tuition expenses 
    at an elementary or secondary school, medical or dental expenses 
    not covered by insurance, unusually high child care costs, recent 
    unemployment of a family member, the number of parents enrolled at 
    least half-time in a degree, certificate, or other program leading 
    to a recognized educational credential at an institution with a 
    program participation agreement under section 487, or other changes 
    in a family's income, a family's assets, or a student's status.''; 
    and
        (2) by amending subsection (c) to read as follows:
    ``(c) Refusal or Adjustment of Loan Certifications.--On a case-by-
case basis, an eligible institution may refuse to certify a statement 
that permits a student to receive a loan under part B or D, or may 
certify a loan amount or make a loan that is less than the student's 
determination of need (as determined under this part), if the reason 
for the action is documented and provided in written form to the 
student. No eligible institution shall discriminate against any 
borrower or applicant in obtaining a loan on the basis of race, 
national origin, religion, sex, marital status, age, or disability 
status.''.

SEC. 479. TREATMENT OF OTHER FINANCIAL ASSISTANCE.

    Section 480(j) (20 U.S.C. 1087vv(j)) is amended--
        (1) in paragraph (1), by inserting before the period at the end 
    the following: ``, and national service educational awards or post-
    service benefits under title I of the National and Community 
    Service Act of 1990 (42 U.S.C. 12571 et seq.)'';
        (2) by striking paragraph (3); and
        (3) by redesignating paragraph (4) as paragraph (3).

SEC. 480. CLERICAL AMENDMENTS.

    (a) Amount of Need.--Section 471 (20 U.S.C. 1087kk) is amended by 
striking ``or 4'' and inserting ``or 2''.
    (b) Family Contribution.--Section 473 (20 U.S.C. 1087mm) is amended 
by striking ``subpart 4'' and inserting ``subpart 2''.

SEC. 480A. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this part are effective on the date of enactment of 
this Act.
    (b) Provisions Effective for Academic Year 2000-2001, and 
Thereafter.--The amendments made by sections 472, 473, 474, and 475 
shall apply with respect to determinations of need under part F of 
title IV of the Higher Education Act of 1965 for academic years 
beginning on or after July 1, 2000.

                       PART G--GENERAL PROVISIONS

SEC. 481. MASTER CALENDAR.

    (a) Required Schedule.--Section 482(a) (20 U.S.C. 1089(a)) is 
amended by adding at the end the following:
        ``(3) The Secretary shall, to the extent practicable, notify 
    eligible institutions, guaranty agencies, lenders, interested 
    software providers, and, upon request, other interested parties, by 
    December 1 prior to the start of an award year of minimal hardware 
    and software requirements necessary to administer programs under 
    this title.
        ``(4) The Secretary shall attempt to conduct training 
    activities for financial aid administrators and others in an 
    expeditious and timely manner prior to the start of an award year 
    in order to ensure that all participants are informed of all 
    administrative requirements.''.
    (b) Delay of Effective Date of Late Publications.--Subsection (c) 
of section 482 is amended to read as follows:
    ``(c) Delay of Effective Date of Late Publications.--(1) Except as 
provided in paragraph (2), any regulatory changes initiated by the 
Secretary affecting the programs under this title that have not been 
published in final form by November 1 prior to the start of the award 
year shall not become effective until the beginning of the second award 
year after such November 1 date.
    ``(2)(A) The Secretary may designate any regulatory provision that 
affects the programs under this title and is published in final form 
after November 1 as one that an entity subject to the provision may, in 
the entity's discretion, choose to implement prior to the effective 
date described in paragraph (1). The Secretary may specify in the 
designation when, and under what conditions, an entity may implement 
the provision prior to that effective date. The Secretary shall publish 
any designation under this subparagraph in the Federal Register.
    ``(B) If an entity chooses to implement a regulatory provision 
prior to the effective date described in paragraph (1), as permitted by 
subparagraph (A), the provision shall be effective with respect to that 
entity in accordance with the terms of the Secretary's designation.''.

SEC. 482. FORMS AND REGULATIONS.

    (a) Common Financial Aid Form Development.--Section 483(a) (20 
U.S.C. 1090(a)) is amended--
        (1) in the subsection heading, by striking ``Form'' and 
    inserting ``Form Development'';
        (2) in paragraph (1)--
            (A) by striking ``A, C, D, and E'' and inserting ``A 
        through E'';
            (B) by striking ``and to determine the need of a student 
        for the purpose of part B of this title'';
            (C) by striking the second sentence and inserting the 
        following: ``The Secretary shall include on the form developed 
        under this subsection such data items as the Secretary 
        determines are appropriate for inclusion. Such items shall be 
        selected in consultation with States to assist in the awarding 
        of State financial assistance. In no case shall the number of 
        such data items be less than the number included on the form on 
        the date of enactment of the Higher Education Amendments of 
        1998.''; and
            (D) by striking the last sentence;
        (3) in paragraph (2)--
            (A) by striking ``A, C, D, and E'' each place the term 
        appears and inserting ``A through E'';
            (B) by striking ``and the need of a student for the purpose 
        of part B of this title,''; and
            (C) by striking ``or have the student's need established 
        for the purpose of part B of this title'';
        (4) by amending paragraph (3) to read as follows:
        ``(3) Distribution of data.--Institutions of higher education, 
    guaranty agencies, and States shall receive, without charge, the 
    data collected by the Secretary using the form developed pursuant 
    to this section for the purposes of processing loan applications 
    and determining need and eligibility for institutional and State 
    financial aid awards. Entities designated by institutions of higher 
    education, guaranty agencies, or States to receive such data shall 
    be subject to all the requirements of this section, unless such 
    requirements are waived by the Secretary.'';
        (5) by adding at the end the following:
        ``(5) Electronic forms.--(A) The Secretary, in cooperation with 
    representatives of agencies and organizations involved in student 
    financial assistance, including private computer software 
    providers, shall develop an electronic version of the form 
    described in paragraph (1). As permitted by the Secretary, such an 
    electronic version shall not require a signature to be collected at 
    the time such version is submitted, if a signature is subsequently 
    submitted by the applicant. The Secretary shall prescribe such 
    version not later than 120 days after the date of enactment of the 
    Higher Education Amendments of 1998.
        ``(B) Nothing in this section shall be construed to prohibit 
    the use of the form developed by the Secretary pursuant to 
    subparagraph (A) by an eligible institution, eligible lender, 
    guaranty agency, State grant agency, private computer software 
    providers, a consortium thereof, or such other entities as the 
    Secretary may designate.
        ``(C) No fee shall be charged to students in connection with 
    the use of the electronic version of the form, or of any other 
    electronic forms used in conjunction with such form in applying for 
    Federal or State student financial assistance.
        ``(D) The Secretary shall ensure that data collection complies 
    with section 552a of title 5, United States Code, and that any 
    entity using the electronic version of the form developed by the 
    Secretary pursuant to subparagraph (A) shall maintain reasonable 
    and appropriate administrative, technical, and physical safeguards 
    to ensure the integrity and confidentiality of the information, and 
    to protect against security threats, or unauthorized uses or 
    disclosures of the information provided on the electronic version 
    of the form. Data collected by such version of the form shall be 
    used only for the application, award, and administration of aid 
    awarded under this title, State aid, or aid awarded by eligible 
    institutions or such entities as the Secretary may designate. No 
    data collected by such version of the form shall be used for making 
    final aid awards under this title until such data have been 
    processed by the Secretary or a contractor or designee of the 
    Secretary.
        ``(6) Third party servicers and private software providers.--To 
    the extent practicable and in a timely manner, the Secretary shall 
    provide, to private organizations and consortia that develop 
    software used by eligible institutions for the administration of 
    funds under this title, all the necessary specifications that the 
    organizations and consortia must meet for the software the 
    organizations and consortia develop, produce, and distribute 
    (including any diskette, modem, or network communications) which 
    are so used. The specifications shall contain record layouts for 
    required data. The Secretary shall develop in advance of each 
    processing cycle an annual schedule for providing such 
    specifications. The Secretary, to the extent practicable, shall use 
    means of providing such specifications, including conferences and 
    other meetings, outreach, and technical support mechanisms (such as 
    training and printed reference materials). The Secretary shall, 
    from time to time, solicit from such organizations and consortia 
    means of improving the support provided by the Secretary.
        ``(7) Parent's social security number and birth date.--The 
    Secretary is authorized to include on the form developed under this 
    subsection space for the social security number and birth date of 
    parents of dependent students seeking financial assistance under 
    this title.''.
    (b) Streamlined Reapplication Process.--Section 483(b)(1) is 
amended by striking ``, within 240 days'' and all that follows through 
``of 1992,''.
    (c) Information to Committees.--Section 483(c) is amended by 
striking ``and Labor'' and inserting ``and the Workforce''.
    (d) Toll-Free Information.--Section 483(d) is amended by striking 
``section 633(c)'' and inserting ``section 685(d)(2)(C)''.
    (e) Repeal.--Subsection (f) of section 483 is repealed.

SEC. 483. STUDENT ELIGIBILITY.

    (a) In General.--Section 484(a) (20 U.S.C. 1091(a)) is amended--
        (1) in paragraph (4), by striking ``the institution'' and 
    everything that follows through ``lender), a document'' and 
    inserting ``the Secretary, as part of the original financial aid 
    application process, a certification,''; and
        (2) in paragraph (5), by striking ``or a permanent resident of 
    the Trust Territory of the Pacific Islands, Guam, or the Northern 
    Mariana Islands'' and inserting ``a citizen of any one of the 
    Freely Associated States''.
    (b) Home-Schooled Students.--Section 484(d) is amended--
        (1) in the matter preceding paragraph (1), by striking 
    ``either''; and
        (2) by adding at the end the following:
        ``(3) The student has completed a secondary school education in 
    a home school setting that is treated as a home school or private 
    school under State law.''.
    (c) Termination of Eligibility.--Section 484(j) is amended to read 
as follows:
    ``(j) Assistance Under Subparts 1 and 3 of Part A, and Part C.--
Notwithstanding any other provision of law, a student shall be eligible 
until September 30, 2004, for assistance under subparts 1 and 3 of part 
A, and part C, if the student is otherwise qualified and--
        ``(1) is a citizen of any one of the Freely Associated States 
    and attends an institution of higher education in a State or a 
    public or nonprofit private institution of higher education in the 
    Freely Associated States; or
        ``(2) meets the requirements of subsection (a)(5) and attends a 
    public or nonprofit private institution of higher education in any 
    one of the Freely Associated States.''.
    (d) Correspondence Courses.--Paragraph (1) of section 484(l) is 
amended to read as follows:
        ``(1) Relation to correspondence courses.--
            ``(A) In general.--A student enrolled in a course of 
        instruction at an institution of higher education that is 
        offered in whole or in part through telecommunications and 
        leads to a recognized certificate for a program of study of 1 
        year or longer, or a recognized associate, baccalaureate, or 
        graduate degree, conferred by such institution, shall not be 
        considered to be enrolled in correspondence courses unless the 
        total amount of telecommunications and correspondence courses 
        at such institution equals or exceeds 50 percent of the total 
        amount of all courses at the institution.
            ``(B) Requirement.--An institution of higher education 
        referred to in subparagraph (A) is an institution of higher 
        education--
                ``(i) that is not an institute or school described in 
            section 521(4)(C) of the Carl D. Perkins Vocational and 
            Applied Technology Education Act; and
                ``(ii) for which at least 50 percent of the programs of 
            study offered by the institution lead to the award of a 
            recognized associate, baccalaureate, or graduate degree.''.
    (e) Verification of Income Data.--Section 484 is amended by adding 
at the end the following:
    ``(q) Verification of Income Data.--
        ``(1) Confirmation with irs.--The Secretary of Education, in 
    cooperation with the Secretary of the Treasury, is authorized to 
    confirm with the Internal Revenue Service the adjusted gross 
    income, Federal income taxes paid, filing status, and exemptions 
    reported by applicants (including parents) under this title on 
    their Federal income tax returns for the purpose of verifying the 
    information reported by applicants on student financial aid 
    applications.
        ``(2) Notification.--The Secretary shall establish procedures 
    under which an applicant is notified that the Internal Revenue 
    Service will disclose to the Secretary tax return information as 
    authorized under section 6103(l)(13) of the Internal Revenue Code 
    of 1986.''.
    (f) Suspension of Eligibility for Drug-Related Offenses.--
        (1) Amendment.--Section 484 is amended by adding at the end 
    thereof the following:
    ``(r) Suspension of Eligibility for Drug-Related Offenses.--
        ``(1) In general.--A student who has been convicted of any 
    offense under any Federal or State law involving the possession or 
    sale of a controlled substance shall not be eligible to receive any 
    grant, loan, or work assistance under this title during the period 
    beginning on the date of such conviction and ending after the 
    interval specified in the following table:

``If convicted of an offense involving:

  The possession of a con-
    
    trolled substance:
  Ineligibility period is:
      First offense
      1 year 
      Second offense
      2 years 
      Third offense
      Indefinite.

  The sale of a controlled
    
    substance:
  Ineligibility period is:
      First offense
      2 years 
      Second offense
      Indefinite.

        ``(2) Rehabilitation.--A student whose eligibility has been 
    suspended under paragraph (1) may resume eligibility before the end 
    of the ineligibility period determined under such paragraph if--
            ``(A) the student satisfactorily completes a drug 
        rehabilitation program that--
                ``(i) complies with such criteria as the Secretary 
            shall prescribe in regulations for purposes of this 
            paragraph; and
                ``(ii) includes two unannounced drug tests; or
            ``(B) the conviction is reversed, set aside, or otherwise 
        rendered nugatory.
        ``(3) Definitions.--In this subsection, the term `controlled 
    substance' has the meaning given the term in section 102(6) of the 
    Controlled Substances Act (21 U.S.C. 802(6)).''.
        (2) Effective date.--The amendment made by paragraph (1), 
    regarding suspension of eligibility for drug-related offenses, 
    shall apply with respect to financial assistance to cover the costs 
    of attendance for periods of enrollment beginning after the date of 
    enactment of this Act.

SEC. 484. STATE COURT JUDGMENTS.

    Section 484A (20 U.S.C. 1091a) is amended--
        (1) in the heading of the section by inserting ``, and state 
    court judgments'' after ``limitations''; and
        (2) by adding at the end the following:
    ``(c) State Court Judgments.--A judgment of a State court for the 
recovery of money provided as grant, loan, or work assistance under 
this title that has been assigned or transferred to the Secretary under 
this title may be registered in any district court of the United States 
by filing a certified copy of the judgment and a copy of the assignment 
or transfer. A judgment so registered shall have the same force and 
effect, and may be enforced in the same manner, as a judgment of the 
district court of the district in which the judgment is registered.''.

SEC. 485. INSTITUTIONAL REFUNDS.

    Section 484B (20 U.S.C. 1091b) is amended to read as follows:

``SEC. 484B. INSTITUTIONAL REFUNDS.

    ``(a) Return of Title IV Funds.--
        ``(1) In general.--If a recipient of assistance under this 
    title withdraws from an institution during a payment period or 
    period of enrollment in which the recipient began attendance, the 
    amount of grant or loan assistance (other than assistance received 
    under part C) to be returned to the title IV programs is calculated 
    according to paragraph (3) and returned in accordance with 
    subsection (b).
        ``(2) Leave of absence.--
            ``(A) Leave not treated as withdrawal.--In the case of a 
        student who takes a leave of absence from an institution for 
        not more than a total of 180 days in any 12-month period, the 
        institution may consider the student as not having withdrawn 
        from the institution during the leave of absence, and not 
        calculate the amount of grant and loan assistance provided 
        under this title that is to be returned in accordance with this 
        section if--
                ``(i) the institution has a formal policy regarding 
            leaves of absence;
                ``(ii) the student followed the institution's policy in 
            requesting a leave of absence; and
                ``(iii) the institution approved the student's request 
            in accordance with the institution's policy.
            ``(B) Consequences of failure to return.--If a student does 
        not return to the institution at the expiration of an approved 
        leave of absence that meets the requirements of subparagraph 
        (A), the institution shall calculate the amount of grant and 
        loan assistance provided under this title that is to be 
        returned in accordance with this section based on the day the 
        student withdrew (as determined under subsection (c)).
        ``(3) Calculation of amount of title iv assistance earned.--
            ``(A) In general.--The amount of grant or loan assistance 
        under this title that is earned by the recipient for purposes 
        of this section is calculated by--
                ``(i) determining the percentage of grant and loan 
            assistance under this title that has been earned by the 
            student, as described in subparagraph (B); and
                ``(ii) applying such percentage to the total amount of 
            such grant and loan assistance that was disbursed (and that 
            could have been disbursed) to the student, or on the 
            student's behalf, for the payment period or period of 
            enrollment for which the assistance was awarded, as of the 
            day the student withdrew.
            ``(B) Percentage earned.--For purposes of subparagraph 
        (A)(i), the percentage of grant or loan assistance under this 
        title that has been earned by the student is--
                ``(i) equal to the percentage of the payment period or 
            period of enrollment for which assistance was awarded that 
            was completed (as determined in accordance with subsection 
            (d)) as of the day the student withdrew, provided that such 
            date occurs on or before the completion of 60 percent of 
            the payment period or period of enrollment; or
                ``(ii) 100 percent, if the day the student withdrew 
            occurs after the student has completed 60 percent of the 
            payment period or period of enrollment.
            ``(C) Percentage and amount not earned.--For purposes of 
        subsection (b), the amount of grant and loan assistance awarded 
        under this title that has not been earned by the student shall 
        be calculated by--
                ``(i) determining the complement of the percentage of 
            grant or loan assistance under this title that has been 
            earned by the student described in subparagraph (B); and
                ``(ii) applying the percentage determined under clause 
            (i) to the total amount of such grant and loan assistance 
            that was disbursed (and that could have been disbursed) to 
            the student, or on the student's behalf, for the payment 
            period or period of enrollment, as of the day the student 
            withdrew.
        ``(4) Differences between amounts earned and amounts 
    received.--
            ``(A) In general.--If the student has received less grant 
        or loan assistance than the amount earned as calculated under 
        subparagraph (A) of paragraph (3), the institution of higher 
        education shall comply with the procedures for late 
        disbursement specified by the Secretary in regulations.
            ``(B) Return.--If the student has received more grant or 
        loan assistance than the amount earned as calculated under 
        paragraph (3)(A), the unearned funds shall be returned by the 
        institution or the student, or both, as may be required under 
        paragraphs (1) and (2) of subsection (b), to the programs under 
        this title in the order specified in subsection (b)(3).
    ``(b) Return of Title IV Program Funds.--
        ``(1) Responsibility of the institution.--The institution shall 
    return, in the order specified in paragraph (3), the lesser of--
            ``(A) the amount of grant and loan assistance awarded under 
        this title that has not been earned by the student, as 
        calculated under subsection (a)(3)(C); or
            ``(B) an amount equal to--
                ``(i) the total institutional charges incurred by the 
            student for the payment period or period of enrollment for 
            which such assistance was awarded; multiplied by
                ``(ii) the percentage of grant and loan assistance 
            awarded under this title that has not been earned by the 
            student, as described in subsection (a)(3)(C)(i).
        ``(2) Responsibility of the student.--
            ``(A) In general.--The student shall return assistance that 
        has not been earned by the student as described in subsection 
        (a)(3)(C)(ii) in the order specified in paragraph (3) minus the 
        amount the institution is required to return under paragraph 
        (1).
            ``(B) Special rule.--The student (or parent in the case of 
        funds due to a loan borrowed by a parent under part B or D) 
        shall return or repay, as appropriate, the amount determined 
        under subparagraph (A) to--
                ``(i) a loan program under this title in accordance 
            with the terms of the loan; and
                ``(ii) a grant program under this title, as an 
            overpayment of such grant and shall be subject to--

                    ``(I) repayment arrangements satisfactory to the 
                institution; or
                    ``(II) overpayment collection procedures prescribed 
                by the Secretary.

            ``(C) Requirement.--Notwithstanding subparagraphs (A) and 
        (B), a student shall not be required to return 50 percent of 
        the grant assistance received by the student under this title, 
        for a payment period or period of enrollment, that is the 
        responsibility of the student to repay under this section.
        ``(3) Order of return of title iv funds.--
            ``(A) In general.--Excess funds returned by the institution 
        or the student, as appropriate, in accordance with paragraph 
        (1) or (2), respectively, shall be credited to outstanding 
        balances on loans made under this title to the student or on 
        behalf of the student for the payment period or period of 
        enrollment for which a return of funds is required. Such excess 
        funds shall be credited in the following order:
                ``(i) To outstanding balances on loans made under 
            section 428H for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(ii) To outstanding balances on loans made under 
            section 428 for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(iii) To outstanding balances on unsubsidized loans 
            (other than parent loans) made under part D for the payment 
            period or period of enrollment for which a return of funds 
            is required.
                ``(iv) To outstanding balances on subsidized loans made 
            under part D for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(v) To outstanding balances on loans made under part 
            E for the payment period or period of enrollment for which 
            a return of funds is required.
                ``(vi) To outstanding balances on loans made under 
            section 428B for the payment period or period of enrollment 
            for which a return of funds is required.
                ``(vii) To outstanding balances on parent loans made 
            under part D for the payment period or period of enrollment 
            for which a return of funds is required.
            ``(B) Remaining excesses.--If excess funds remain after 
        repaying all outstanding loan amounts, the remaining excess 
        shall be credited in the following order:
                ``(i) To awards under subpart 1 of part A for the 
            payment period or period of enrollment for which a return 
            of funds is required.
                ``(ii) To awards under subpart 3 of part A for the 
            payment period or period of enrollment for which a return 
            of funds is required.
                ``(iii) To other assistance awarded under this title 
            for which a return of funds is required.
    ``(c) Withdrawal Date.--
        ``(1) In general.--In this section, the term `day the student 
    withdrew'--
            ``(A) is the date that the institution determines--
                ``(i) the student began the withdrawal process 
            prescribed by the institution;
                ``(ii) the student otherwise provided official 
            notification to the institution of the intent to withdraw; 
            or
                ``(iii) in the case of a student who does not begin the 
            withdrawal process or otherwise notify the institution of 
            the intent to withdraw, the date that is the mid-point of 
            the payment period for which assistance under this title 
            was disbursed or a later date documented by the 
            institution; or
            ``(B) for institutions required to take attendance, is 
        determined by the institution from such attendance records.
        ``(2) Special rule.--Notwithstanding paragraph (1), if the 
    institution determines that a student did not begin the withdrawal 
    process, or otherwise notify the institution of the intent to 
    withdraw, due to illness, accident, grievous personal loss, or 
    other such circumstances beyond the student's control, the 
    institution may determine the appropriate withdrawal date.
    ``(d) Percentage of the Payment Period or Period of Enrollment 
Completed.--For purposes of subsection (a)(3)(B)(i), the percentage of 
the payment period or period of enrollment for which assistance was 
awarded that was completed, is determined--
        ``(1) in the case of a program that is measured in credit 
    hours, by dividing the total number of calendar days comprising the 
    payment period or period of enrollment for which assistance is 
    awarded into the number of calendar days completed in that period 
    as of the day the student withdrew; and
        ``(2) in the case of a program that is measured in clock hours, 
    by dividing the total number of clock hours comprising the payment 
    period or period of enrollment for which assistance is awarded into 
    the number of clock hours--
            ``(A) completed by the student in that period as of the day 
        the student withdrew; or
            ``(B) scheduled to be completed as of the day the student 
        withdrew, if the clock hours completed in the period are not 
        less than a percentage, to be determined by the Secretary in 
        regulations, of the hours that were scheduled to be completed 
        by the student in the period.
    ``(e) Effective Date.--The provisions of this section shall take 
effect 2 years after the date of enactment of the Higher Education 
Amendments of 1998. An institution of higher education may choose to 
implement such provisions prior to that date.''.

SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE INFORMATION FOR 
              STUDENTS.

    (a) Information Dissemination Activities.--Section 485(a) (20 
U.S.C. 1092(a)) is amended--
        (1) in paragraph (1)--
            (A) in the second sentence, by striking ``, through 
        appropriate publications and mailings, to all current students, 
        and to any prospective student upon request'' and inserting 
        ``upon request, through appropriate publications, mailings, and 
        electronic media, to an enrolled student and to any prospective 
        student'';
            (B) by inserting after the second sentence the following: 
        ``Each eligible institution shall, on an annual basis, provide 
        to all enrolled students a list of the information that is 
        required to be provided by institutions to students by this 
        section and section 444 of the General Education Provisions Act 
        (also referred to as the Family Educational Rights and Privacy 
        Act of 1974), together with a statement of the procedures 
        required to obtain such information.'';
            (C) by amending subparagraph (F) to read as follows:
        ``(F) a statement of--
            ``(i) the requirements of any refund policy with which the 
        institution is required to comply;
            ``(ii) the requirements under section 484B for the return 
        of grant or loan assistance provided under this title; and
            ``(iii) the requirements for officially withdrawing from 
        the institution;''; and
            (D) by striking ``and'' at the end of subparagraph (M);
            (E) by striking the period at the end of subparagraph (N) 
        and inserting ``; and''; and
            (F) by adding at the end the following:
        ``(O) the campus crime report prepared by the institution 
    pursuant to subsection (f), including all required reporting 
    categories.'';
        (2) in paragraph (3), by amending subparagraph (A) to read as 
    follows:
        ``(A) shall be made available by July 1 each year to enrolled 
    students and prospective students prior to the students enrolling 
    or entering into any financial obligation; and''; and
        (3) by adding at the end the following:
    ``(6) Each institution may provide supplemental information to 
enrolled and prospective students showing the completion or graduation 
rate for students described in paragraph (4) or for students 
transferring into the institution or information showing the rate at 
which students transfer out of the institution.''.
    (b) Exit Counseling for Borrowers.--Section 485(b) (20 U.S.C. 
1092(b)) is amended--
        (1) in paragraph (1)(A), by striking ``(individually or in 
    groups)''; and
        (2) in paragraph (2), by adding at the end the following:
    ``(C) Nothing in this subsection shall be construed to prohibit an 
institution of higher education from utilizing electronic means to 
provide personalized exit counseling.''.
    (c) Departmental Publications.--Section 485(d) is amended--
        (1) by striking ``(1) assist'' and inserting ``(A) assist'';
        (2) by striking ``(2) assist'' and inserting ``(B) assist'';
        (3) by inserting ``(1)'' before ``The Secretary'' the first 
    place the term appears; and
        (4) by adding at the end the following:
    ``(2) The Secretary, to the extent the information is available, 
shall compile information describing State and other prepaid tuition 
programs and savings programs and disseminate such information to 
States, eligible institutions, students, and parents in departmental 
publications.
    ``(3) The Secretary, to the extent practicable, shall update the 
Department's Internet site to include direct links to databases that 
contain information on public and private financial assistance 
programs. The Secretary shall only provide direct links to databases 
that can be accessed without charge and shall make reasonable efforts 
to verify that the databases included in a direct link are not 
providing fraudulent information. The Secretary shall prominently 
display adjacent to any such direct link a disclaimer indicating that a 
direct link to a database does not constitute an endorsement or 
recommendation of the database, the provider of the database, or any 
services or products of such provider. The Secretary shall provide 
additional direct links to information resources from which students 
may obtain information about fraudulent and deceptive practices in the 
provision of services related to student financial aid.''.
    (d) Disclosures.--Section 485(e) is amended--
        (1) in paragraph (2)--
            (A) by striking ``his parents, his guidance'' and inserting 
        ``the student's parents, guidance''; and
            (B) by adding at the end the following: ``If the 
        institution is a member of a national collegiate athletic 
        association that compiles graduation rate data on behalf of the 
        association's member institutions that the Secretary determines 
        is substantially comparable to the information described in 
        paragraph (1), the distribution of the compilation of such data 
        to all secondary schools in the United States shall fulfill the 
        responsibility of the institution to provide information to a 
        prospective student athlete's guidance counselor and coach.''; 
        and
        (2) by amending paragraph (9) to read as follows:
    ``(9) The reports required by this subsection shall be due each 
July 1 and shall cover the 1-year period ending August 31 of the 
preceding year.''.
    (e) Disclosure of Campus Security Policy and Campus Crime 
Statistics.--Section 485(f) (20 U.S.C. 1092(f)) is amended--
        (1) in paragraph (1)--
            (A) by amending subparagraph (F) to read as follows:
        ``(F) Statistics concerning the occurrence on campus, in or on 
    noncampus buildings or property, and on public property during the 
    most recent calendar year, and during the 2 preceding calendar 
    years for which data are available--
            ``(i) of the following criminal offenses reported to campus 
        security authorities or local police agencies:
                ``(I) murder;
                ``(II) sex offenses, forcible or nonforcible;
                ``(III) robbery;
                ``(IV) aggravated assault;
                ``(V) burglary;
                ``(VI) motor vehicle theft;
                ``(VII) manslaughter;
                ``(VIII) arson; and
                ``(IX) arrests or persons referred for campus 
            disciplinary action for liquor law violations, drug-related 
            violations, and weapons possession; and
            ``(ii) of the crimes described in subclauses (I) through 
        (VIII) of clause (i), and other crimes involving bodily injury 
        to any person in which the victim is intentionally selected 
        because of the actual or perceived race, gender, religion, 
        sexual orientation, ethnicity, or disability of the victim that 
        are reported to campus security authorities or local police 
        agencies, which data shall be collected and reported according 
        to category of prejudice.'';
            (B) by striking subparagraph (H); and
            (C) by redesignating subparagraph (I) as subparagraph (H);
        (2) in paragraph (4)--
            (A) by striking ``Upon request of the Secretary, each'' and 
        inserting ``On an annual basis, each'';
            (B) by striking ``paragraphs (1)(F) and (1)(H)'' and 
        inserting ``paragraph (1)(F)'';
            (C) by striking ``and Labor'' and inserting ``and the 
        Workforce'';
            (D) by striking ``1995'' and inserting ``2000'';
            (E) by striking ``and'' at the end of subparagraph (A);
            (F) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (G) by inserting after subparagraph (A) the following:
        ``(B) make copies of the statistics submitted to the Secretary 
    available to the public; and'';
        (3) by amending paragraph (5)(A) to read as follows:
    ``(5)(A) In this subsection:
        ``(i) The term `campus' means--
            ``(I) any building or property owned or controlled by an 
        institution of higher education within the same reasonably 
        contiguous geographic area of the institution and used by the 
        institution in direct support of, or in a manner related to, 
        the institution's educational purposes, including residence 
        halls; and
            ``(II) property within the same reasonably contiguous 
        geographic area of the institution that is owned by the 
        institution but controlled by another person, is used by 
        students, and supports institutional purposes (such as a food 
        or other retail vendor).
        ``(ii) The term `noncampus building or property' means--
            ``(I) any building or property owned or controlled by a 
        student organization recognized by the institution; and
            ``(II) any building or property (other than a branch 
        campus) owned or controlled by an institution of higher 
        education that is used in direct support of, or in relation to, 
        the institution's educational purposes, is used by students, 
        and is not within the same reasonably contiguous geographic 
        area of the institution.
        ``(iii) The term `public property' means all public property 
    that is within the same reasonably contiguous geographic area of 
    the institution, such as a sidewalk, a street, other thoroughfare, 
    or parking facility, and is adjacent to a facility owned or 
    controlled by the institution if the facility is used by the 
    institution in direct support of, or in a manner related to the 
    institution's educational purposes.'';
        (4) in paragraph (6)--
            (A) by striking ``paragraphs (1)(F) and (1)(H)'' and 
        inserting ``paragraph (1)(F)''; and
            (B) by adding at the end the following: ``Such statistics 
        shall not identify victims of crimes or persons accused of 
        crimes.'';
        (5) by redesignating paragraphs (4) through (7) as paragraphs 
    (5) through (8), respectively;
        (6) by inserting after paragraph (3) the following:
    ``(4)(A) Each institution participating in any program under this 
title that maintains a police or security department of any kind shall 
make, keep, and maintain a daily log, written in a form that can be 
easily understood, recording all crimes reported to such police or 
security department, including--
        ``(i) the nature, date, time, and general location of each 
    crime; and
        ``(ii) the disposition of the complaint, if known.
    ``(B)(i) All entries that are required pursuant to this paragraph 
shall, except where disclosure of such information is prohibited by law 
or such disclosure would jeopardize the confidentiality of the victim, 
be open to public inspection within two business days of the initial 
report being made to the department or a campus security authority.
    ``(ii) If new information about an entry into a log becomes 
available to a police or security department, then the new information 
shall be recorded in the log not later than two business days after the 
information becomes available to the police or security department.
    ``(iii) If there is clear and convincing evidence that the release 
of such information would jeopardize an ongoing criminal investigation 
or the safety of an individual, cause a suspect to flee or evade 
detection, or result in the destruction of evidence, such information 
may be withheld until that damage is no longer likely to occur from the 
release of such information.''; and
        (7) by adding at the end the following:
    ``(9) The Secretary shall provide technical assistance in complying 
with the provisions of this section to an institution of higher 
education who requests such assistance.
    ``(10) Nothing in this section shall be construed to require the 
reporting or disclosure of privileged information.
    ``(11) The Secretary shall report to the appropriate committees of 
Congress each institution of higher education that the Secretary 
determines is not in compliance with the reporting requirements of this 
subsection.
    ``(12) For purposes of reporting the statistics with respect to 
crimes described in paragraph (1)(F), an institution of higher 
education shall distinguish, by means of separate categories, any 
criminal offenses that occur--
        ``(A) on campus;
        ``(B) in or on a noncampus building or property;
        ``(C) on public property; and
        ``(D) in dormitories or other residential facilities for 
    students on campus.
    ``(13) Upon a determination pursuant to section 487(c)(3)(B) that 
an institution of higher education has substantially misrepresented the 
number, location, or nature of the crimes required to be reported under 
this subsection, the Secretary shall impose a civil penalty upon the 
institution in the same amount and pursuant to the same procedures as a 
civil penalty is imposed under section 487(c)(3)(B).
    ``(14)(A) Nothing in this subsection may be construed to--
        ``(i) create a cause of action against any institution of 
    higher education or any employee of such an institution for any 
    civil liability; or
        ``(ii) establish any standard of care.
    ``(B) Notwithstanding any other provision of law, evidence 
regarding compliance or noncompliance with this subsection shall not be 
admissible as evidence in any proceeding of any court, agency, board, 
or other entity, except with respect to an action to enforce this 
subsection.
    ``(15) This subsection may be cited as the `Jeanne Clery Disclosure 
of Campus Security Policy and Campus Crime Statistics Act'.''.
    (f) Data Required.--Section 485(g) is amended--
        (1) in paragraph (1), by adding at the end the following:
            ``(I)(i) The total revenues, and the revenues from 
        football, men's basketball, women's basketball, all other men's 
        sports combined and all other women's sports combined, derived 
        by the institution from the institution's intercollegiate 
        athletics activities.
            ``(ii) For the purpose of clause (i), revenues from 
        intercollegiate athletics activities allocable to a sport shall 
        include (without limitation) gate receipts, broadcast revenues, 
        appearance guarantees and options, concessions, and 
        advertising, but revenues such as student activities fees or 
        alumni contributions not so allocable shall be included in the 
        calculation of total revenues only.
            ``(J)(i) The total expenses, and the expenses attributable 
        to football, men's basketball, women's basketball, all other 
        men's sports combined, and all other women's sports combined, 
        made by the institution for the institution's intercollegiate 
        athletics activities.
            ``(ii) For the purpose of clause (i), expenses for 
        intercollegiate athletics activities allocable to a sport shall 
        include (without limitation) grants-in-aid, salaries, travel, 
        equipment, and supplies, but expenses such as general and 
        administrative overhead not so allocable shall be included in 
        the calculation of total expenses only.''; and
        (2) by striking paragraph (5);
        (3) by redesignating paragraph (4) as paragraph (5); and
        (4) by inserting after paragraph (3) the following:
        ``(4) Submission; report; information availability.--(A) On an 
    annual basis, each institution of higher education described in 
    paragraph (1) shall provide to the Secretary, within 15 days of the 
    date that the institution makes available the report under 
    paragraph (1), the information contained in the report.
        ``(B) The Secretary shall prepare a report regarding the 
    information received under subparagraph (A) and submit such report 
    to the Committee on Education and the Workforce of the House of 
    Representatives and the Committee on Labor and Human Resources of 
    the Senate by April 1, 2000. The report shall--
            ``(i) summarize the information and identify trends in the 
        information;
            ``(ii) aggregate the information by divisions of the 
        National Collegiate Athletic Association; and
            ``(iii) contain information on each individual institution 
        of higher education.
        ``(C) The Secretary shall ensure that the reports described in 
    subparagraph (A) and the report to Congress described in 
    subparagraph (B) are made available to the public within a 
    reasonable period of time.
        ``(D) Not later than 180 days after the date of enactment of 
    the Higher Education Amendments of 1998, the Secretary shall notify 
    all secondary schools in all States regarding the availability of 
    the information reported under subparagraph (B) and the information 
    made available under paragraph (1), and how such information may be 
    accessed.''.

SEC. 487. NATIONAL STUDENT LOAN DATA SYSTEM.

    Section 485B(a) (20 U.S.C. 1092b(a)) is amended by inserting before 
the period at the end of the third sentence the following: ``not later 
than one year after the date of enactment of the Higher Education 
Amendments of 1998''.

SEC. 488. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

    Section 486 (20 U.S.C. 1083) is amended to read as follows:

``SEC. 486. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

    ``(a) Purpose.--It is the purpose of this section--
        ``(1) to allow demonstration programs that are strictly 
    monitored by the Department of Education to test the quality and 
    viability of expanded distance education programs currently 
    restricted under this Act;
        ``(2) to provide for increased student access to higher 
    education through distance education programs; and
        ``(3) to help determine--
            ``(A) the most effective means of delivering quality 
        education via distance education course offerings;
            ``(B) the specific statutory and regulatory requirements 
        which should be altered to provide greater access to high 
        quality distance education programs; and
            ``(C) the appropriate level of Federal assistance for 
        students enrolled in distance education programs.
    ``(b) Demonstration Programs Authorized.--
        ``(1) In general.--In accordance with the provisions of 
    subsection (d), the Secretary is authorized to select institutions 
    of higher education, systems of such institutions, or consortia of 
    such institutions for voluntary participation in a Distance 
    Education Demonstration Program that provides participating 
    institutions with the ability to offer distance education programs 
    that do not meet all or a portion of the sections or regulations 
    described in paragraph (2).
        ``(2) Waivers.--The Secretary is authorized to waive for any 
    institution of higher education, system of institutions of higher 
    education, or consortium participating in a Distance Education 
    Demonstration Program, the requirements of section 472(5) as the 
    section relates to computer costs, sections 481(a) and 481(b) as 
    such sections relate to requirements for a minimum number of weeks 
    of instruction, sections 102(a)(3)(A), 102(a)(3)(B), and 484(l)(1), 
    or one or more of the regulations prescribed under this part or 
    part F which inhibit the operation of quality distance education 
    programs.
        ``(3) Eligible applicants.--
            ``(A) Eligible institutions.--Except as provided in 
        subparagraphs (B), (C), and (D), only an institution of higher 
        education that is eligible to participate in programs under 
        this title shall be eligible to participate in the 
        demonstration program authorized under this section.
            ``(B) Prohibition.--An institution of higher education 
        described in section 102(a)(1)(C) shall not be eligible to 
        participate in the demonstration program authorized under this 
        section.
            ``(C) Special rule.--Subject to subparagraph (B), an 
        institution of higher education that meets the requirements of 
        subsection (a) of section 102, other than the requirement of 
        paragraph (3)(A) or (3)(B) of such subsection, and that 
        provides a 2-year or 4-year program of instruction for which 
        the institution awards an associate or baccalaureate degree, 
        shall be eligible to participate in the demonstration program 
        authorized under this section.
            ``(D) Requirement.--Notwithstanding any other provision of 
        this paragraph, Western Governors University shall be 
        considered eligible to participate in the demonstration program 
        authorized under this section. In addition to the waivers 
        described in paragraph (2), the Secretary may waive the 
        provisions of title I and parts G and H of this title for such 
        university that the Secretary determines to be appropriate 
        because of the unique characteristics of such university. In 
        carrying out the preceding sentence, the Secretary shall ensure 
        that adequate program integrity and accountability measures 
        apply to such university's participation in the demonstration 
        program authorized under this section.
    ``(c) Application.--
        ``(1) In general.--Each institution, system, or consortium of 
    institutions desiring to participate in a demonstration program 
    under this section shall submit an application to the Secretary at 
    such time and in such manner as the Secretary may require.
        ``(2) Contents.--Each application shall include--
            ``(A) a description of the institution, system, or 
        consortium's consultation with a recognized accrediting agency 
        or association with respect to quality assurances for the 
        distance education programs to be offered;
            ``(B) a description of the statutory and regulatory 
        requirements described in subsection (b)(2) or, if applicable, 
        subsection (b)(3)(D) for which a waiver is sought and the 
        reasons for which the waiver is sought;
            ``(C) a description of the distance education programs to 
        be offered;
            ``(D) a description of the students to whom distance 
        education programs will be offered;
            ``(E) an assurance that the institution, system, or 
        consortium will offer full cooperation with the ongoing 
        evaluations of the demonstration program provided for in this 
        section; and
            ``(F) such other information as the Secretary may require.
    ``(d) Selection.--
        ``(1) In general.--For the first year of the demonstration 
    program authorized under this section, the Secretary is authorized 
    to select for participation in the program not more than 15 
    institutions, systems of institutions, or consortia of 
    institutions. For the third year of the demonstration program 
    authorized under this section, the Secretary may select not more 
    than 35 institutions, systems, or consortia, in addition to the 
    institutions, systems, or consortia selected pursuant to the 
    preceding sentence, to participate in the demonstration program if 
    the Secretary determines that such expansion is warranted based on 
    the evaluations conducted in accordance with subsections (f) and 
    (g).
        ``(2) Considerations.--In selecting institutions to participate 
    in the demonstration program in the first or succeeding years of 
    the program, the Secretary shall take into account--
            ``(A) the number and quality of applications received;
            ``(B) the Department's capacity to oversee and monitor each 
        institution's participation;
            ``(C) an institution's--
                ``(i) financial responsibility;
                ``(ii) administrative capability; and
                ``(iii) program or programs being offered via distance 
            education; and
            ``(D) ensuring the participation of a diverse group of 
        institutions with respect to size, mission, and geographic 
        distribution.
    ``(e) Notification.--The Secretary shall make available to the 
public and to the Committee on Labor and Human Resources of the Senate 
and the Committee on Education and the Workforce of the House of 
Representatives a list of institutions, systems or consortia selected 
to participate in the demonstration program authorized by this section. 
Such notice shall include a listing of the specific statutory and 
regulatory requirements being waived for each institution, system or 
consortium and a description of the distance education courses to be 
offered.
    ``(f) Evaluations and Reports.--
        ``(1) Evaluation.--The Secretary shall evaluate the 
    demonstration programs authorized under this section on an annual 
    basis. Such evaluations specifically shall review--
            ``(A) the extent to which the institution, system or 
        consortium has met the goals set forth in its application to 
        the Secretary, including the measures of program quality 
        assurance;
            ``(B) the number and types of students participating in the 
        programs offered, including the progress of participating 
        students toward recognized certificates or degrees and the 
        extent to which participation in such programs increased;
            ``(C) issues related to student financial assistance for 
        distance education;
            ``(D) effective technologies for delivering distance 
        education course offerings; and
            ``(E) the extent to which statutory or regulatory 
        requirements not waived under the demonstration program present 
        difficulties for students or institutions.
        ``(2) Policy analysis.--The Secretary shall review current 
    policies and identify those policies that present impediments to 
    the development and use of distance education and other 
    nontraditional methods of expanding access to education.
        ``(3) Reports.--
            ``(A) In general.--Within 18 months of the initiation of 
        the demonstration program, the Secretary shall report to the 
        Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives with respect to--
                ``(i) the evaluations of the demonstration programs 
            authorized under this section; and
                ``(ii) any proposed statutory changes designed to 
            enhance the use of distance education.
            ``(B) Additional reports.--The Secretary shall provide 
        additional reports to the Committee on Labor and Human 
        Resources of the Senate and the Committee on Education and the 
        Workforce of the House of Representatives on an annual basis 
        regarding--
                ``(i) the demonstration programs authorized under this 
            section; and
                ``(ii) the number and types of students receiving 
            assistance under this title for instruction leading to a 
            recognized certificate, as provided for in section 
            484(l)(1), including the progress of such students toward 
            recognized certificates and the degree to which 
            participation in such programs leading to such certificates 
            increased.
    ``(g) Oversight.--In conducting the demonstration program 
authorized under this section, the Secretary shall, on a continuing 
basis--
        ``(1) assure compliance of institutions, systems or consortia 
    with the requirements of this title (other than the sections and 
    regulations that are waived under subsections (b)(2) and 
    (b)(3)(D));
        ``(2) provide technical assistance;
        ``(3) monitor fluctuations in the student population enrolled 
    in the participating institutions, systems or consortia; and
        ``(4) consult with appropriate accrediting agencies or 
    associations and appropriate State regulatory authorities.
    ``(h) Definition.--For the purpose of this section, the term 
`distance education' means an educational process that is characterized 
by the separation, in time or place, between instructor and student. 
Such term may include courses offered principally through the use of--
        ``(1) television, audio, or computer transmission, such as open 
    broadcast, closed circuit, cable, microwave, or satellite 
    transmission;
        ``(2) audio or computer conferencing;
        ``(3) video cassettes or discs; or
        ``(4) correspondence.''.

SEC. 489. PROGRAM PARTICIPATION AGREEMENTS.

    (a) Required Content.--Section 487(a) (20 U.S.C. 1094(a)) is 
amended--
        (1) in paragraph (3)--
            (A) by striking subparagraph (B); and
            (B) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (B) and (C), respectively;
        (2) in paragraph (4), by striking ``subsection (b)'' and 
    inserting ``subsection (c)'';
        (3) in paragraph (9), by striking ``part B'' and inserting 
    ``part B or D'';
        (4) in paragraph (14)--
            (A) in subparagraph (A), by striking ``part B'' and 
        inserting ``part B or D''; and
            (B) in subparagraph (B), by striking ``part B'' and 
        inserting ``part B or D''; and
            (C) by adding at the end the following:
        ``(C) This paragraph shall not apply in the case of an 
    institution in which (i) neither the parent nor the subordinate 
    institution has a cohort default rate in excess of 10 percent, and 
    (ii) the new owner of such parent or subordinate institution does 
    not, and has not, owned any other institution with a cohort default 
    rate in excess of 10 percent.'';
        (5) in paragraph (15), by striking ``State review entities'' 
    and inserting ``the State agencies'';
        (6) by amending paragraph (18) to read as follows:
        ``(18) The institution will meet the requirements established 
    pursuant to section 485(g).''; and
        (7) by amending paragraph (21) to read as follows:
        ``(21) The institution will meet the requirements established 
    by the Secretary and accrediting agencies or associations, and will 
    provide evidence to the Secretary that the institution has the 
    authority to operate within a State.''.
    (b) Provision of Voter Registration Forms.--
        (1) Program participation requirement.--Section 487(a) (20 
    U.S.C. 1094(a)) is amended by adding at the end the following:
        ``(23)(A) The institution, if located in a State to which 
    section 4(b) of the National Voter Registration Act (42 U.S.C. 
    1973gg-2(b)) does not apply, will make a good faith effort to 
    distribute a mail voter registration form, requested and received 
    from the State, to each student enrolled in a degree or certificate 
    program and physically in attendance at the institution, and to 
    make such forms widely available to students at the institution.
        ``(B) The institution shall request the forms from the State 
    120 days prior to the deadline for registering to vote within the 
    State. If an institution has not received a sufficient quantity of 
    forms to fulfill this section from the State within 60 days prior 
    to the deadline for registering to vote in the State, the 
    institution shall not be held liable for not meeting the 
    requirements of this section during that election year.
        ``(C) This paragraph shall apply to elections as defined in 
    section 301(1) of the Federal Election Campaign Act of 1971 (2 
    U.S.C. 431(1)), and includes the election for Governor or other 
    chief executive within such State).''.
        (2) Regulation prohibited.--No officer of the executive branch 
    is authorized to instruct the institution in the manner in which 
    the amendment made by this subsection is carried out.
    (c) Audits; Financial Responsibility.--Section 487(c) is amended--
        (1) in paragraph (1)(A)--
            (A) in clause (i)--
                (i) by striking ``clause (ii)'' and inserting ``clauses 
            (ii) and (iii)'';
                (ii) by striking ``State review entities referred to 
            in'' and inserting ``appropriate State agency notifying the 
            Secretary under''; and
                (iii) by striking ``or'' after the semicolon;
            (B) in clause (ii), by inserting ``or'' after the 
        semicolon; and
            (C) by adding at the end the following:
        ``(iii) at the discretion of the Secretary, with regard to an 
    eligible institution (other than an eligible institution described 
    in section 102(a)(1)(C)) that has obtained less than $200,000 in 
    funds under this title during each of the 2 award years that 
    precede the audit period and submits a letter of credit payable to 
    the Secretary equal to not less than \1/2\ of the annual potential 
    liabilities of such institution as determined by the Secretary, 
    deeming an audit conducted every 3 years to satisfy the 
    requirements of clause (i), except for the award year immediately 
    preceding renewal of the institution's eligibility under section 
    498(g);'';
        (2) in paragraph (4), by striking ``, after consultation with 
    each State review entity designated under subpart 1 of part H,''; 
    and
        (3) in paragraph (5), by striking ``State review entities 
    designated'' and inserting ``State agencies notifying the 
    Secretary''.

SEC. 490. REGULATORY RELIEF AND IMPROVEMENT.

    Section 487A (20 U.S.C. 1094a) is amended to read as follows:

``SEC. 487A. REGULATORY RELIEF AND IMPROVEMENT.

    ``(a) Quality Assurance Program.--
        ``(1) In general.--The Secretary is authorized to select 
    institutions for voluntary participation in a Quality Assurance 
    Program that provides participating institutions with an 
    alternative management approach through which individual schools 
    develop and implement their own comprehensive systems, related to 
    processing and disbursement of student financial aid, verification 
    of student financial aid application data, and entrance and exit 
    interviews, thereby enhancing program integrity within the student 
    aid delivery system.
        ``(2) Criteria and consideration.--The Quality Assurance 
    Program authorized by this section shall be based on criteria that 
    include demonstrated institutional performance, as determined by 
    the Secretary, and shall take into consideration current quality 
    assurance goals, as determined by the Secretary. The selection 
    criteria shall ensure the participation of a diverse group of 
    institutions of higher education with respect to size, mission, and 
    geographical distribution.
        ``(3) Waiver.--The Secretary is authorized to waive for any 
    institution participating in the Quality Assurance Program any 
    regulations dealing with reporting or verification requirements in 
    this title that are addressed by the institution's alternative 
    management system, and may substitute such quality assurance 
    reporting as the Secretary determines necessary to ensure 
    accountability and compliance with the purposes of the programs 
    under this title. The Secretary shall not modify or waive any 
    statutory requirements pursuant to this paragraph.
        ``(4) Determination.--The Secretary is authorized to 
    determine--
            ``(A) when an institution that is unable to administer the 
        Quality Assurance Program shall be removed from such program; 
        and
            ``(B) when institutions desiring to cease participation in 
        such program will be required to complete the current award 
        year under the requirements of the Quality Assurance Program.
        ``(5) Review and evaluation.--The Secretary shall review and 
    evaluate the Quality Assurance Program conducted by each 
    participating institution and, on the basis of that evaluation, 
    make recommendations regarding amendments to this Act that will 
    streamline the administration and enhance the integrity of Federal 
    student assistance programs. Such recommendations shall be 
    submitted to the Committee on Labor and Human Resources of the 
    Senate and the Committee on Education and the Workforce of the 
    House of Representatives.
    ``(b) Regulatory Improvement and Streamlining Experiments.--
        ``(1) In general.--The Secretary may continue any experimental 
    sites in existence on the date of enactment of the Higher Education 
    Amendments of 1998. Any activities approved by the Secretary prior 
    to such date that are inconsistent with this section shall be 
    discontinued not later than June 30, 1999.
        ``(2) Report.--The Secretary shall review and evaluate the 
    experience of institutions participating as experimental sites 
    during the period of 1993 through 1998 under this section (as such 
    section was in effect on the day before the date of enactment of 
    the Higher Education Amendments of 1998), and shall submit a report 
    based on this review and evaluation to the Committee on Labor and 
    Human Resources of the Senate and the Committee on Education and 
    the Workforce of the House of Representatives not later than 6 
    months after the enactment of the Higher Education Amendments of 
    1998. Such report shall include--
            ``(A) a list of participating institutions and the specific 
        statutory or regulatory waivers granted to each institution;
            ``(B) the findings and conclusions reached regarding each 
        of the experiments conducted; and
            ``(C) recommendations for amendments to improve and 
        streamline this Act, based on the results of the experiment.
        ``(3) Selection.--
            ``(A) In general.--Upon the submission of the report 
        required by paragraph (2), the Secretary is authorized to 
        select a limited number of additional institutions for 
        voluntary participation as experimental sites to provide 
        recommendations to the Secretary on the impact and 
        effectiveness of proposed regulations or new management 
        initiatives.
            ``(B) Consultation.--Prior to approving any additional 
        experimental sites, the Secretary shall consult with the 
        Committee on Labor and Human Resources of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives and shall provide to such Committees--
                ``(i) a list of institutions proposed for participation 
            in the experiment and the specific statutory or regulatory 
            waivers proposed to be granted to each institution;
                ``(ii) a statement of the objectives to be achieved 
            through the experiment; and
                ``(iii) an identification of the period of time over 
            which the experiment is to be conducted.
            ``(C) Waivers.--The Secretary is authorized to waive, for 
        any institution participating as an experimental site under 
        subparagraph (A), any requirements in this title, or 
        regulations prescribed under this title, that will bias the 
        results of the experiment, except that the Secretary shall not 
        waive any provisions with respect to award rules, grant and 
        loan maximum award amounts, and need analysis requirements.
    ``(c) Definitions.--For purposes of this section, the term `current 
award year' means the award year during which the participating 
institution indicates the institution's intention to cease 
participation.''.

SEC. 490A. GARNISHMENT REQUIREMENTS.

    Section 488A (20 U.S.C. 1095a) is amended--
        (1) by redesignating subsection (d) as subsection (e); and
        (2) by inserting after subsection (c) the following:
    ``(d) No Attachment of Student Assistance.--Except as authorized in 
this section, notwithstanding any other provision of Federal or State 
law, no grant, loan, or work assistance awarded under this title, or 
property traceable to such assistance, shall be subject to garnishment 
or attachment in order to satisfy any debt owed by the student awarded 
such assistance, other than a debt owed to the Secretary and arising 
under this title.''.

SEC. 490B. ADMINISTRATIVE SUBPOENA AUTHORITY.

    Part G of title IV is further amended by inserting immediately 
after section 490 (20 U.S.C. 1097) the following:

``SEC. 490A. ADMINISTRATIVE SUBPOENAS.

    ``(a) Authority.--To assist the Secretary in the conduct of 
investigations of possible violations of the provisions of this title, 
the Secretary is authorized to require by subpoena the production of 
information, documents, reports, answers, records, accounts, papers, 
and other documentary evidence pertaining to participation in any 
program under this title. The production of any such records may be 
required from any place in a State.
    ``(b) Enforcement.--In case of contumacy by, or refusal to obey a 
subpoena issued to, any person, the Secretary may request the Attorney 
General to invoke the aid of any court of the United States where such 
person resides or transacts business for a court order for the 
enforcement of this section.''.

SEC. 490C. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

    Section 491 (20 U.S.C. 1098) is amended--
        (1) in subsection (b)--
            (A) in the second sentence, by striking ``and 
        expenditures'' and inserting ``, expenditures and staffing 
        levels''; and
            (B) by inserting after the third sentence the following: 
        ``Reports, publications, and other documents of the Advisory 
        Committee, including such reports, publications, and documents 
        in electronic form, shall not be subject to review by the 
        Secretary.'';
        (2) in subsection (e)--
            (A) by redesignating paragraphs (3), (4), and (5), as 
        paragraphs (4), (5), and (6), respectively; and
            (B) by inserting after paragraph (2) the following:
    ``(3) No officers or full-time employees of the Federal Government 
shall serve as members of the Advisory Committee.'';
        (3) in subsection (g), by striking ``(1) Members'' and all that 
    follows through ``of the United States may each'' and inserting 
    ``Members of the Advisory Committee may each'';
        (4) in subsection (h)(1)--
            (A) by inserting ``determined'' after ``as may be''; and
            (B) by adding at the end the following: ``The Advisory 
        Committee may appoint not more than 1 full-time equivalent, 
        nonpermanent, consultant without regard to the provisions of 
        title 5, United States Code. The Advisory Committee shall not 
        be required by the Secretary to reduce personnel to meet agency 
        personnel reduction goals.'';
        (5) in subsection (i), by striking ``$750,000'' and inserting 
    ``$800,000'';
        (6) by amending subsection (j) to read as follows:
    ``(j) Special Analyses and Activities.--The Advisory Committee 
shall--
        ``(1) monitor and evaluate the modernization of student 
    financial aid systems and delivery processes, including the 
    implementation of a performance-based organization within the 
    Department, and report to Congress regarding such modernization on 
    not less than an annual basis, including recommendations for 
    improvement;
        ``(2) assess the adequacy of current methods for disseminating 
    information about programs under this title and recommend 
    improvements, as appropriate, regarding early needs assessment and 
    information for first-year secondary school students;
        ``(3) assess and make recommendations concerning the 
    feasibility and degree of use of appropriate technology in the 
    application for, and delivery and management of, financial 
    assistance under this title, as well as policies that promote use 
    of such technology to reduce cost and enhance service and program 
    integrity, including electronic application and reapplication, 
    just-in-time delivery of funds, reporting of disbursements and 
    reconciliation;
        ``(4) assess the implications of distance education on student 
    eligibility and other requirements for financial assistance under 
    this title, and make recommendations that will enhance access to 
    postsecondary education through distance education while 
    maintaining access, through on-campus instruction at eligible 
    institutions, and program integrity; and
        ``(5) make recommendations to the Secretary regarding redundant 
    or outdated provisions of and regulations under this Act, 
    consistent with the Secretary's requirements under section 498B.'';
        (7) in subsection (k), by striking ``1998'' and inserting 
    ``2004''; and
        (8) by repealing subsection (l).

SEC. 490D. MEETINGS AND NEGOTIATED RULEMAKING.

    (a) Meetings.--Section 492(a) (20 U.S.C. 1098a) is amended--
        (1) in paragraph (1)--
            (A) by striking ``convene regional meetings to'';
            (B) by striking ``parts B, G, and H of this title,'' and 
        inserting ``this title;''; and
            (C) by striking ``Such meetings shall include'' and 
        inserting ``The Secretary shall obtain the advice of and 
        recommendations from''; and
        (2) in paragraph (2)--
            (A) by striking ``During such meetings the'' and inserting 
        ``The'';
            (B) by striking ``parts B, G, and H'' and inserting ``this 
        title'';
            (C) by striking ``1992'' and inserting ``1998 through such 
        mechanisms as regional meetings and electronic exchanges of 
        information''; and
            (D) by striking ``at such meetings'' and inserting 
        ``through such mechanisms''.
    (b) Draft Regulations.--Section 492(b) is amended--
        (1) by striking ``After'' and inserting the following:
        ``(1) In general.--After'';
        (2) in paragraph (1) (as redesignated by paragraph (1))--
            (A) by striking ``holding regional meetings'' and inserting 
        ``obtaining the advice and recommendations described in 
        subsection (a)(1)'';
            (B) by striking ``parts B, G, and H of this title'' and 
        inserting ``this title'';
            (C) by striking ``1992'' and inserting ``1998'';
            (D) by striking ``The Secretary shall follow the guidance 
        provided in sections 305.82-4 and 305.85-5 of chapter 1, Code 
        of Federal Regulations, and any successor recommendation, 
        regulation, or law.'';
            (E) by striking ``participating in the regional meetings'';
            (F) by striking ``240-day'' and inserting ``360-day''; and
            (G) by striking ``section 431(g)'' and inserting ``section 
        437(e)''; and
        (3) by adding at the end the following:
        ``(2) Expansion of negotiated rulemaking.--All regulations 
    pertaining to this title that are promulgated after the date of 
    enactment of this paragraph shall be subject to a negotiated 
    rulemaking (including the selection of the issues to be 
    negotiated), unless the Secretary determines that applying such a 
    requirement with respect to given regulations is impracticable, 
    unnecessary, or contrary to the public interest (within the meaning 
    of section 553(b)(3)(B) of title 5, United States Code), and 
    publishes the basis for such determination in the Federal Register 
    at the same time as the proposed regulations in question are first 
    published. All published proposed regulations shall conform to 
    agreements resulting from such negotiated rulemaking unless the 
    Secretary reopens the negotiated rulemaking process or provides a 
    written explanation to the participants in that process why the 
    Secretary has decided to depart from such agreements. Such 
    negotiated rulemaking shall be conducted in accordance with the 
    provisions of paragraph (1), and the Secretary shall ensure that a 
    clear and reliable record of agreements reached during the 
    negotiations process is maintained.''.

SEC. 490E. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT OF EDUCATION.

    Part G of title IV (20 U.S.C. 1088 et seq.) is amended by adding at 
the end the following:

``SEC. 493A. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT.

    ``(a) Preparations for Year 2000.--In order to ensure that the 
processing, delivery, and administration of grant, loan, and work 
assistance provided under this title is not interrupted due to 
operational problems related to the inability of computer systems to 
indicate accurately dates after December 31, 1999, the Secretary of 
Education shall--
        ``(1) take such actions as are necessary to ensure that all 
    internal and external systems, hardware, and data exchange 
    infrastructure administered by the Department that are necessary 
    for the processing, delivery, and administration of the grant, 
    loan, and work assistance are Year 2000 compliant by March 31, 
    1999, such that there will be no business interruption after 
    December 31, 1999;
        ``(2) ensure that the Robert T. Stafford Federal Student Loan 
    Program and the William D. Ford Federal Direct Loan Program are 
    equal in level of priority with respect to addressing, and that 
    resources are managed to equally provide for successful resolution 
    of, the Year 2000 computer problem in both programs by December 31, 
    1999;
        ``(3) work with the Department's various data exchange partners 
    under this title to fully test all data exchange routes for Year 
    2000 compliance via end-to-end testing, and submit a report 
    describing the parameters and results of such tests to the 
    Comptroller General not later than March 31, 1999;
        ``(4) ensure that the Inspector General of the Department (or 
    an external, independent entity selected by the Inspector General) 
    performs and publishes a risk assessment of the systems and 
    hardware under the Department's management, that has been reviewed 
    by an independent entity, and make such assessment publicly 
    available not later than 60 days after the date of enactment of the 
    Higher Education Amendments of 1998;
        ``(5) not later than June 30, 1999, ensure that the Inspector 
    General (or an external, independent entity selected by the 
    Inspector General) conducts a review of the Department's Year 2000 
    compliance for the processing, delivery, and administration of 
    grant, loan, and work assistance, and submits a report reflecting 
    the results of that review to the Chairperson of the Committee on 
    Labor and Human Resources of the Senate and the Chairperson of the 
    Committee on Education and the Workforce of the House of 
    Representatives;
        ``(6) develop a contingency plan to ensure the programs under 
    this title will continue to run uninterrupted in the event of 
    widespread disruptions in the flow of accurate computerized data, 
    which contingency plan shall include a prioritization of mission 
    critical systems and strategies to allow data partners to transfer 
    data through alternate means; and
        ``(7) alert Congress at the earliest possible time if mission 
    critical deadlines will not be met.
    ``(b) Postponement Authority for the Year 2000.--
        ``(1) Purpose.--It is the purpose of this subsection to provide 
    the Secretary with the flexibility necessary to--
            ``(A) ensure that the resources and capabilities of 
        institutions, lenders, and guaranty agencies are not 
        overburdened by the combination of student aid processing and 
        delivery requirements added or modified by the amendments made 
        by the Higher Education Amendments of 1998 and by the changes 
        required to ensure that the systems of the institutions, 
        lenders and guaranty agencies are Year 2000 compliant; and
            ``(B) avoid the disruption of grant, loan, or work 
        assistance funds awarded to students because of Year 2000 
        compliance problems at a substantial number of institutions, 
        lenders, and guaranty agencies.
        ``(2) Authority to postpone.--The Secretary may postpone, for a 
    period of time described in paragraph (3), the implementation of 
    any requirements under part B, D, E, or G that are added or 
    modified by the amendments made by the Higher Education Amendments 
    of 1998 related to the processing or delivery of grant, loan, and 
    work assistance (which shall not include the determination of need 
    for such assistance) provided under this title, if the Secretary--
            ``(A) determines that--
                ``(i) implementation of such requirements would require 
            extensive changes to the existing systems of institutions, 
            lenders, or guaranty agencies; and
                ``(ii) postponement is necessary to avoid jeopardizing 
            the ability of a substantial number of institutions, 
            lenders, or guaranty agencies to ensure that all of the 
            systems of the institutions, lenders, or guaranty agencies 
            related to the processing or delivery of such assistance 
            function successfully after December 31, 1999; and
            ``(B) promptly publishes in the Federal Register a list of, 
        and notifies Congress of, any provisions, the implementation of 
        which the Secretary intends to postpone, with the reasons for 
        such postponement.
        ``(3) Exceptions to authority.--The Secretary may not postpone 
    the implementation of one or more provisions described in this 
    subsection longer than the earlier of--
            ``(A) the period of time that the Secretary determines 
        necessary to ensure that the processing and delivery systems of 
        the institutions, lenders, and guaranty agencies referred to in 
        paragraph (1)(A)(ii) are capable of functioning successfully 
        after December 31, 1999; or
            ``(B) one award year after the effective date applicable to 
        such provision under the Higher Education Amendments of 
        1998.''.

SEC. 490F. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR ELIGIBLE 
              DISABLED VETERANS.

    Part G of title IV (20 U.S.C. 1088 et seq.) is amended by adding 
after section 493A (as added by section 490E) the following:

``SEC. 493B. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR ELIGIBLE 
              DISABLED VETERANS.

    ``The Secretary, in consultation with the Secretary of Veterans 
Affairs, shall develop and implement a procedure to permit Department 
of Veterans Affairs physicians to provide the certifications and 
affidavits needed to enable disabled veterans enrolled in the 
Department of Veterans Affairs health care system to document such 
veterans' eligibility for deferments or cancellations of student loans 
made, insured, or guaranteed under this title. Not later than 6 months 
after the date of enactment of the Higher Education Amendments of 1998, 
the Secretary and the Secretary of Veterans Affairs jointly shall 
report to Congress on the progress made in developing and implementing 
the procedure.''.

                       PART H--PROGRAM INTEGRITY

SEC. 491. STATE ROLE AND RESPONSIBILITIES.

    Part H of title IV (20 U.S.C. 1099a et seq.) is amended by--
        (1) striking the heading of such part and inserting the 
    following:

                     ``PART H--PROGRAM INTEGRITY'';

        and
        (2) by amending subpart 1 (20 U.S.C. 1099a et seq.) to read as 
    follows:

                        ``Subpart 1--State Role

``SEC. 495. STATE RESPONSIBILITIES.

    ``(a) State Responsibilities.--As part of the integrity program 
authorized by this part, each State, through one State agency or 
several State agencies selected by the State, shall--
        ``(1) furnish the Secretary, upon request, information with 
    respect to the process for licensing or other authorization for 
    institutions of higher education to operate within the State;
        ``(2) notify the Secretary promptly whenever the State revokes 
    a license or other authority to operate an institution of higher 
    education; and
        ``(3) notify the Secretary promptly whenever the State has 
    credible evidence that an institution of higher education within 
    the State--
            ``(A) has committed fraud in the administration of the 
        student assistance programs authorized by this title; or
            ``(B) has substantially violated a provision of this title.
    ``(b) Institutional Responsibility.--Each institution of higher 
education shall provide evidence to the Secretary that the institution 
has authority to operate within a State at the time the institution is 
certified under subpart 3.''.

SEC. 492. ACCREDITING AGENCY RECOGNITION.

    (a) Recognition.--
        (1) Subpart heading.--The heading of subpart 2 of part H is 
    amended by striking ``Approval'' and inserting ``Recognition''.
        (2) Section 496 heading.--The heading of section 496 is amended 
    by striking ``approval'' and inserting ``recognition''.
    (b) Standards.--Section 496(a) (20 U.S.C. 1099b(a)) is amended--
        (1) in the subsection heading, by striking ``Standards'' and 
    inserting ``Criteria'';
        (2) in the matter preceding paragraph (1), by striking 
    ``standards'' each place the term appears and inserting 
    ``criteria'';
        (3) in paragraph (4)--
            (A) by striking ``at the institution'' and inserting 
        ``offered by the institution''; and
            (B) by inserting ``, including distance education courses 
        or programs,'' after ``higher education''; and
        (4) in paragraph (5)--
            (A) by striking ``of accreditation'' and inserting ``for 
        accreditation'';
            (B) by striking subparagraphs (H), (I), and (J);
            (C) by redesignating subparagraphs (A) through (G) as 
        subparagraphs (B) through (H), respectively;
            (D) by redesignating subparagraphs (K) and (L) as 
        subparagraphs (I) and (J), respectively;
            (E) by inserting before subparagraph (B) the following:
            ``(A) success with respect to student achievement in 
        relation to the institution's mission, including, as 
        appropriate, consideration of course completion, State 
        licensing examinations, and job placement rates;'';
            (F) in subparagraph (H) (as redesignated by subparagraph 
        (C)), by striking ``program length and tuition and fees in 
        relation to the subject matters taught'' and inserting 
        ``measures of program length'';
            (G) in subparagraph (J) (as redesignated by subparagraph 
        (D))--
                (i) by inserting ``record of'' before ``compliance'';
                (ii) by striking ``Act, including any'' and inserting 
            ``Act based on the most recent student loan default rate 
            data provided by the Secretary, the''; and
                (iii) by inserting ``any'' after ``reviews, and''; and
            (H) in the matter following subparagraph (J) (as 
        redesignated by subparagraph (D)), by striking ``(G), (H), (I), 
        (J), and (L)'' and inserting ``(A), (H), and (J)'';
        (5) in paragraph (7), by striking ``State postsecondary review 
    entity'' and inserting ``State licensing or authorizing agency''; 
    and
        (6) in paragraph (8), by striking ``State postsecondary'' and 
    everything that follows through ``is located'' and inserting 
    ``State licensing or authorizing agency''.
    (c) Operating Procedures.--Section 496(c) is amended--
        (1) by striking ``approved by the Secretary'' and inserting 
    ``recognized by the Secretary''; and
        (2) in paragraph (1), by striking ``(at least'' and everything 
    that follows through ``unannounced),'' and inserting ``(which may 
    include unannounced site visits)''.
    (d) Conforming Amendments.--Section 496 is further amended--
        (1) in subsection (d)--
            (A) by striking ``Approval'' in the heading of such 
        subsection and inserting ``Recognition''; and
            (B) by striking ``approved'' and inserting ``recognized'';
        (2) in subsection (f), by striking ``approved'' and inserting 
    ``recognized'';
        (3) in subsection (g)--
            (A) in the heading of such subsection, by striking 
        ``Standards'' and inserting ``Criteria''; and
            (B) by striking ``standards'' the first place such term 
        appears and inserting ``criteria'';
        (4) in subsection (k)--
            (A) in the matter preceding paragraph (1), by striking 
        ``section 481'' and inserting ``section 102''; and
            (B) in paragraph (2), by striking ``standards'' and 
        inserting ``criteria'';
        (5) in subsection (l), by striking everything preceding 
    paragraph (2) and inserting the following:
    ``(l) Limitation, Suspension, or Termination of Recognition.--(1) 
If the Secretary determines that an accrediting agency or association 
has failed to apply effectively the criteria in this section, or is 
otherwise not in compliance with the requirements of this section, the 
Secretary shall--
        ``(A) after notice and opportunity for a hearing, limit, 
    suspend, or terminate the recognition of the agency or association; 
    or
        ``(B) require the agency or association to take appropriate 
    action to bring the agency or association into compliance with such 
    requirements within a timeframe specified by the Secretary, except 
    that--
            ``(i) such timeframe shall not exceed 12 months unless the 
        Secretary extends such period for good cause; and
            ``(ii) if the agency or association fails to bring the 
        agency or association into compliance within such timeframe, 
        the Secretary shall, after notice and opportunity for a 
        hearing, limit, suspend, or terminate the recognition of the 
        agency or association.''; and
        (6) in subsection (n)--
            (A) by striking ``standards'' each place the term appears 
        and inserting ``criteria'';
            (B) in paragraph (3)--
                (i) by striking ``approval process'' and inserting 
            ``recognition process'';
                (ii) by striking ``approval or disapproval'' and 
            inserting ``recognition or denial of recognition''; and
                (iii) by adding at the end the following: ``When the 
            Secretary decides to recognize an accrediting agency or 
            association, the Secretary shall determine the agency or 
            association's scope of recognition. If the agency or 
            association reviews institutions offering distance 
            education courses or programs and the Secretary determines 
            that the agency or association meets the requirements of 
            this section, then the agency shall be recognized and the 
            scope of recognition shall include accreditation of 
            institutions offering distance education courses or 
            programs.''; and
            (C) by striking paragraph (4) and inserting the following:
    ``(4) The Secretary shall maintain sufficient documentation to 
support the conclusions reached in the recognition process, and, if the 
Secretary does not recognize any accreditation agency or association, 
shall make publicly available the reason for denying recognition, 
including reference to the specific criteria under this section which 
have not been fulfilled.''.

SEC. 493. ELIGIBILITY AND CERTIFICATION PROCEDURES.

    (a) Single Application Form.--Section 498(b) (20 U.S.C. 1099c(b)) 
is amended--
        (1) in paragraph (1), by striking ``and capability'' and 
    inserting ``financial responsibility, and administrative 
    capability'';
        (2) by amending paragraph (3) to read as follows:
        ``(3) requires--
            ``(A) a description of the third party servicers of an 
        institution of higher education; and
            ``(B) the institution to maintain a copy of any contract 
        with a financial aid service provider or loan servicer, and 
        provide a copy of any such contract to the Secretary upon 
        request;'';
        (3) in paragraph (4), by striking the period and inserting ``; 
    and''; and
        (4) by adding at the end the following:
        ``(5) provides, at the option of the institution, for 
    participation in one or more of the programs under part B or D.''.
    (b) Financial Responsibility Standards.--Section 498(c) is 
amended--
        (1) in paragraph (2)--
            (A) in the first sentence, by striking ``with respect to 
        operating losses, net worth, asset to liabilities ratios, or 
        operating fund deficits'' and inserting ``regarding ratios that 
        demonstrate financial responsibility,''; and
            (B) in the second sentence, by inserting ``, public,'' 
        after ``for profit'';
        (2) in paragraph (3)(A), by inserting ``that the Secretary 
    determines are reasonable'' after ``guarantees''; and
        (3) in paragraph (4)--
            (A) in the matter preceding subparagraph (A), by striking 
        ``ratio of current assets to current liabilities'' and 
        inserting ``criteria''; and
            (B) in subparagraph (C), by striking ``current operating 
        ratio requirement'' and inserting ``criteria''.
    (c) Financial Guarantees From Owners.--
        (1) Amendment.--Section 498(e) is amended by adding at the end 
    the following:
    ``(6) Notwithstanding any other provision of law, any individual 
who--
        ``(A) the Secretary determines, in accordance with paragraph 
    (2), exercises substantial control over an institution 
    participating in, or seeking to participate in, a program under 
    this title;
        ``(B) is required to pay, on behalf of a student or borrower, a 
    refund of unearned institutional charges to a lender, or to the 
    Secretary; and
        ``(C) willfully fails to pay such refund or willfully attempts 
    in any manner to evade payment of such refund,
shall, in addition to other penalties provided by law, be liable to the 
Secretary for the amount of the refund not paid, to the same extent 
with respect to such refund that such an individual would be liable as 
a responsible person for a penalty under section 6672(a) of Internal 
Revenue Code of 1986 with respect to the nonpayment of taxes.''.
        (2) Effective date.--The amendment made by paragraph (1) shall 
    be effective with respect to any unpaid refunds that were first 
    required to be paid to a lender or to the Secretary on or after 90 
    days after the date of enactment of this Act.
    (d) Applications and Site Visits.--Section 498(f) is amended--
        (1) in the subsection heading, by striking ``; Site Visits and 
    Fees'' and inserting ``and Site Visits'';
        (2) in the second sentence, by striking ``shall'' and inserting 
    ``may'';
        (3) in the third sentence--
            (A) by striking ``may establish'' and insert ``shall 
        establish''; and
            (B) by striking ``may coordinate'' and inserting ``shall, 
        to the extent practicable, coordinate''; and
        (4) by striking the fourth sentence.
    (e) Time Limitations on, and Renewal of, Eligibility.--Subsection 
(g) of section 498 is amended to read as follows:
    ``(g) Time Limitations on, and Renewal of, Eligibility.--
        ``(1) General rule.--After the expiration of the certification 
    of any institution under the schedule prescribed under this section 
    (as this section was in effect prior to the enactment of the Higher 
    Education Act Amendments of 1998), or upon request for initial 
    certification from an institution not previously certified, the 
    Secretary may certify the eligibility for the purposes of any 
    program authorized under this title of each such institution for a 
    period not to exceed 6 years.
        ``(2) Notification.--The Secretary shall notify each 
    institution of higher education not later than 6 months prior to 
    the date of the expiration of the institution's certification.
        ``(3) Institutions outside the united states.--The Secretary 
    shall promulgate regulations regarding the recertification 
    requirements applicable to an institution of higher education 
    outside of the United States that meets the requirements of section 
    102(a)(1)(C) and received less than $500,000 in funds under part B 
    for the most recent year for which data are available.''.
    (f) Provisional Certification.--Section 498(h)(2) is amended--
        (1) by striking ``the approval'' and inserting ``the 
    recognition''; and
        (2) by striking ``of approval'' and inserting ``of 
    recognition''.
    (g) Change in Ownership.--Section 498(i) is amended by adding at 
the end the following:
    ``(4)(A) The Secretary may provisionally certify an institution 
seeking approval of a change in ownership based on the preliminary 
review by the Secretary of a materially complete application that is 
received by the Secretary within 10 business days of the transaction 
for which the approval is sought.
    ``(B) A provisional certification under this paragraph shall expire 
not later than the end of the month following the month in which the 
transaction occurred, except that if the Secretary has not issued a 
decision on the application for the change of ownership within that 
period, the Secretary may continue such provisional certification on a 
month-to-month basis until such decision has been issued.''.
    (h) Treatment of Branches.--The second sentence of section 
498(j)(1) is amended by inserting ``after the branch is certified by 
the Secretary as a branch campus participating in a program under this 
title,'' after ``2 years''.

SEC. 494. PROGRAM REVIEW AND DATA.

    Section 498A (20 U.S.C. 1099c-1) is amended--
        (1) in subsection (a)--
            (A) in paragraph (2)--
                (i) in the matter preceding subparagraph (A), by 
            striking ``may'' and inserting ``shall'';
                (ii) by amending subparagraph (C) to read as follows:
            ``(C) institutions with a significant fluctuation in 
        Federal Stafford Loan volume, Federal Direct Stafford/Ford Loan 
        volume, or Federal Pell Grant award volume, or any combination 
        thereof, in the year for which the determination is made, 
        compared to the year prior to such year, that are not accounted 
        for by changes in the Federal Stafford Loan program, the 
        Federal Direct Stafford/Ford Loan program, or the Pell Grant 
        program, or any combination thereof;'';
                (iii) by amending subparagraph (D) to read as follows:
            ``(D) institutions reported to have deficiencies or 
        financial aid problems by the State licensing or authorizing 
        agency, or by the appropriate accrediting agency or 
        association;'';
                (iv) in subparagraph (E), by inserting ``and'' after 
            the semicolon; and
                (v) by striking subparagraphs (F) and (G) and inserting 
            the following:
            ``(F) such other institutions that the Secretary determines 
        may pose a significant risk of failure to comply with the 
        administrative capability or financial responsibility 
        provisions of this title; and''; and
            (B) in paragraph (3)(A), by inserting ``relevant'' after 
        ``all''; and
        (2) by amending subsection (b) to read as follows:
    ``(b) Special Administrative Rules.--In carrying out paragraphs (1) 
and (2) of subsection (a) and any other relevant provisions of this 
title, the Secretary shall--
        ``(1) establish guidelines designed to ensure uniformity of 
    practice in the conduct of program reviews of institutions of 
    higher education;
        ``(2) make available to each institution participating in 
    programs authorized under this title complete copies of all review 
    guidelines and procedures used in program reviews;
        ``(3) permit the institution to correct or cure an 
    administrative, accounting, or recordkeeping error if the error is 
    not part of a pattern of error and there is no evidence of fraud or 
    misconduct related to the error;
        ``(4) base any civil penalty assessed against an institution of 
    higher education resulting from a program review or audit on the 
    gravity of the violation, failure, or misrepresentation; and
        ``(5) inform the appropriate State and accrediting agency or 
    association whenever the Secretary takes action against an 
    institution of higher education under this section, section 498, or 
    section 432.''.

SEC. 495. REVIEW OF REGULATIONS.

    Part H of title IV is further amended by adding at the end the 
following:

``SEC. 498B. REVIEW OF REGULATIONS.

    ``(a) Review Required.--The Secretary shall review each regulation 
issued under this title that is in effect at the time of the review and 
applies to the operations or activities of any participant in the 
programs assisted under this title. The review shall include a 
determination of whether the regulation is duplicative, or is no longer 
necessary. The review may involve one or more of the following:
        ``(1) An assurance of the uniformity of interpretation and 
    application of such regulations.
        ``(2) The establishment of a process for ensuring that 
    eligibility and compliance issues, such as institutional audit, 
    program review, and recertification, are considered simultaneously.
        ``(3) A determination of the extent to which unnecessary costs 
    are imposed on institutions of higher education as a consequence of 
    the applicability to the facilities and equipment of such 
    institutions of regulations prescribed for purposes of regulating 
    industrial and commercial enterprises.
    ``(b) Regulatory and Statutory Relief for Small Volume 
Institutions.--The Secretary shall review and evaluate ways in which 
regulations under and provisions of this Act affecting institution of 
higher education (other than institutions described in section 
102(a)(1)(C)), that have received in each of the two most recent award 
years prior to the date of the enactment of the Higher Education 
Amendments of 1998 less than $200,000 in funds through this title, may 
be improved, streamlined, or eliminated.
    ``(c) Consultation.--In carrying out subsections (a) and (b), the 
Secretary shall consult with relevant representatives of institutions 
participating in the programs authorized by this title.
    ``(d) Reports to Congress.--
        ``(1) In general.--The Secretary shall submit, not later than 1 
    year after the date of the enactment of the Higher Education 
    Amendments of 1998, a report to the Committee on Labor and Human 
    Resources of the Senate and the Committee on Education and the 
    Workforce of the House of Representatives detailing the Secretary's 
    findings and recommendations based on the reviews conducted under 
    subsections (a) and (b), including a timetable for implementation 
    of any recommended changes in regulations and a description of any 
    recommendations for legislative changes.
        ``(2) Additional reports.--Not later than January 1, 2003, the 
    Secretary shall submit a report to the Committee on Labor and Human 
    Resources of the Senate and the Committee on Education and the 
    Workforce of the House of Representatives detailing the Secretary's 
    findings and recommendations based on the review conducted under 
    subsection (a), including a timetable for implementation of any 
    recommended changes in regulations and a description of any 
    recommendations for legislative changes.''.

                    TITLE V--DEVELOPING INSTITUTIONS

SEC. 501. ESTABLISHMENT OF NEW TITLE V.

    Title V (20 U.S.C. 1101 et seq.) is amended to read as follows:

                   ``TITLE V--DEVELOPING INSTITUTIONS

                ``PART A--HISPANIC-SERVING INSTITUTIONS

``SEC. 501. FINDINGS; PURPOSE; AND PROGRAM AUTHORITY.

    ``(a) Findings.--Congress makes the following findings:
        ``(1) Hispanic Americans are at high risk of not enrolling or 
    graduating from institutions of higher education.
        ``(2) Disparities between the enrollment of non-Hispanic white 
    students and Hispanic students in postsecondary education are 
    increasing. Between 1973 and 1994, enrollment of white secondary 
    school graduates in 4-year institutions of higher education 
    increased at a rate two times higher than that of Hispanic 
    secondary school graduates.
        ``(3) Despite significant limitations in resources, Hispanic-
    serving institutions provide a significant proportion of 
    postsecondary opportunities for Hispanic students.
        ``(4) Relative to other institutions of higher education, 
    Hispanic-serving institutions are underfunded. Such institutions 
    receive significantly less in State and local funding, per full-
    time equivalent student, than other institutions of higher 
    education.
        ``(5) Hispanic-serving institutions are succeeding in educating 
    Hispanic students despite significant resource problems that--
            ``(A) limit the ability of such institutions to expand and 
        improve the academic programs of such institutions; and
            ``(B) could imperil the financial and administrative 
        stability of such institutions.
        ``(6) There is a national interest in remedying the disparities 
    described in paragraphs (2) and (4) and ensuring that Hispanic 
    students have an equal opportunity to pursue postsecondary 
    opportunities.
    ``(b) Purpose.--The purpose of this title is to--
        ``(1) expand educational opportunities for, and improve the 
    academic attainment of, Hispanic students; and
        ``(2) expand and enhance the academic offerings, program 
    quality, and institutional stability of colleges and universities 
    that are educating the majority of Hispanic college students and 
    helping large numbers of Hispanic students and other low-income 
    individuals complete postsecondary degrees.
    ``(c) Program Authority.--The Secretary shall provide grants and 
related assistance to Hispanic-serving institutions to enable such 
institutions to improve and expand their capacity to serve Hispanic 
students and other low-income individuals.

``SEC. 502. DEFINITIONS; ELIGIBILITY.

    ``(a) Definitions.--For the purpose of this title:
        ``(1) Educational and general expenditures.--The term 
    `educational and general expenditures' means the total amount 
    expended by an institution for instruction, research, public 
    service, academic support (including library expenditures), student 
    services, institutional support, scholarships and fellowships, 
    operation and maintenance expenditures for the physical plant, and 
    any mandatory transfers that the institution is required to pay by 
    law.
        ``(2) Eligible institution.--The term `eligible institution' 
    means--
            ``(A) an institution of higher education--
                ``(i) that has an enrollment of needy students as 
            required by subsection (b);
                ``(ii) except as provided in section 512(b), the 
            average educational and general expenditures of which are 
            low, per full-time equivalent undergraduate student, in 
            comparison with the average educational and general 
            expenditures per full-time equivalent undergraduate student 
            of institutions that offer similar instruction;
                ``(iii) that is--

                    ``(I) legally authorized to provide, and provides 
                within the State, an educational program for which the 
                institution awards a bachelor's degree; or
                    ``(II) a junior or community college;

                ``(iv) that is accredited by a nationally recognized 
            accrediting agency or association determined by the 
            Secretary to be reliable authority as to the quality of 
            training offered or that is, according to such an agency or 
            association, making reasonable progress toward 
            accreditation;
                ``(v) that meets such other requirements as the 
            Secretary may prescribe; and
                ``(vi) that is located in a State; and
            ``(B) any branch of any institution of higher education 
        described under subparagraph (A) that by itself satisfies the 
        requirements contained in clauses (i) and (ii) of such 
        subparagraph.
    For purposes of the determination of whether an institution is an 
    eligible institution under this paragraph, the factor described 
    under subparagraph (A)(i) shall be given twice the weight of the 
    factor described under subparagraph (A)(ii).
        ``(3) Endowment fund.--The term `endowment fund' means a fund 
    that--
            ``(A) is established by State law, by a Hispanic-serving 
        institution, or by a foundation that is exempt from Federal 
        income taxation;
            ``(B) is maintained for the purpose of generating income 
        for the support of the institution; and
            ``(C) does not include real estate.
        ``(4) Full-time equivalent students.--The term `full-time 
    equivalent students' means the sum of the number of students 
    enrolled full time at an institution, plus the full-time equivalent 
    of the number of students enrolled part time (determined on the 
    basis of the quotient of the sum of the credit hours of all part-
    time students divided by 12) at such institution.
        ``(5) Hispanic-serving institution.--The term `Hispanic-serving 
    institution' means an institution of higher education that--
            ``(A) is an eligible institution;
            ``(B) at the time of application, has an enrollment of 
        undergraduate full-time equivalent students that is at least 25 
        percent Hispanic students; and
            ``(C) provides assurances that not less than 50 percent of 
        the institution's Hispanic students are low-income individuals.
        ``(6) Junior or community college.--The term `junior or 
    community college' means an institution of higher education--
            ``(A) that admits as regular students persons who are 
        beyond the age of compulsory school attendance in the State in 
        which the institution is located and who have the ability to 
        benefit from the training offered by the institution;
            ``(B) that does not provide an educational program for 
        which the institution awards a bachelor's degree (or an 
        equivalent degree); and
            ``(C) that--
                ``(i) provides an educational program of not less than 
            2 years in duration that is acceptable for full credit 
            toward such a degree; or
                ``(ii) offers a 2-year program in engineering, 
            mathematics, or the physical or biological sciences, 
            designed to prepare a student to work as a technician or at 
            the semiprofessional level in engineering, scientific, or 
            other technological fields requiring the understanding and 
            application of basic engineering, scientific, or 
            mathematical principles of knowledge.
        ``(7) Low-income individual.--The term `low-income individual' 
    means an individual from a family whose taxable income for the 
    preceding year did not exceed 150 percent of an amount equal to the 
    poverty level determined by using criteria of poverty established 
    by the Bureau of the Census.
    ``(b) Enrollment of Needy Students.--For the purpose of this title, 
the term `enrollment of needy students' means an enrollment at an 
institution with respect to which--
        ``(1) at least 50 percent of the degree students so enrolled 
    are receiving need-based assistance under title IV in the second 
    fiscal year preceding the fiscal year for which the determination 
    is made (other than loans for which an interest subsidy is paid 
    pursuant to section 428); or
        ``(2) a substantial percentage of the students so enrolled are 
    receiving Federal Pell Grants in the second fiscal year preceding 
    the fiscal year for which determination is made, compared to the 
    percentage of students receiving Federal Pell Grants at all such 
    institutions in the second fiscal year preceding the fiscal year 
    for which the determination is made, unless the requirement of this 
    paragraph is waived under section 512(a).

``SEC. 503. AUTHORIZED ACTIVITIES.

    ``(a) Types of Activities Authorized.--Grants awarded under this 
title shall be used by Hispanic-serving institutions of higher 
education to assist the institutions to plan, develop, undertake, and 
carry out programs to improve and expand the institutions' capacity to 
serve Hispanic students and other low-income students.
    ``(b) Authorized Activities.--Grants awarded under this section 
shall be used for one or more of the following activities:
        ``(1) Purchase, rental, or lease of scientific or laboratory 
    equipment for educational purposes, including instructional and 
    research purposes.
        ``(2) Construction, maintenance, renovation, and improvement in 
    classrooms, libraries, laboratories, and other instructional 
    facilities.
        ``(3) Support of faculty exchanges, faculty development, 
    curriculum development, academic instruction, and faculty 
    fellowships to assist in attaining advanced degrees in the fellow's 
    field of instruction.
        ``(4) Purchase of library books, periodicals, and other 
    educational materials, including telecommunications program 
    material.
        ``(5) Tutoring, counseling, and student service programs 
    designed to improve academic success.
        ``(6) Funds management, administrative management, and 
    acquisition of equipment for use in strengthening funds management.
        ``(7) Joint use of facilities, such as laboratories and 
    libraries.
        ``(8) Establishing or improving a development office to 
    strengthen or improve contributions from alumni and the private 
    sector.
        ``(9) Establishing or improving an endowment fund.
        ``(10) Creating or improving facilities for Internet or other 
    distance learning academic instruction capabilities, including 
    purchase or rental of telecommunications technology equipment or 
    services.
        ``(11) Establishing or enhancing a program of teacher education 
    designed to qualify students to teach in public elementary schools 
    and secondary schools.
        ``(12) Establishing community outreach programs that will 
    encourage elementary school and secondary school students to 
    develop the academic skills and the interest to pursue 
    postsecondary education.
        ``(13) Expanding the number of Hispanic and other 
    underrepresented graduate and professional students that can be 
    served by the institution by expanding courses and institutional 
    resources.
        ``(14) Other activities proposed in the application submitted 
    pursuant to section 504 that--
            ``(A) contribute to carrying out the purposes of this 
        title; and
            ``(B) are approved by the Secretary as part of the review 
        and acceptance of such application.
    ``(c) Endowment Fund Limitations.--
        ``(1) Portion of grant.--A Hispanic-serving institution may not 
    use more than 20 percent of the grant funds provided under this 
    title for any fiscal year for establishing or improving an 
    endowment fund.
        ``(2) Matching required.--A Hispanic-serving institution that 
    uses any portion of the grant funds provided under this title for 
    any fiscal year for establishing or improving an endowment fund 
    shall provide from non-Federal funds an amount equal to or greater 
    than the portion.
        ``(3) Comparability.--The provisions of part C of title III 
    regarding the establishment or increase of an endowment fund, that 
    the Secretary determines are not inconsistent with this subsection, 
    shall apply to funds used under paragraph (1).

``SEC. 504. DURATION OF GRANT.

    ``(a) Award Period.--
        ``(1) In general.--The Secretary may award a grant to a 
    Hispanic-serving institution under this title for 5 years.
        ``(2) Waitout period.--A Hispanic-serving institution shall not 
    be eligible to secure a subsequent 5-year grant award under this 
    title until 2 years have elapsed since the expiration of the 
    institution's most recent 5-year grant award under this title, 
    except that for the purpose of this subsection a grant under 
    section 514(a) shall not be considered a grant under this title.
    ``(b) Planning Grants.--Notwithstanding subsection (a), the 
Secretary may award a grant to a Hispanic-serving institution under 
this title for a period of 1 year for the purpose of preparation of 
plans and applications for a grant under this title.

``SEC. 505. SPECIAL RULE.

    ``No Hispanic-serving institution that is eligible for and receives 
funds under this title may receive funds under part A or B of title III 
during the period for which funds under this title are awarded.

                      ``PART B--GENERAL PROVISIONS

``SEC. 511. ELIGIBILITY; APPLICATIONS.

    ``(a) Institutional Eligibility.--Each Hispanic-serving institution 
desiring to receive assistance under this title shall submit to the 
Secretary such enrollment data as may be necessary to demonstrate that 
the institution is a Hispanic-serving institution as defined in section 
502, along with such other data and information as the Secretary may by 
regulation require.
    ``(b) Applications.--
        ``(1) Applications required.--Any institution which is eligible 
    for assistance under this title shall submit to the Secretary an 
    application for assistance at such time, in such form, and 
    containing such information, as may be necessary to enable the 
    Secretary to evaluate the institution's need for assistance. 
    Subject to the availability of appropriations to carry out this 
    title, the Secretary may approve an application for a grant under 
    this title only if the Secretary determines that--
            ``(A) the application meets the requirements of subsection 
        (b); and
            ``(B) the institution is eligible for assistance in 
        accordance with the provisions of this title under which the 
        assistance is sought.
        ``(2) Preliminary applications.--In carrying out paragraph (1), 
    the Secretary may develop a preliminary application for use by 
    Hispanic-serving institutions applying under this title prior to 
    the submission of the principal application.
    ``(c) Contents.--A Hispanic-serving institution, in the 
institution's application for a grant, shall--
        ``(1) set forth, or describe how the institution will develop, 
    a comprehensive development plan to strengthen the institution's 
    academic quality and institutional management, and otherwise 
    provide for institutional self-sufficiency and growth (including 
    measurable objectives for the institution and the Secretary to use 
    in monitoring the effectiveness of activities under this title);
        ``(2) include a 5-year plan for improving the assistance 
    provided by the Hispanic-serving institution to Hispanic students 
    and other low-income individuals;
        ``(3) set forth policies and procedures to ensure that Federal 
    funds made available under this title for any fiscal year will be 
    used to supplement and, to the extent practical, increase the funds 
    that would otherwise be made available for the purposes of section 
    501(b), and in no case supplant those funds;
        ``(4) set forth policies and procedures for evaluating the 
    effectiveness in accomplishing the purpose of the activities for 
    which a grant is sought under this title;
        ``(5) provide for such fiscal control and fund accounting 
    procedures as may be necessary to ensure proper disbursement of and 
    accounting for funds made available to the institution under this 
    title;
        ``(6) provide that the institution will comply with the 
    limitations set forth in section 516;
        ``(7) describe in a comprehensive manner any proposed project 
    for which funds are sought under the application and include--
            ``(A) a description of the various components of the 
        proposed project, including the estimated time required to 
        complete each such component;
            ``(B) in the case of any development project that consists 
        of several components (as described by the institution pursuant 
        to subparagraph (A)), a statement identifying those components 
        which, if separately funded, would be sound investments of 
        Federal funds and those components which would be sound 
        investments of Federal funds only if funded under this title in 
        conjunction with other parts of the development project (as 
        specified by the institution);
            ``(C) an evaluation by the institution of the priority 
        given any proposed project for which funds are sought in 
        relation to any other projects for which funds are sought by 
        the institution under this title, and a similar evaluation 
        regarding priorities among the components of any single 
        proposed project (as described by the institution pursuant to 
        subparagraph (A));
            ``(D) a detailed budget showing the manner in which funds 
        for any proposed project would be spent by the institution; and
            ``(E) a detailed description of any activity which involves 
        the expenditure of more than $25,000, as identified in the 
        budget referred to in subparagraph (D);
        ``(8) provide for making reports, in such form and containing 
    such information, as the Secretary may require to carry out the 
    Secretary's functions under this title, including not less than one 
    report annually setting forth the institution's progress toward 
    achieving the objectives for which the funds were awarded and for 
    keeping such records and affording such access to such records, as 
    the Secretary may find necessary to assure the correctness and 
    verification of such reports; and
        ``(9) include such other information as the Secretary may 
    prescribe.
    ``(d) Priority.--With respect to applications for assistance under 
this section, the Secretary shall give priority to an application that 
contains satisfactory evidence that the Hispanic-serving institution 
has entered into or will enter into a collaborative arrangement with at 
least one local educational agency or community-based organization to 
provide such agency or organization with assistance (from funds other 
than funds provided under this title) in reducing dropout rates for 
Hispanic students, improving rates of academic achievement for Hispanic 
students, and increasing the rates at which Hispanic secondary school 
graduates enroll in higher education.
    ``(e) Eligibility Data.--The Secretary shall use the most recent 
and relevant data concerning the number and percentage of students 
receiving need-based assistance under title IV in making eligibility 
determinations and shall advance the base-year for the determinations 
forward following each annual grant cycle.

``SEC. 512. WAIVER AUTHORITY AND REPORTING REQUIREMENT.

    ``(a) Waiver Requirements; Need-Based Assistance Students.--The 
Secretary may waive the requirements set forth in section 
502(a)(2)(A)(i) in the case of an institution--
        ``(1) that is extensively subsidized by the State in which the 
    institution is located and charges low or no tuition;
        ``(2) that serves a substantial number of low-income students 
    as a percentage of the institution's total student population;
        ``(3) that is contributing substantially to increasing higher 
    education opportunities for educationally disadvantaged, 
    underrepresented, or minority students, who are low-income 
    individuals;
        ``(4) which is substantially increasing higher educational 
    opportunities for individuals in rural or other isolated areas 
    which are unserved by postsecondary institutions; or
        ``(5) wherever located, if the Secretary determines that the 
    waiver will substantially increase higher education opportunities 
    appropriate to the needs of Hispanic Americans.
    ``(b) Waiver Determinations; Expenditures.--
        ``(1) Waiver determinations.--The Secretary may waive the 
    requirements set forth in section 502(a)(2)(A)(ii) if the Secretary 
    determines, based on persuasive evidence submitted by the 
    institution, that the institution's failure to meet the 
    requirements is due to factors which, when used in the 
    determination of compliance with the requirements, distort such 
    determination, and that the institution's designation as an 
    eligible institution under part A is otherwise consistent with the 
    purposes of this title.
        ``(2) Expenditures.--The Secretary shall submit to Congress 
    every other year a report concerning the institutions that, 
    although not satisfying the requirements of section 
    502(a)(2)(A)(ii), have been determined to be eligible institutions 
    under part A. Such report shall--
            ``(A) identify the factors referred to in paragraph (1) 
        that were considered by the Secretary as factors that distorted 
        the determination of compliance with clauses (i) and (ii) of 
        section 502(a)(2)(A); and
            ``(B) contain a list of each institution determined to be 
        an eligible institution under part A including a statement of 
        the reasons for each such determination.

``SEC. 513. APPLICATION REVIEW PROCESS.

    ``(a) Review Panel.--All applications submitted under this title by 
Hispanic-serving institutions shall be read by a panel of readers 
composed of individuals who are selected by the Secretary and who 
include individuals representing Hispanic-serving institutions. The 
Secretary shall ensure that no individual assigned under this section 
to review any application has any conflict of interest with regard to 
the application that might impair the impartiality with which the 
individual conducts the review under this section.
    ``(b) Instruction.--All readers selected by the Secretary shall 
receive thorough instruction from the Secretary regarding the 
evaluation process for applications submitted under this title that are 
consistent with the provisions of this title, including--
        ``(1) an enumeration of the factors to be used to determine the 
    quality of applications submitted under this title; and
        ``(2) an enumeration of the factors to be used to determine 
    whether a grant should be awarded for a project under this title, 
    the amount of any such grant, and the duration of any such grant.
    ``(c) Recommendations of Panel.--In awarding grants under this 
title, the Secretary shall take into consideration the recommendations 
of the panel made under subsection (a).
    ``(d) Notification.--Not later than June 30 of each year, the 
Secretary shall notify each Hispanic-serving institution making an 
application under this title of--
        ``(1) the scores given the institution by the panel pursuant to 
    this section;
        ``(2) the recommendations of the panel with respect to such 
    application; and
        ``(3) the reasons for the decision of the Secretary in awarding 
    or refusing to award a grant under this title, and any 
    modifications, if any, in the recommendations of the panel made by 
    the Secretary.

``SEC. 514. COOPERATIVE ARRANGEMENTS.

    ``(a) General Authority.--The Secretary may make grants to 
encourage cooperative arrangements with funds available to carry out 
this title, between Hispanic-serving institutions eligible for 
assistance under this title, and between such institutions and 
institutions not receiving assistance under this title, for the 
activities described in section 503 so that the resources of the 
cooperating institutions might be combined and shared in order to 
achieve the purposes of this title, to avoid costly duplicative 
efforts, and to enhance the development of Hispanic-serving 
institutions.
    ``(b) Priority.--The Secretary shall give priority to grants for 
the purposes described under subsection (a) whenever the Secretary 
determines that the cooperative arrangement is geographically and 
economically sound or will benefit the applicant Hispanic-serving 
institution.
    ``(c) Duration.--Grants to Hispanic-serving institutions having a 
cooperative arrangement may be made under this section for a period 
determined under section 505.

``SEC. 515. ASSISTANCE TO INSTITUTIONS UNDER OTHER PROGRAMS.

    ``(a) Assistance Eligibility.--Each Hispanic-serving institution 
that the Secretary determines to be an institution eligible under this 
title may be eligible for waivers in accordance with subsection (b).
    ``(b) Waiver Applicability.--
        ``(1) In general.--Subject to, and in accordance with, 
    regulations promulgated for the purpose of this section, in the 
    case of any application by a Hispanic-serving institution referred 
    to in subsection (a) for assistance under any programs specified in 
    paragraph (2), the Secretary is authorized, if such application is 
    otherwise approvable, to waive any requirement for a non-Federal 
    share of the cost of the program or project, or, to the extent not 
    inconsistent with other law, to give, or require to be given, 
    priority consideration of the application in relation to 
    applications from other institutions.
        ``(2) Programs.--The provisions of this section shall apply to 
    any program authorized by title IV or section 604.
    ``(c) Limitation.--The Secretary shall not waive, under subsection 
(b), the non-Federal share requirement for any program for applications 
which, if approved, would require the expenditure of more than 10 
percent of the appropriations for the program for any fiscal year.

``SEC. 516. LIMITATIONS.

    ``The funds appropriated under section 518 may not be used--
        ``(1) for a school or department of divinity or any religious 
    worship or sectarian activity;
        ``(2) for an activity that is inconsistent with a State plan 
    for desegregation of higher education applicable to a Hispanic-
    serving institution;
        ``(3) for an activity that is inconsistent with a State plan of 
    higher education applicable to a Hispanic-serving institution; or
        ``(4) for purposes other than the purposes set forth in the 
    approved application under which the funds were made available to a 
    Hispanic-serving institution.

``SEC. 517. PENALTIES.

    ``Whoever, being an officer, director, agent, or employee of, or 
connected in any capacity with, any recipient of Federal financial 
assistance or grant pursuant to this title embezzles, willfully 
misapplies, steals, or obtains by fraud any of the funds that are the 
subject of such grant or assistance, shall be fined not more than 
$10,000 or imprisoned for not more than 2 years, or both.

``SEC. 518. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) Authorizations.--There are authorized to be appropriated to 
carry out this title $62,500,000 for fiscal year 1999 and such sums as 
may be necessary for each of the 4 succeeding fiscal years.
    ``(b) Use of Multiple Year Awards.--In the event of a multiple year 
award to any Hispanic-serving institution under this title, the 
Secretary shall make funds available for such award from funds 
appropriated for this title for the fiscal year in which such funds are 
to be used by the institution.''.

               TITLE VI--INTERNATIONAL EDUCATION PROGRAMS

SEC. 601. INTERNATIONAL AND FOREIGN LANGUAGE STUDIES.

    Part A of title VI (20 U.S.C. 1121 et seq.) is amended to read as 
follows:

          ``PART A--INTERNATIONAL AND FOREIGN LANGUAGE STUDIES

``SEC. 601. FINDINGS AND PURPOSES.

    ``(a) Findings.--Congress finds as follows:
        ``(1) The security, stability, and economic vitality of the 
    United States in a complex global era depend upon American experts 
    in and citizens knowledgeable about world regions, foreign 
    languages, and international affairs, as well as upon a strong 
    research base in these areas.
        ``(2) Advances in communications technology and the growth of 
    regional and global problems make knowledge of other countries and 
    the ability to communicate in other languages more essential to the 
    promotion of mutual understanding and cooperation among nations and 
    their peoples.
        ``(3) Dramatic post-Cold War changes in the world's 
    geopolitical and economic landscapes are creating needs for 
    American expertise and knowledge about a greater diversity of less 
    commonly taught foreign languages and nations of the world.
        ``(4) Systematic efforts are necessary to enhance the capacity 
    of institutions of higher education in the United States for--
            ``(A) producing graduates with international and foreign 
        language expertise and knowledge; and
            ``(B) research regarding such expertise and knowledge.
        ``(5) Cooperative efforts among the Federal Government, 
    institutions of higher education, and the private sector are 
    necessary to promote the generation and dissemination of 
    information about world regions, foreign languages, and 
    international affairs throughout education, government, business, 
    civic, and nonprofit sectors in the United States.
    ``(b) Purposes.--The purposes of this part are--
        ``(1)(A) to support centers, programs, and fellowships in 
    institutions of higher education in the United States for producing 
    increased numbers of trained personnel and research in foreign 
    languages, area studies, and other international studies;
        ``(B) to develop a pool of international experts to meet 
    national needs;
        ``(C) to develop and validate specialized materials and 
    techniques for foreign language acquisition and fluency, 
    emphasizing (but not limited to) the less commonly taught 
    languages;
        ``(D) to promote access to research and training overseas; and
        ``(E) to advance the internationalization of a variety of 
    disciplines throughout undergraduate and graduate education;
        ``(2) to support cooperative efforts promoting access to and 
    the dissemination of international and foreign language knowledge, 
    teaching materials, and research, throughout education, government, 
    business, civic, and nonprofit sectors in the United States, 
    through the use of advanced technologies; and
        ``(3) to coordinate the programs of the Federal Government in 
    the areas of foreign language, area studies, and other 
    international studies, including professional international affairs 
    education and research.

``SEC. 602. GRADUATE AND UNDERGRADUATE LANGUAGE AND AREA CENTERS AND 
              PROGRAMS.

    ``(a) National Language and Area Centers and Programs Authorized.--
        ``(1) Centers and programs.--
            ``(A) In general.--The Secretary is authorized--
                ``(i) to make grants to institutions of higher 
            education, or combinations thereof, for the purpose of 
            establishing, strengthening, and operating comprehensive 
            foreign language and area or international studies centers 
            and programs; and
                ``(ii) to make grants to such institutions or 
            combinations for the purpose of establishing, 
            strengthening, and operating a diverse network of 
            undergraduate foreign language and area or international 
            studies centers and programs.
            ``(B) National resources.--The centers and programs 
        referred to in paragraph (1) shall be national resources for--
                ``(i) teaching of any modern foreign language;
                ``(ii) instruction in fields needed to provide full 
            understanding of areas, regions, or countries in which such 
            language is commonly used;
                ``(iii) research and training in international studies, 
            and the international and foreign language aspects of 
            professional and other fields of study; and
                ``(iv) instruction and research on issues in world 
            affairs that concern one or more countries.
        ``(2) Authorized activities.--Any such grant may be used to pay 
    all or part of the cost of establishing or operating a center or 
    program, including the cost of--
            ``(A) teaching and research materials;
            ``(B) curriculum planning and development;
            ``(C) establishing and maintaining linkages with overseas 
        institutions of higher education and other organizations that 
        may contribute to the teaching and research of the center or 
        program;
            ``(D) bringing visiting scholars and faculty to the center 
        to teach or to conduct research;
            ``(E) professional development of the center's faculty and 
        staff;
            ``(F) projects conducted in cooperation with other centers 
        addressing themes of world regional, cross-regional, 
        international, or global importance;
            ``(G) summer institutes in the United States or abroad 
        designed to provide language and area training in the center's 
        field or topic; and
            ``(H) support for faculty, staff, and student travel in 
        foreign areas, regions, or countries, and for the development 
        and support of educational programs abroad for students.
        ``(3) Grants to maintain library collections.--The Secretary 
    may make grants to centers described in paragraph (1) having 
    important library collections, as determined by the Secretary, for 
    the maintenance of such collections.
        ``(4) Outreach grants and summer institutes.--The Secretary may 
    make additional grants to centers described in paragraph (1) for 
    any one or more of the following purposes:
            ``(A) Programs of linkage or outreach between foreign 
        language, area studies, or other international fields, and 
        professional schools and colleges.
            ``(B) Programs of linkage or outreach with 2- and 4-year 
        colleges and universities.
            ``(C) Programs of linkage or outreach with departments or 
        agencies of Federal and State governments.
            ``(D) Programs of linkage or outreach with the news media, 
        business, professional, or trade associations.
            ``(E) Summer institutes in foreign area, foreign language, 
        and other international fields designed to carry out the 
        programs of linkage and outreach described in subparagraphs 
        (A), (B), (C), and (D).
    ``(b) Graduate Fellowships for Foreign Language and Area or 
International Studies.--
        ``(1) In general.--The Secretary is authorized to make grants 
    to institutions of higher education or combinations of such 
    institutions for the purpose of paying stipends to individuals 
    undergoing advanced training in any center or program approved by 
    the Secretary.
        ``(2) Eligible students.--Students receiving stipends described 
    in paragraph (1) shall be individuals who are engaged in an 
    instructional program with stated performance goals for functional 
    foreign language use or in a program developing such performance 
    goals, in combination with area studies, international studies, or 
    the international aspects of a professional studies program, 
    including predissertation level studies, preparation for 
    dissertation research, dissertation research abroad, and 
    dissertation writing.
    ``(c) Special Rule With Respect to Travel.--No funds may be 
expended under this part for undergraduate travel except in accordance 
with rules prescribed by the Secretary setting forth policies and 
procedures to assure that Federal funds made available for such travel 
are expended as part of a formal program of supervised study.
    ``(d) Allowances.--Stipends awarded to graduate level recipients 
may include allowances for dependents and for travel for research and 
study in the United States and abroad.

``SEC. 603. LANGUAGE RESOURCE CENTERS.

    ``(a) Language Resource Centers Authorized.--The Secretary is 
authorized to make grants to and enter into contracts with institutions 
of higher education, or combinations of such institutions, for the 
purpose of establishing, strengthening, and operating a small number of 
national language resource and training centers, which shall serve as 
resources to improve the capacity to teach and learn foreign languages 
effectively.
    ``(b) Authorized Activities.--The activities carried out by the 
centers described in subsection (a)--
        ``(1) shall include effective dissemination efforts, whenever 
    appropriate; and
        ``(2) may include--
            ``(A) the conduct and dissemination of research on new and 
        improved teaching methods, including the use of advanced 
        educational technology;
            ``(B) the development and dissemination of new teaching 
        materials reflecting the use of such research in effective 
        teaching strategies;
            ``(C) the development, application, and dissemination of 
        performance testing appropriate to an educational setting for 
        use as a standard and comparable measurement of skill levels in 
        all languages;
            ``(D) the training of teachers in the administration and 
        interpretation of performance tests, the use of effective 
        teaching strategies, and the use of new technologies;
            ``(E) a significant focus on the teaching and learning 
        needs of the less commonly taught languages, including an 
        assessment of the strategic needs of the United States, the 
        determination of ways to meet those needs nationally, and the 
        publication and dissemination of instructional materials in the 
        less commonly taught languages;
            ``(F) the development and dissemination of materials 
        designed to serve as a resource for foreign language teachers 
        at the elementary and secondary school levels; and
            ``(G) the operation of intensive summer language institutes 
        to train advanced foreign language students, to provide 
        professional development, and to improve language instruction 
        through preservice and inservice language training for 
        teachers.
    ``(c) Conditions for Grants.--Grants under this section shall be 
made on such conditions as the Secretary determines to be necessary to 
carry out the provisions of this section.

``SEC. 604. UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN LANGUAGE 
              PROGRAMS.

    ``(a) Incentives for the Creation of New Programs and the 
Strengthening of Existing Programs in Undergraduate International 
Studies and Foreign Language Programs.--
        ``(1) Authority.--The Secretary is authorized to make grants to 
    institutions of higher education, combinations of such 
    institutions, or partnerships between nonprofit educational 
    organizations and institutions of higher education, to assist such 
    institutions, combinations or partnerships in planning, developing, 
    and carrying out programs to improve undergraduate instruction in 
    international studies and foreign languages. Such grants shall be 
    awarded to institutions, combinations or partnerships seeking to 
    create new programs or to strengthen existing programs in foreign 
    languages, area studies, and other international fields.
        ``(2) Use of funds.--Grants made under this section may be used 
    for Federal share of the cost of projects and activities which are 
    an integral part of such a program, such as--
            ``(A) planning for the development and expansion of 
        undergraduate programs in international studies and foreign 
        languages;
            ``(B) teaching, research, curriculum development, faculty 
        training in the United States or abroad, and other related 
        activities, including--
                ``(i) the expansion of library and teaching resources; 
            and
                ``(ii) preservice and inservice teacher training;
            ``(C) expansion of opportunities for learning foreign 
        languages, including less commonly taught languages;
            ``(D) programs under which foreign teachers and scholars 
        may visit institutions as visiting faculty;
            ``(E) programs designed to develop or enhance linkages 
        between 2- and 4-year institutions of higher education, or 
        baccalaureate and post-baccalaureate programs or institutions;
            ``(F) the development of undergraduate educational 
        programs--
                ``(i) in locations abroad where such opportunities are 
            not otherwise available or that serve students for whom 
            such opportunities are not otherwise available; and
                ``(ii) that provide courses that are closely related to 
            on-campus foreign language and international curricula;
            ``(G) the integration of new and continuing education 
        abroad opportunities for undergraduate students into curricula 
        of specific degree programs;
            ``(H) the development of model programs to enrich or 
        enhance the effectiveness of educational programs abroad, 
        including predeparture and postreturn programs, and the 
        integration of educational programs abroad into the curriculum 
        of the home institution;
            ``(I) the development of programs designed to integrate 
        professional and technical education with foreign languages, 
        area studies, and other international fields;
            ``(J) the establishment of linkages overseas with 
        institutions of higher education and organizations that 
        contribute to the educational programs assisted under this 
        subsection;
            ``(K) the conduct of summer institutes in foreign area, 
        foreign language, and other international fields to provide 
        faculty and curriculum development, including the integration 
        of professional and technical education with foreign area and 
        other international studies, and to provide foreign area and 
        other international knowledge or skills to government personnel 
        or private sector professionals in international activities;
            ``(L) the development of partnerships between--
                ``(i) institutions of higher education; and
                ``(ii) the private sector, government, or elementary 
            and secondary education institutions,
        in order to enhance international knowledge and skills; and
            ``(M) the use of innovative technology to increase access 
        to international education programs.
        ``(3) Non-federal share.--The non-Federal share of the cost of 
    the programs assisted under this subsection--
            ``(A) may be provided in cash from the private sector 
        corporations or foundations in an amount equal to one-third of 
        the total cost of the programs assisted under this section; or
            ``(B) may be provided as an in-cash or in-kind contribution 
        from institutional and noninstitutional funds, including State 
        and private sector corporation or foundation contributions, 
        equal to one-half of the total cost of the programs assisted 
        under this section.
        ``(4) Special rule.--The Secretary may waive or reduce the 
    required non-Federal share for institutions that--
            ``(A) are eligible to receive assistance under part A or B 
        of title III or under title V; and
            ``(B) have submitted a grant application under this 
        section.
        ``(5) Priority.--In awarding grants under this section, the 
    Secretary shall give priority to applications from institutions of 
    higher education, combinations or partnerships that require 
    entering students to have successfully completed at least 2 years 
    of secondary school foreign language instruction or that require 
    each graduating student to earn 2 years of postsecondary credit in 
    a foreign language (or have demonstrated equivalent competence in 
    the foreign language) or, in the case of a 2-year degree granting 
    institution, offer 2 years of postsecondary credit in a foreign 
    language.
        ``(6) Grant conditions.--Grants under this subsection shall be 
    made on such conditions as the Secretary determines to be necessary 
    to carry out this subsection.
        ``(7) Application.--Each application for assistance under this 
    subsection shall include--
            ``(A) evidence that the applicant has conducted extensive 
        planning prior to submitting the application;
            ``(B) an assurance that the faculty and administrators of 
        all relevant departments and programs served by the applicant 
        are involved in ongoing collaboration with regard to achieving 
        the stated objectives of the application;
            ``(C) an assurance that students at the applicant 
        institutions, as appropriate, will have equal access to, and 
        derive benefits from, the program assisted under this 
        subsection; and
            ``(D) an assurance that each institution, combination or 
        partnership will use the Federal assistance provided under this 
        subsection to supplement and not supplant non-Federal funds the 
        institution expends for programs to improve undergraduate 
        instruction in international studies and foreign languages.
        ``(8) Evaluation.--The Secretary may establish requirements for 
    program evaluations and require grant recipients to submit annual 
    reports that evaluate the progress and performance of students 
    participating in programs assisted under this subsection.
    ``(b) Programs of National Significance.--The Secretary may also 
award grants to public and private nonprofit agencies and 
organizations, including professional and scholarly associations, 
whenever the Secretary determines such grants will make an especially 
significant contribution to improving undergraduate international 
studies and foreign language programs.
    ``(c) Funding Support.--The Secretary may use not more than 10 
percent of the total amount appropriated for this part for carrying out 
the purposes of this section.

``SEC. 605. RESEARCH; STUDIES; ANNUAL REPORT.

    ``(a) Authorized Activities.--The Secretary may, directly or 
through grants or contracts, conduct research and studies that 
contribute to achieving the purposes of this part. Such research and 
studies may include--
        ``(1) studies and surveys to determine needs for increased or 
    improved instruction in foreign language, area studies, or other 
    international fields, including the demand for foreign language, 
    area, and other international specialists in government, education, 
    and the private sector;
        ``(2) studies and surveys to assess the utilization of 
    graduates of programs supported under this title by governmental, 
    educational, and private sector organizations and other studies 
    assessing the outcomes and effectiveness of programs so supported;
        ``(3) evaluation of the extent to which programs assisted under 
    this title that address national needs would not otherwise be 
    offered;
        ``(4) comparative studies of the effectiveness of strategies to 
    provide international capabilities at institutions of higher 
    education;
        ``(5) research on more effective methods of providing 
    instruction and achieving competency in foreign languages, area 
    studies, or other international fields;
        ``(6) the development and publication of specialized materials 
    for use in foreign language, area studies, and other international 
    fields, or for training foreign language, area, and other 
    international specialists;
        ``(7) studies and surveys of the uses of technology in foreign 
    language, area studies, and international studies programs;
        ``(8) studies and evaluations of effective practices in the 
    dissemination of international information, materials, research, 
    teaching strategies, and testing techniques throughout the 
    education community, including elementary and secondary schools; 
    and
        ``(9) the application of performance tests and standards across 
    all areas of foreign language instruction and classroom use.
    ``(b) Annual Report.--The Secretary shall prepare, publish, and 
announce an annual report listing the books and research materials 
produced with assistance under this section.

``SEC. 606. TECHNOLOGICAL INNOVATION AND COOPERATION FOR FOREIGN 
              INFORMATION ACCESS.

    ``(a) Authority.--The Secretary is authorized to make grants to 
institutions of higher education, public or nonprofit private 
libraries, or consortia of such institutions or libraries, to develop 
innovative techniques or programs using new electronic technologies to 
collect, organize, preserve, and widely disseminate information on 
world regions and countries other than the United States that address 
our Nation's teaching and research needs in international education and 
foreign languages.
    ``(b) Authorized Activities.--Grants under this section may be 
used--
        ``(1) to facilitate access to or preserve foreign information 
    resources in print or electronic forms;
        ``(2) to develop new means of immediate, full-text document 
    delivery for information and scholarship from abroad;
        ``(3) to develop new means of shared electronic access to 
    international data;
        ``(4) to support collaborative projects of indexing, 
    cataloging, and other means of bibliographic access for scholars to 
    important research materials published or distributed outside the 
    United States;
        ``(5) to develop methods for the wide dissemination of 
    resources written in non-Roman language alphabets;
        ``(6) to assist teachers of less commonly taught languages in 
    acquiring, via electronic and other means, materials suitable for 
    classroom use; and
        ``(7) to promote collaborative technology based projects in 
    foreign languages, area studies, and international studies among 
    grant recipients under this title.
    ``(c) Application.--Each institution or consortium desiring a grant 
under this section shall submit an application to the Secretary at such 
time, in such manner, and accompanied by such information and 
assurances as the Secretary may reasonably require.
    ``(d) Match Required.--The Federal share of the total cost of 
carrying out a program supported by a grant under this section shall 
not be more than 66\2/3\ percent. The non-Federal share of such cost 
may be provided either in-kind or in cash, and may include 
contributions from private sector corporations or foundations.''.

``SEC. 607. SELECTION OF CERTAIN GRANT RECIPIENTS.

    ``(a) Competitive Grants.--The Secretary shall award grants under 
section 602 competitively on the basis of criteria that separately, but 
not less rigorously, evaluates the applications for comprehensive and 
undergraduate language and area centers and programs.
    ``(b) Selection Criteria.--The Secretary shall set criteria for 
grants awarded under section 602 by which a determination of excellence 
shall be made to meet the differing objectives of graduate and 
undergraduate institutions.
    ``(c) Equitable Distribution of Grants.--The Secretary shall, to 
the extent practicable, award grants under this part (other than 
section 602) in such manner as to achieve an equitable distribution of 
the grant funds throughout the United States, based on the merit of a 
proposal as determined pursuant to a peer review process involving 
broadly representative professionals.

``SEC. 608. EQUITABLE DISTRIBUTION OF CERTAIN FUNDS.

    ``(a) Selection Criteria.--The Secretary shall make excellence the 
criterion for selection of grants awarded under section 602.
    ``(b) Equitable Distribution.--To the extent practicable and 
consistent with the criterion of excellence, the Secretary shall award 
grants under this part (other than section 602) in such a manner as 
will achieve an equitable distribution of funds throughout the United 
States.
    ``(c) Support for Undergraduate Education.--The Secretary shall 
also award grants under this part in such manner as to ensure that an 
appropriate portion of the funds appropriated for this part (as 
determined by the Secretary) are used to support undergraduate 
education.

``SEC. 609. AMERICAN OVERSEAS RESEARCH CENTERS.

    ``(a) Centers Authorized.--The Secretary is authorized to make 
grants to and enter into contracts with any American overseas research 
center that is a consortium of institutions of higher education 
(hereafter in this section referred to as a ``center'') to enable such 
center to promote postgraduate research, exchanges and area studies.
    ``(b) Use of Grants.--Grants made and contracts entered into 
pursuant to this section may be used to pay all or a portion of the 
cost of establishing or operating a center or program, including--
        ``(1) the cost of faculty and staff stipends and salaries;
        ``(2) the cost of faculty, staff, and student travel;
        ``(3) the cost of the operation and maintenance of overseas 
    facilities;
        ``(4) the cost of teaching and research materials;
        ``(5) the cost of acquisition, maintenance, and preservation of 
    library collections;
        ``(6) the cost of bringing visiting scholars and faculty to a 
    center to teach or to conduct research;
        ``(7) the cost of organizing and managing conferences; and
        ``(8) the cost of publication and dissemination of material for 
    the scholarly and general public.
    ``(c) Limitation.--The Secretary shall only award grants to and 
enter into contracts with centers under this section that--
        ``(1) receive more than 50 percent of their funding from public 
    or private United States sources;
        ``(2) have a permanent presence in the country in which the 
    center is located; and
        ``(3) are organizations described in section 501(c)(3) of the 
    Internal Revenue Code of 1986 which are exempt from taxation under 
    section 501(a) of such Code.
    ``(d) Development Grants.--The Secretary is authorized to make 
grants for the establishment of new centers. The grants may be used to 
fund activities that, within 1 year, will result in the creation of a 
center described in subsection (c).

``SEC. 610. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
$80,000,000 for fiscal year 1999, and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.

SEC. 602. BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS.

    (a) Amendment to Heading.--The heading for section 611 (20 U.S.C. 
1130) is amended to read as follows:

``SEC. 611. FINDINGS AND PURPOSES.''.

    (b) Centers.--Section 612 (20 U.S.C. 1130-1) is amended--
        (1) in subsection (c)--
            (A) in paragraph (1)--
                (i) in subparagraph (B), by striking ``advanced''; and
                (ii) in subparagraph (C), by striking ``evening or 
            summer''; and
            (B) in paragraph (2)(C), by inserting ``foreign language 
        studies,'' after ``area studies,''; and
        (2) in subsection (d)(2)(G), by inserting ``, such as a 
    representative of a community college in the region served by the 
    center'' before the period.
    (c) Authorization of Appropriations.--Section 614 (20 U.S.C. 1130b) 
is amended--
        (1) in subsection (a), by striking ``1993'' and inserting 
    ``1999''; and
        (2) in subsection (b), by striking ``1993'' and inserting 
    ``1999''.

SEC. 603. INSTITUTE FOR INTERNATIONAL PUBLIC POLICY.

    (a) Minority Foreign Service Professional Development Program.--
Section 621(e) (20 U.S.C. 1131(e)) is amended by striking ``one-
fourth'' and inserting ``one-half''.
    (b) Institutional Development.--Part C of title VI (20 U.S.C. 1131 
et seq.) is amended--
        (1) by redesignating sections 622 through 627 (20 U.S.C. 1131a 
    through 1131f) as sections 623 through 628, respectively; and
        (2) by inserting after section 621 (20 U.S.C. 1131) the 
    following:

``SEC. 622. INSTITUTIONAL DEVELOPMENT.

    ``(a) In General.--The Institute shall award grants, from amounts 
available to the Institute for each fiscal year, to historically Black 
colleges and universities, Hispanic-serving institutions, Tribally 
Controlled Colleges or Universities, and minority institutions, to 
enable such colleges, universities, and institutions to strengthen 
international affairs programs.
    ``(b) Application.--No grant may be made by the Institute unless an 
application is made by the college, university, or institution at such 
time, in such manner, and accompanied by such information as the 
Institute may require.
    ``(c) Definitions.--In this section--
        ``(1) the term `historically Black college and university' has 
    the meaning given the term in section 322;
        ``(2) the term `Hispanic-serving institution' has the meaning 
    given the term in section 502;
        ``(3) the term `Tribally Controlled College or University' has 
    the meaning given the term in section 2 of the Tribally Controlled 
    College or University Assistance Act of 1978 (25 U.S.C. 1801); and
        ``(4) the term `minority institution' has the meaning given the 
    term in section 365.''.
    (c) Study Abroad Program.--Section 623 (as redesignated by 
subsection(b)(1)) (20 U.S.C. 1131a)--
        (1) in the section heading, by striking ``junior year'' and 
    inserting ``study'';
        (2) in subsection (b)(2)--
            (A) by inserting ``, or completing the third year of study 
        in the case of a summer abroad program,'' after ``study''; and
            (B) by striking ``junior year'' and inserting ``study''; 
        and
        (3) in subsection (c)--
            (A) in the matter preceding paragraph (1), by striking 
        ``junior year'' and inserting ``study'';
            (B) in paragraph (1), by striking ``junior year'' and 
        inserting ``study''; and
            (C) in paragraph (2)--
                (i) by striking ``one-half'' and inserting ``one-
            third''; and
                (ii) by striking ``junior year'' and inserting 
            ``study''.
    (d) Internships.--Section 625 (as redesignated by subsection 
(b)(1)) (20 U.S.C. 1132c)--
        (1) by striking ``The Institute'' and inserting ``(a) In 
    General.--The Institute''; and
        (2) by adding at the end the following:
    ``(b) Postbaccalaureate Internships.--The Institute shall enter 
into agreements with institutions of higher education described in the 
first sentence of subsection (a) to conduct internships for students 
who have completed study for a baccalaureate degree. The internship 
program authorized by this subsection shall--
        ``(1) assist the students to prepare for a master's degree 
    program;
        ``(2) be carried out with the assistance of the Woodrow Wilson 
    International Center for Scholars;
        ``(3) contain work experience for the students designed to 
    contribute to the students' preparation for a master's degree 
    program; and
        ``(4) be assisted by the Interagency Committee on Minority 
    Careers in International Affairs established under subsection (c).
    ``(c) Interagency Committee on Minority Careers in International 
Affairs.--
        ``(1) Establishment.--There is established in the executive 
    branch of the Federal Government an Interagency Committee on 
    Minority Careers in International Affairs composed of not less than 
    7 members, including--
            ``(A) the Under Secretary for Farm and Foreign Agricultural 
        Services of the Department of Agriculture, or the Under 
        Secretary's designee;
            ``(B) the Assistant Secretary and Director General, of the 
        United States and Foreign Commercial Service of the Department 
        of Commerce, or the Assistant Secretary and Director General's 
        designee;
            ``(C) the Under Secretary of Defense for Personnel and 
        Readiness of the Department of Defense, or the Under 
        Secretary's designee;
            ``(D) the Assistant Secretary for Postsecondary Education 
        in the Department of Education, or the Assistant Secretary's 
        designee;
            ``(E) the Director General of the Foreign Service of the 
        Department of State, or the Director General's designee;
            ``(F) the General Counsel of the Agency for International 
        Development, or the General Counsel's designee; and
            ``(G) the Associate Director for Educational and Cultural 
        Affairs of the United States Information Agency, or the 
        Associate Director's designee.
        ``(2) Functions.--The Interagency Committee established by this 
    section shall--
            ``(A) on an annual basis inform the Secretary and the 
        Institute regarding ways to advise students participating in 
        the internship program assisted under this section with respect 
        to goals for careers in international affairs;
            ``(B) locate for students potential internship 
        opportunities in the Federal Government related to 
        international affairs; and
            ``(C) promote policies in each department and agency 
        participating in the Committee that are designed to carry out 
        the objectives of this part.''.
    (f) Conforming Amendment.--Section 627 (as redesignated by 
subsection (b)(1)) (20 U.S.C. 1131e) is amended by striking ``625'' and 
inserting ``626''.
    (g) Authorization of Appropriations.--Section 628 (as redesignated 
by subsection (b)(1)) (20 U.S.C. 1131f), by striking ``1993'' and 
inserting ``1999''.

SEC. 604. GENERAL PROVISIONS.

    (a) Definitions.--Section 631(a) (20 U.S.C. 1132(a)) is amended--
        (1) by striking ``and'' at the end of paragraph (7);
        (2) by striking the period at the end of paragraph (8) and 
    inserting ``; and''; and
        (3) by inserting after paragraph (8) the following:
        ``(9) the term `educational programs abroad' means programs of 
    study, internships, or service learning outside the United States 
    which are part of a foreign language or other international 
    curriculum at the undergraduate or graduate education levels.''.
    (b) Repeal.--Section 632 (20 U.S.C. 1132-1) is repealed.

       TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

SEC. 701. REVISION OF TITLE VII.

    Title VII (20 U.S.C. 1132a et seq.) is amended to read as follows:

      ``TITLE VII--GRADUATE AND POSTSECONDARY IMPROVEMENT PROGRAMS

``SEC. 700. PURPOSE.

    ``It is the purpose of this title--
        ``(1) to authorize national graduate fellowship programs--
            ``(A) in order to attract students of superior ability and 
        achievement, exceptional promise, and demonstrated financial 
        need, into high-quality graduate programs and provide the 
        students with the financial support necessary to complete 
        advanced degrees; and
            ``(B) that are designed to--
                ``(i) sustain and enhance the capacity for graduate 
            education in areas of national need; and
                ``(ii) encourage talented students to pursue scholarly 
            careers in the humanities, social sciences, and the arts; 
            and
        ``(2) to promote postsecondary programs.

                 ``PART A--GRADUATE EDUCATION PROGRAMS

            ``Subpart 1--Jacob K. Javits Fellowship Program

``SEC. 701. AWARD OF JACOB K. JAVITS FELLOWSHIPS.

    ``(a) Authority and Timing of Awards.--The Secretary is authorized 
to award fellowships in accordance with the provisions of this subpart 
for graduate study in the arts, humanities, and social sciences by 
students of superior ability selected on the basis of demonstrated 
achievement, financial need, and exceptional promise. The fellowships 
shall be awarded to students who are eligible to receive any grant, 
loan, or work assistance pursuant to section 484 and intend to pursue a 
doctoral degree, except that fellowships may be granted to students 
pursuing a master's degree in those fields in which the master's degree 
is the terminal highest degree awarded in the area of study. All funds 
appropriated in a fiscal year shall be obligated and expended to the 
students for fellowships for use in the academic year beginning after 
July 1 of the fiscal year following the fiscal year for which the funds 
were appropriated. The fellowships shall be awarded for only 1 academic 
year of study and shall be renewable for a period not to exceed 4 years 
of study.
    ``(b) Designation of Fellows.--Students receiving awards under this 
subpart shall be known as `Jacob K. Javits Fellows'.
    ``(c) Interruptions of Study.--The institution of higher education 
may allow a fellowship recipient to interrupt periods of study for a 
period not to exceed 12 months for the purpose of work, travel, or 
independent study away from the campus, if such independent study is 
supportive of the fellowship recipient's academic program and shall 
continue payments for those 12-month periods during which the student 
is pursuing travel or independent study supportive of the recipient's 
academic program.
    ``(d) Process and Timing of Competition.--The Secretary shall make 
applications for fellowships under this part available not later than 
October 1 of the academic year preceding the academic year for which 
fellowships will be awarded, and shall announce the recipients of 
fellowships under this section not later than March 1 of the academic 
year preceding the academic year for which the fellowships are awarded.
    ``(e) Authority To Contract.--The Secretary is authorized to enter 
into a contract with a nongovernmental agency to administer the program 
assisted under this part if the Secretary determines that entering into 
the contract is an efficient means of carrying out the program.

``SEC. 702. ALLOCATION OF FELLOWSHIPS.

    ``(a) Fellowship Board.--
        ``(1) Appointment.--The Secretary shall appoint a Jacob K. 
    Javits Fellows Program Fellowship Board (hereinafter in this 
    subpart referred to as the `Board') consisting of 9 individuals 
    representative of both public and private institutions of higher 
    education who are especially qualified to serve on the Board. In 
    making appointments, the Secretary shall give due consideration to 
    the appointment of individuals who are highly respected in the 
    academic community. The Secretary shall assure that individuals 
    appointed to the Board are broadly representative of a range of 
    disciplines in graduate education in arts, humanities, and social 
    sciences.
        ``(2) Duties.--The Board shall--
            ``(A) establish general policies for the program 
        established by this subpart and oversee the program's 
        operation;
            ``(B) establish general criteria for the award of 
        fellowships in academic fields identified by the Board, or, in 
        the event that the Secretary enters into a contract with a 
        nongovernmental entity to administer the program assisted under 
        this subpart, by such nongovernmental entity;
            ``(C) appoint panels of academic scholars with 
        distinguished backgrounds in the arts, humanities, and social 
        sciences for the purpose of selecting fellows, except that, in 
        the event that the Secretary enters into a contract with a 
        nongovernmental entity to administer the program, such panels 
        may be appointed by such nongovernmental entity; and
            ``(D) prepare and submit to the Congress at least once in 
        every 3-year period a report on any modifications in the 
        program that the Board determines are appropriate.
        ``(3) Consultations.--In carrying out its responsibilities, the 
    Board shall consult on a regular basis with representatives of the 
    National Science Foundation, the National Endowment for the 
    Humanities, the National Endowment for the Arts, and 
    representatives of institutions of higher education and 
    associations of such institutions, learned societies, and 
    professional organizations.
        ``(4) Term.--The term of office of each member of the Board 
    shall be 4 years, except that any member appointed to fill a 
    vacancy shall serve for the remainder of the term for which the 
    predecessor of the member was appointed. No member may serve for a 
    period in excess of 6 years.
        ``(5) Initial meeting; vacancy.--The Secretary shall call the 
    first meeting of the Board, at which the first order of business 
    shall be the election of a Chairperson and a Vice Chairperson, who 
    shall serve until 1 year after the date of the appointment of the 
    Chairperson and Vice Chairperson. Thereafter each officer shall be 
    elected for a term of 2 years. In case a vacancy occurs in either 
    office, the Board shall elect an individual from among the members 
    of the Board to fill such vacancy.
        ``(6) Quorum; additional meetings.--(A) A majority of the 
    members of the Board shall constitute a quorum.
        ``(B) The Board shall meet at least once a year or more 
    frequently, as may be necessary, to carry out the Board's 
    responsibilities.
        ``(7) Compensation.--Members of the Board, while serving on the 
    business of the Board, shall be entitled to receive compensation at 
    rates fixed by the Secretary, but not exceeding the rate of basic 
    pay payable for level IV of the Executive Schedule, including 
    travel time, and while so serving away from their homes or regular 
    places of business, the members may be allowed travel expenses, 
    including per diem in lieu of subsistence, as authorized by section 
    5703 of title 5, United States Code, for persons in Government 
    service employed intermittently.
    ``(b) Use of Selection Panels.--The recipients of fellowships shall 
be selected in each designated field from among all applicants 
nationwide in each field by distinguished panels appointed by the Board 
to make such selections under criteria established by the Board, except 
that, in the event that the Secretary enters into a contract with a 
nongovernmental entity to administer the program, such panels may be 
appointed by such nongovernmental entity. The number of recipients in 
each field in each year shall not exceed the number of fellows 
allocated to that field for that year by the Board.
    ``(c) Fellowship Portability.--Each recipient shall be entitled to 
use the fellowship in a graduate program at any accredited institution 
of higher education in which the recipient may decide to enroll.

``SEC. 703. STIPENDS.

    ``(a) Award by Secretary.--The Secretary shall pay to individuals 
awarded fellowships under this subpart such stipends as the Secretary 
may establish, reflecting the purpose of this program to encourage 
highly talented students to undertake graduate study as described in 
this subpart. In the case of an individual who receives such 
individual's first stipend under this subpart in academic year 1999-
2000 or any succeeding academic year, such stipend shall be set at a 
level of support equal to that provided by the National Science 
Foundation graduate fellowships, except such amount shall be adjusted 
as necessary so as not to exceed the fellow's demonstrated level of 
need determined in accordance with part F of title IV.
    ``(b) Institutional Payments.--
        ``(1) In general.--(A) The Secretary shall (in addition to 
    stipends paid to individuals under this subpart) pay to the 
    institution of higher education, for each individual awarded a 
    fellowship under this subpart at such institution, an institutional 
    allowance. Except as provided in subparagraph (B), such allowance 
    shall be, for 1999-2000 and succeeding academic years, the same 
    amount as the institutional payment made for 1998-1999 under 
    section 933(b) (as such section was in effect on the day before the 
    date of enactment of the Higher Education Amendments of 1998) 
    adjusted for 1999-2000 and annually thereafter in accordance with 
    inflation as determined by the Department of Labor's Consumer Price 
    Index for the previous calendar year.
        ``(B) The institutional allowance paid under subparagraph (A) 
    shall be reduced by the amount the institution charges and collects 
    from a fellowship recipient for tuition and other expenses as part 
    of the recipient's instructional program.
        ``(2) Special rules.--(A) Beginning March 1, 1992, any 
    applicant for a fellowship under this subpart who has been notified 
    in writing by the Secretary that such applicant has been selected 
    to receive such a fellowship and is subsequently notified that the 
    fellowship award has been withdrawn, shall receive such fellowship 
    unless the Secretary subsequently makes a determination that such 
    applicant submitted fraudulent information on the application.
        ``(B) Subject to the availability of appropriations, amounts 
    payable to an institution by the Secretary pursuant to this 
    subsection shall not be reduced for any purpose other than the 
    purposes specified under paragraph (1).

``SEC. 704. FELLOWSHIP CONDITIONS.

    ``(a) Requirements for Receipt.--An individual awarded a fellowship 
under the provisions of this subpart shall continue to receive payments 
provided in section 703 only during such periods as the Secretary finds 
that such individual is maintaining satisfactory proficiency in, and 
devoting essentially full time to, study or research in the field in 
which such fellowship was awarded, in an institution of higher 
education, and is not engaging in gainful employment other than part-
time employment by such institution in teaching, research, or similar 
activities, approved by the Secretary.
    ``(b) Reports From Recipients.--The Secretary is authorized to 
require reports containing such information in such form and filed at 
such times as the Secretary determines necessary from any person 
awarded a fellowship under the provisions of this subpart. The reports 
shall be accompanied by a certificate from an appropriate official at 
the institution of higher education, library, archive, or other 
research center approved by the Secretary, stating that such individual 
is making satisfactory progress in, and is devoting essentially full 
time to the program for which the fellowship was awarded.

``SEC. 705. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $30,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years to carry out this subpart.

       ``Subpart 2--Graduate Assistance in Areas of National Need

``SEC. 711. GRANTS TO ACADEMIC DEPARTMENTS AND PROGRAMS OF 
              INSTITUTIONS.

    ``(a) Grant Authority.--
        ``(1) In general.--The Secretary shall make grants to academic 
    departments, programs and other academic units of institutions of 
    higher education that provide courses of study leading to a 
    graduate degree in order to enable such institutions to provide 
    assistance to graduate students in accordance with this subpart.
        ``(2) Additional grants.--The Secretary may also make grants to 
    such departments, programs and other academic units of institutions 
    of higher education granting graduate degrees which submit joint 
    proposals involving nondegree granting institutions which have 
    formal arrangements for the support of doctoral dissertation 
    research with degree-granting institutions. Nondegree granting 
    institutions eligible for awards as part of such joint proposals 
    include any organization which--
            ``(A) is described in section 501(c)(3) of the Internal 
        Revenue Code of 1986, and is exempt from tax under section 
        501(a) of such Code;
            ``(B) is organized and operated substantially to conduct 
        scientific and cultural research and graduate training 
        programs;
            ``(C) is not a private foundation;
            ``(D) has academic personnel for instruction and counseling 
        who meet the standards of the institution of higher education 
        in which the students are enrolled; and
            ``(E) has necessary research resources not otherwise 
        readily available in such institutions to such students.
    ``(b) Award and Duration of Grants.--
        ``(1) Awards.--The principal criterion for the award of grants 
    shall be the relative quality of the graduate programs presented in 
    competing applications. Consistent with an allocation of awards 
    based on quality of competing applications, the Secretary shall, in 
    awarding such grants, promote an equitable geographic distribution 
    among eligible public and private institutions of higher education.
        ``(2)Duration and Amount.--
            ``(A) Duration.--The Secretary shall award a grant under 
        this subpart for a period of 3 years.
            ``(B) Amount.--The Secretary shall award a grant to an 
        academic department, program or unit of an institution of 
        higher education under this subpart for a fiscal year in an 
        amount that is not less than $100,000 and not greater than 
        $750,000.
        ``(3) Reallotment.--Whenever the Secretary determines that an 
    academic department, program or unit of an institution of higher 
    education is unable to use all of the amounts available to the 
    department, program or unit under this subpart, the Secretary 
    shall, on such dates during each fiscal year as the Secretary may 
    fix, reallot the amounts not needed to academic departments, 
    programs and units of institutions which can use the grants 
    authorized by this subpart.
    ``(c) Preference To Continuing Grant Recipients.--
        ``(1) In general.--The Secretary shall make new grant awards 
    under this subpart only to the extent that each previous grant 
    recipient under this subpart has received continued funding in 
    accordance with subsection (b)(2)(A).
        ``(2) Ratable reduction.--To the extent that appropriations 
    under this subpart are insufficient to comply with paragraph (1), 
    available funds shall be distributed by ratably reducing the 
    amounts required to be awarded under subsection (b)(2)(A).

``SEC. 712. INSTITUTIONAL ELIGIBILITY.

    ``(a) Eligibility Criteria.--Any academic department, program or 
unit of an institution of higher education that offers a program of 
postbaccalaureate study leading to a graduate degree in an area of 
national need (as designated under subsection (b)) may apply for a 
grant under this subpart. No department, program or unit shall be 
eligible for a grant unless the program of postbaccalaureate study has 
been in existence for at least 4 years at the time of application for 
assistance under this subpart.
    ``(b) Designation of Areas of National Need.--After consultation 
with appropriate Federal and nonprofit agencies and organizations, the 
Secretary shall designate areas of national need. In making such 
designations, the Secretary shall take into account the extent to which 
the interest in the area is compelling, the extent to which other 
Federal programs support postbaccalaureate study in the area concerned, 
and an assessment of how the program could achieve the most significant 
impact with available resources.

``SEC. 713. CRITERIA FOR APPLICATIONS.

    ``(a) Selection of Applications.--The Secretary shall make grants 
to academic departments, programs and units of institutions of higher 
education on the basis of applications submitted in accordance with 
subsection (b). Applications shall be ranked on program quality by 
review panels of nationally recognized scholars and evaluated on the 
quality and effectiveness of the academic program and the achievement 
and promise of the students to be served. To the extent possible 
(consistent with other provisions of this section), the Secretary shall 
make awards that are consistent with recommendations of the review 
panels.
    ``(b) Contents of Applications.--An academic department, program or 
unit of an institution of higher education, in the department, program 
or unit's application for a grant, shall--
        ``(1) describe the current academic program of the applicant 
    for which the grant is sought;
        ``(2) provide assurances that the applicant will provide, from 
    other non-Federal sources, for the purposes of the fellowship 
    program under this subpart an amount equal to at least 25 percent 
    of the amount of the grant received under this subpart, which 
    contribution may be in cash or in kind, fairly valued;
        ``(3) set forth policies and procedures to assure that, in 
    making fellowship awards under this subpart, the institution will 
    seek talented students from traditionally underrepresented 
    backgrounds, as determined by the Secretary;
        ``(4) describe the number, types, and amounts of the 
    fellowships that the applicant intends to offer with grant funds 
    provided under this part;
        ``(5) set forth policies and procedures to assure that, in 
    making fellowship awards under this subpart, the institution will 
    make awards to individuals who--
            ``(A) have financial need, as determined under part F of 
        title IV;
            ``(B) have excellent academic records in their previous 
        programs of study; and
            ``(C) plan to pursue the highest possible degree available 
        in their course of study;
        ``(6) set forth policies and procedures to ensure that Federal 
    funds made available under this subpart for any fiscal year will be 
    used to supplement and, to the extent practical, increase the funds 
    that would otherwise be made available for the purpose of this 
    subpart and in no case to supplant those funds;
        ``(7) provide assurances that, in the event that funds made 
    available to the academic department, program or unit under this 
    subpart are insufficient to provide the assistance due a student 
    under the commitment entered into between the academic department, 
    program or unit and the student, the academic department, program 
    or unit will, from any funds available to the department, program 
    or unit, fulfill the commitment to the student;
        ``(8) provide that the applicant will comply with the 
    limitations set forth in section 715;
        ``(9) provide assurances that the academic department will 
    provide at least 1 year of supervised training in instruction for 
    students; and
        ``(10) include such other information as the Secretary may 
    prescribe.

``SEC. 714. AWARDS TO GRADUATE STUDENTS.

    ``(a) Commitments to Graduate Students.--
        ``(1) In general.--An academic department, program or unit of 
    an institution of higher education shall make commitments to 
    graduate students who are eligible students under section 484 
    (including students pursuing a doctoral degree after having 
    completed a master's degree program at an institution of higher 
    education) at any point in their graduate study to provide stipends 
    for the length of time necessary for a student to complete the 
    course of graduate study, but in no case longer than 5 years.
        ``(2) Special rule.--No such commitments shall be made to 
    students under this subpart unless the academic department, program 
    or unit has determined adequate funds are available to fulfill the 
    commitment from funds received or anticipated under this subpart, 
    or from institutional funds.
    ``(b) Amount of Stipends.--The Secretary shall make payments to 
institutions of higher education for the purpose of paying stipends to 
individuals who are awarded fellowships under this subpart. The 
stipends the Secretary establishes shall reflect the purpose of the 
program under this subpart to encourage highly talented students to 
undertake graduate study as described in this subpart. In the case of 
an individual who receives such individual's first stipend under this 
subpart in academic year 1999-2000 or any succeeding academic year, 
such stipend shall be set at a level of support equal to that provided 
by the National Science Foundation graduate fellowships, except such 
amount shall be adjusted as necessary so as not to exceed the fellow's 
demonstrated level of need as determined under part F of title IV.
    ``(c) Treatment of Institutional Payments.--An institution of 
higher education that makes institutional payments for tuition and fees 
on behalf of individuals supported by fellowships under this subpart in 
amounts that exceed the institutional payments made by the Secretary 
pursuant to section 716(a) may count such excess toward the amounts the 
institution is required to provide pursuant to section 714(b)(2).
    ``(d) Academic Progress Required.--Notwithstanding the provisions 
of subsection (a), no student shall receive an award--
        ``(1) except during periods in which such student is 
    maintaining satisfactory progress in, and devoting essentially full 
    time to, study or research in the field in which such fellowship 
    was awarded; or
        ``(2) if the student is engaging in gainful employment other 
    than part-time employment involved in teaching, research, or 
    similar activities determined by the institution to be in support 
    of the student's progress towards a degree.

``SEC. 715. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION.

    ``(a) Institutional Payments.--
        ``(1) In general.--The Secretary shall (in addition to stipends 
    paid to individuals under this subpart) pay to the institution of 
    higher education, for each individual awarded a fellowship under 
    this subpart at such institution, an institutional allowance. 
    Except as provided in paragraph (2), such allowance shall be, for 
    1999-2000 and succeeding academic years, the same amount as the 
    institutional payment made for 1998-1999 adjusted annually 
    thereafter in accordance with inflation as determined by the 
    Department of Labor's Consumer Price Index for the previous 
    calendar year.
        ``(2) Reduction.--The institutional allowance paid under 
    paragraph (1) shall be reduced by the amount the institution 
    charges and collects from a fellowship recipient for tuition and 
    other expenses as part of the recipient's instructional program.
    ``(b) Use for Overhead Prohibited.--Funds made available pursuant 
to this subpart may not be used for the general operational overhead of 
the academic department or program.

``SEC. 716. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $35,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years to carry out this subpart.

  ``Subpart 3--Thurgood Marshall Legal Educational Opportunity Program

``SEC. 721. LEGAL EDUCATIONAL OPPORTUNITY PROGRAM.

    ``(a) Program Authority.--The Secretary shall carry out a program 
to be known as the `Thurgood Marshall Legal Educational Opportunity 
Program' designed to provide low-income, minority, or disadvantaged 
college students with the information, preparation, and financial 
assistance to gain access to and complete law school study.
    ``(b) Eligibility.--A college student is eligible for assistance 
under this section if the student is--
        ``(1) from a low-income family;
        ``(2) a minority; or
        ``(3) from an economically or otherwise disadvantaged 
    background.
    ``(c) Contract or Grant Authorized.--The Secretary is authorized to 
enter into a contract with, or make a grant to, the Council on Legal 
Education Opportunity, for a period of not less than 5 years--
        ``(1) to identify college students who are from low-income 
    families, are minorities, or are from disadvantaged backgrounds 
    described in subsection (b)(3);
        ``(2) to prepare such students for study at accredited law 
    schools;
        ``(3) to assist such students to select the appropriate law 
    school, make application for entry into law school, and receive 
    financial assistance for such study;
        ``(4) to provide support services to such students who are 
    first-year law students to improve retention and success in law 
    school studies; and
        ``(5) to motivate and prepare such students with respect to law 
    school studies and practice in low-income communities.
    ``(d) Services Provided.--In carrying out the purposes described in 
subsection (c), the contract or grant shall provide for the delivery of 
services through prelaw information resource centers, summer 
institutes, midyear seminars, and other educational activities, 
conducted under this section. Such services may include--
        ``(1) information and counseling regarding--
            ``(A) accredited law school academic programs, especially 
        tuition, fees, and admission requirements;
            ``(B) course work offered and required for graduation;
            ``(C) faculty specialties and areas of legal emphasis; and
            ``(D) undergraduate preparatory courses and curriculum 
        selection;
        ``(2) tutoring and academic counseling, including assistance in 
    preparing for bar examinations;
        ``(3) prelaw mentoring programs, involving law school faculty, 
    members of State and local bar associations, and retired and 
    sitting judges, justices, and magistrates;
        ``(4) assistance in identifying preparatory courses and 
    material for the law school aptitude or admissions tests;
        ``(5) summer institutes for Thurgood Marshall Fellows that 
    expose the Fellows to a rigorous curriculum that emphasizes 
    abstract thinking, legal analysis, research, writing, and 
    examination techniques; and
        ``(6) midyear seminars and other educational activities that 
    are designed to reinforce reading, writing, and studying skills of 
    Thurgood Marshall Fellows.
    ``(e) Duration of the Provision of Services.--The services 
described in subsection (d) may be provided--
        ``(1) prior to the period of law school study;
        ``(2) during the period of law school study; and
        ``(3) during the period following law school study and prior to 
    taking a bar examination.
    ``(f) Subcontracts and Subgrants.--For the purposes of planning, 
developing, or delivering one or more of the services described in 
subsection (d), the Council on Legal Education Opportunity shall enter 
into subcontracts with, and make subgrants to, institutions of higher 
education, law schools, public and private agencies and organizations, 
and combinations of such institutions, schools, agencies, and 
organizations.
    ``(g) Stipends.--The Secretary shall annually establish the maximum 
stipend to be paid (including allowances for participant travel and for 
the travel of the dependents of the participant) to Thurgood Marshall 
Fellows for the period of participation in summer institutes and 
midyear seminars. A Fellow may be eligible for such a stipend only if 
the Thurgood Marshall Fellow maintains satisfactory academic progress 
toward the Juris Doctor or Bachelor of Laws degree, as determined by 
the respective institutions.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $5,000,000 for fiscal year 1999 
and each of the 4 succeeding fiscal years.

                    ``Subpart 4--General Provisions

``SEC. 731. ADMINISTRATIVE PROVISIONS FOR SUBPARTS 1, 2, AND 3.

    ``(a) Coordinated Administration.--In carrying out the purpose 
described in section 700(1), the Secretary shall provide for 
coordinated administration and regulation of graduate programs assisted 
under subparts 1, 2, and 3 with other Federal programs providing 
assistance for graduate education in order to minimize duplication and 
improve efficiency to ensure that the programs are carried out in a 
manner most compatible with academic practices and with the standard 
timetables for applications for, and notifications of acceptance to, 
graduate programs.
    ``(b) Hiring Authority.--For purposes of carrying out subparts 1, 
2, and 3, the Secretary shall appoint, without regard to the provisions 
of title 5, United States Code, that govern appointments in the 
competitive service, such administrative and technical employees, with 
the appropriate educational background, as shall be needed to assist in 
the administration of such parts. The employees shall be paid without 
regard to the provisions of chapter 51 and subchapter III of chapter 53 
of such title relating to classification and General Schedule pay 
rates.
    ``(c) Use for Religious Purposes Prohibited.--No institutional 
payment or allowance under section 703(b) or 715(a) shall be paid to a 
school or department of divinity as a result of the award of a 
fellowship under subpart 1 or 2, respectively, to an individual who is 
studying for a religious vocation.
    ``(d) Evaluation.--The Secretary shall evaluate the success of 
assistance provided to individuals under subpart 1, 2, or 3 with 
respect to graduating from their degree programs, and placement in 
faculty and professional positions.
    ``(e) Continuation Awards.--The Secretary, using funds appropriated 
to carry out subparts 1 and 2, and before awarding any assistance under 
such parts to a recipient that did not receive assistance under part C 
or D of title IX (as such parts were in effect prior to the date of 
enactment of the Higher Education Amendments of 1998) shall continue to 
provide funding to recipients of assistance under such part C or D (as 
so in effect), as the case may be, pursuant to any multiyear award of 
such assistance.

     ``PART B--FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION

``SEC. 741. FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION.

    ``(a) Authority.--The Secretary is authorized to make grants to, or 
enter into contracts with, institutions of higher education, 
combinations of such institutions, and other public and private 
nonprofit institutions and agencies, to enable such institutions, 
combinations, and agencies to improve postsecondary education 
opportunities by--
        ``(1) encouraging the reform, innovation, and improvement of 
    postsecondary education, and providing equal educational 
    opportunity for all;
        ``(2) the creation of institutions, programs, and joint efforts 
    involving paths to career and professional training, and 
    combinations of academic and experiential learning;
        ``(3) the establishment of institutions and programs based on 
    the technology of communications;
        ``(4) the carrying out, in postsecondary educational 
    institutions, of changes in internal structure and operations 
    designed to clarify institutional priorities and purposes;
        ``(5) the design and introduction of cost-effective methods of 
    instruction and operation;
        ``(6) the introduction of institutional reforms designed to 
    expand individual opportunities for entering and reentering 
    institutions and pursuing programs of study tailored to individual 
    needs;
        ``(7) the introduction of reforms in graduate education, in the 
    structure of academic professions, and in the recruitment and 
    retention of faculties; and
        ``(8) the creation of new institutions and programs for 
    examining and awarding credentials to individuals, and the 
    introduction of reforms in current institutional practices related 
    thereto.
    ``(b) Planning Grants.--The Secretary is authorized to make 
planning grants to institutions of higher education for the development 
and testing of innovative techniques in postsecondary education. Such 
grants shall not exceed $20,000.

``SEC. 742. BOARD OF THE FUND FOR THE IMPROVEMENT OF POSTSECONDARY 
              EDUCATION.

    ``(a) Establishment.--There is established a National Board of the 
Fund for the Improvement of Postsecondary Education (in this part 
referred to as the `Board'). The Board shall consist of 15 members 
appointed by the Secretary for overlapping 3-year terms. A majority of 
the Board shall constitute a quorum. Any member of the Board who has 
served for 6 consecutive years shall thereafter be ineligible for 
appointment to the Board during a 2-year period following the 
expiration of such sixth year.
    ``(b) Membership.--
        ``(1) In general.--The Secretary shall designate one of the 
    members of the Board as Chairperson of the Board. A majority of the 
    members of the Board shall be public interest representatives, 
    including students, and a minority shall be educational 
    representatives. All members selected shall be individuals able to 
    contribute an important perspective on priorities for improvement 
    in postsecondary education and strategies of educational and 
    institutional change.
        ``(2) Appointment of director.--The Secretary shall appoint the 
    Director of the Fund for the Improvement of Postsecondary Education 
    (hereafter in this part referred to as the `Director').
    ``(c) Duties.--The Board shall--
        ``(1) advise the Secretary and the Director on priorities for 
    the improvement of postsecondary education and make such 
    recommendations as the Board may deem appropriate for the 
    improvement of postsecondary education and for the evaluation, 
    dissemination, and adaptation of demonstrated improvements in 
    postsecondary educational practice;
        ``(2) advise the Secretary and the Director on the operation of 
    the Fund for the Improvement of Postsecondary Education, including 
    advice on planning documents, guidelines, and procedures for grant 
    competitions prepared by the Fund; and
        ``(3) meet at the call of the Chairperson, except that the 
    Board shall meet whenever one-third or more of the members request 
    in writing that a meeting be held.
    ``(d) Information and Assistance.--The Director shall make 
available to the Board such information and assistance as may be 
necessary to enable the Board to carry out its functions.

``SEC. 743. ADMINISTRATIVE PROVISIONS.

    ``(a) Technical Employees.--The Secretary may appoint, for terms 
not to exceed 3 years, without regard to the provisions of title 5, 
United States Code, governing appointments in the competitive service, 
not more than 7 technical employees to administer this part who may be 
paid without regard to the provisions of chapter 51 and subchapter III 
of chapter 53 of such title relating to classification and General 
Schedule pay rates.
    ``(b) Procedures.--The Director shall establish procedures for 
reviewing and evaluating grants and contracts made or entered into 
under this part. Procedures for reviewing grant applications or 
contracts for financial assistance under this section may not be 
subject to any review outside of officials responsible for the 
administration of the Fund for the Improvement of Postsecondary 
Education.

``SEC. 744. SPECIAL PROJECTS.

    ``(a) Grant Authority.--The Director is authorized to make grants 
to institutions of higher education, or consortia thereof, and such 
other public agencies and nonprofit organizations as the Director deems 
necessary for innovative projects concerning one or more areas of 
particular national need identified by the Director.
    ``(b) Application.--No grant shall be made under this part unless 
an application is made at such time, in such manner, and contains or is 
accompanied by such information as the Secretary may require.
    ``(c) Areas of National Need.--Areas of national need shall 
initially include, but shall not be limited to, the following:
        ``(1) Institutional restructuring to improve learning and 
    promote productivity, efficiency, quality improvement, and cost and 
    price control.
        ``(2) Articulation between 2- and 4-year institutions of higher 
    education, including developing innovative methods for ensuring the 
    successful transfer of students from 2- to 4-year institutions of 
    higher education.
        ``(3) Evaluation and dissemination of model programs.
        ``(4) International cooperation and student exchange among 
    postsecondary educational institutions.

``SEC. 745. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
$30,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.

                   ``PART C--URBAN COMMUNITY SERVICE

``SEC. 751. FINDINGS.

    ``The Congress finds that--
        ``(1) the Nation's urban centers are facing increasingly 
    pressing problems and needs in the areas of economic development, 
    community infrastructure and service, social policy, public health, 
    housing, crime, education, environmental concerns, planning and 
    work force preparation;
        ``(2) there are, in the Nation's urban institutions, people 
    with underutilized skills, knowledge, and experience who are 
    capable of providing a vast range of services toward the 
    amelioration of the problems described in paragraph (1);
        ``(3) the skills, knowledge and experience in these urban 
    institutions, if applied in a systematic and sustained manner, can 
    make a significant contribution to the solution of such problems; 
    and
        ``(4) the application of such skills, knowledge and experience 
    is hindered by the limited funds available to redirect attention to 
    solutions to such urban problems.

``SEC. 752. PURPOSE; PROGRAM AUTHORIZED.

    ``(a) Purpose.--It is the purpose of this part to provide 
incentives to urban academic institutions to enable such institutions 
to work with private and civic organizations to devise and implement 
solutions to pressing and severe problems in their communities.
    ``(b) Program Authorized.--The Secretary is authorized to carry out 
a program of providing assistance to eligible institutions to enable 
such institutions to carry out the activities described in section 754 
in accordance with the provisions of this part.

``SEC. 753. APPLICATION FOR URBAN COMMUNITY SERVICE GRANTS.

    ``(a) Application.--
        ``(1) In general.--An eligible institution seeking assistance 
    under this part shall submit to the Secretary an application at 
    such time, in such form, and containing or accompanied by such 
    information and assurances as the Secretary may require by 
    regulation.
        ``(2) Contents.--Each application submitted pursuant to 
    paragraph (1) shall--
            ``(A) describe the activities and services for which 
        assistance is sought; and
            ``(B) include a plan that is agreed to by the members of a 
        consortium that includes, in addition to the eligible 
        institution, one or more of the following entities:
                ``(i) A community college.
                ``(ii) An urban school system.
                ``(iii) A local government.
                ``(iv) A business or other employer.
                ``(v) A nonprofit institution.
        ``(3) Waiver.--The Secretary may waive the consortium 
    requirements described in paragraph (2) for any applicant who can 
    demonstrate to the satisfaction of the Secretary that the applicant 
    has devised an integrated and coordinated plan which meets the 
    purpose of this part.
    ``(b) Priority in Selection of Applications.--The Secretary shall 
give priority to applications that propose to conduct joint projects 
supported by other local, State, and Federal programs. In addition, the 
Secretary shall give priority to eligible institutions submitting 
applications that demonstrate the eligible institution's commitment to 
urban community service.
    ``(c) Selection Procedures.--The Secretary shall, by regulation, 
develop a formal procedure for the submission of applications under 
this part and shall publish in the Federal Register an announcement of 
that procedure and the availability of funds under this part.

``SEC. 754. ALLOWABLE ACTIVITIES.

    ``Funds made available under this part shall be used to support 
planning, applied research, training, resource exchanges or technology 
transfers, the delivery of services, or other activities the purpose of 
which is to design and implement programs to assist urban communities 
to meet and address their pressing and severe problems, such as the 
following:
        ``(1) Work force preparation.
        ``(2) Urban poverty and the alleviation of such poverty.
        ``(3) Health care, including delivery and access.
        ``(4) Underperforming school systems and students.
        ``(5) Problems faced by the elderly and individuals with 
    disabilities in urban settings.
        ``(6) Problems faced by families and children.
        ``(7) Campus and community crime prevention, including enhanced 
    security and safety awareness measures as well as coordinated 
    programs addressing the root causes of crime.
        ``(8) Urban housing.
        ``(9) Urban infrastructure.
        ``(10) Economic development.
        ``(11) Urban environmental concerns.
        ``(12) Other problem areas which participants in the consortium 
    described in section 753(a)(2)(B) concur are of high priority in 
    the urban area.
        ``(13)(A) Problems faced by individuals with disabilities 
    regarding accessibility to institutions of higher education and 
    other public and private community facilities.
        ``(B) Amelioration of existing attitudinal barriers that 
    prevent full inclusion by individuals with disabilities in their 
    community.
        ``(14) Improving access to technology in local communities.

``SEC. 755. PEER REVIEW.

    ``The Secretary shall designate a peer review panel to review 
applications submitted under this part and make recommendations for 
funding to the Secretary. In selecting the peer review panel, the 
Secretary may consult with other appropriate Cabinet-level officials 
and with non-Federal organizations, to ensure that the panel will be 
geographically balanced and be composed of representatives from public 
and private institutions of higher education, labor, business, and 
State and local government, who have expertise in urban community 
service or in education.

``SEC. 756. DISBURSEMENT OF FUNDS.

    ``(a) Multiyear Availability.--Subject to the availability of 
appropriations, grants under this part may be made on a multiyear 
basis, except that no institution, individually or as a participant in 
a consortium of such institutions, may receive such a grant for more 
than 5 years.
    ``(b) Equitable Geographic Distribution.--The Secretary shall award 
grants under this part in a manner that achieves an equitable 
geographic distribution of such grants.
    ``(c) Matching Requirement.--An applicant under this part and the 
local governments associated with the application shall contribute to 
the conduct of the program supported by the grant an amount from non-
Federal funds equal to at least one-fourth of the amount of the grant, 
which contribution may be in cash or in kind.

``SEC. 757. DESIGNATION OF URBAN GRANT INSTITUTIONS.

    ``The Secretary shall publish a list of eligible institutions under 
this part and shall designate these institutions of higher education as 
`Urban Grant Institutions'. The Secretary shall establish a national 
network of Urban Grant Institutions so that the results of individual 
projects achieved in one metropolitan area can then be generalized, 
disseminated, replicated, and applied throughout the Nation. The 
information developed as a result of this section shall be made 
available to Urban Grant Institutions and to any other interested 
institution of higher education by any appropriate means.

``SEC. 758. DEFINITIONS.

    ``As used in this part:
        ``(1) Urban area.--The term `urban area' means a metropolitan 
    statistical area having a population of not less than 350,000, or 
    two contiguous metropolitan statistical areas having a population 
    of not less than 350,000, or, in any State which does not have a 
    metropolitan statistical area which has such a population, the 
    eligible entity in the State submitting an application under 
    section 753, or, if no such entity submits an application, the 
    Secretary, shall designate one urban area for the purposes of this 
    part.
        ``(2) Eligible institution.--The term `eligible institution' 
    means--
            ``(A) a nonprofit municipal university, established by the 
        governing body of the city in which it is located, and 
        operating as of the date of enactment of the Higher Education 
        Amendments of 1992 under that authority; or
            ``(B) an institution of higher education, or a consortium 
        of such institutions any one of which meets all of the 
        requirements of this paragraph, which--
                ``(i) is located in an urban area;
                ``(ii) draws a substantial portion of its undergraduate 
            students from the urban area in which such institution is 
            located, or from contiguous areas;
                ``(iii) carries out programs to make postsecondary 
            educational opportunities more accessible to residents of 
            such urban area, or contiguous areas;
                ``(iv) has the present capacity to provide resources 
            responsive to the needs and priorities of such urban area 
            and contiguous areas;
                ``(v) offers a range of professional, technical, or 
            graduate programs sufficient to sustain the capacity of 
            such institution to provide such resources; and
                ``(vi) has demonstrated and sustained a sense of 
            responsibility to such urban area and contiguous areas and 
            the people of such areas.

``SEC. 759. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $20,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years to carry out this part.

 ``PART D--DEMONSTRATION PROJECTS TO ENSURE STUDENTS WITH DISABILITIES 
                   RECEIVE A QUALITY HIGHER EDUCATION

``SEC. 761. PURPOSES.

    ``It is the purpose of this part to support model demonstration 
projects to provide technical assistance or professional development 
for faculty and administrators in institutions of higher education in 
order to provide students with disabilities a quality postsecondary 
education.

``SEC. 762. GRANTS AUTHORIZED.

    ``(a) Competitive Grants Authorized.--The Secretary may award 
grants, contracts, and cooperative agreements, on a competitive basis, 
to institutions of higher education, of which at least two such grants 
shall be awarded to institutions that provide professional development 
and technical assistance in order for students with learning 
disabilities to receive a quality postsecondary education.
    ``(b) Duration; Activities.--
        ``(1) Duration.--Grants under this part shall be awarded for a 
    period of 3 years.
        ``(2) Authorized activities.--Grants under this part shall be 
    used to carry out one or more of the following activities:
            ``(A) Teaching methods and strategies.--The development of 
        innovative, effective, and efficient teaching methods and 
        strategies to provide faculty and administrators with the 
        skills and supports necessary to teach students with 
        disabilities. Such methods and strategies may include inservice 
        training, professional development, customized and general 
        technical assistance, workshops, summer institutes, distance 
        learning, and training in the use of assistive and educational 
        technology.
            ``(B) Synthesizing research and information.--Synthesizing 
        research and other information related to the provision of 
        postsecondary educational services to students with 
        disabilities.
            ``(C) Professional development and training sessions.--
        Conducting professional development and training sessions for 
        faculty and administrators from other institutions of higher 
        education to enable the faculty and administrators to meet the 
        postsecondary educational needs of students with disabilities.
        ``(3) Mandatory evaluation and dissemination.--Grants under 
    this part shall be used for evaluation, and dissemination to other 
    institutions of higher education, of the information obtained 
    through the activities described in subparagraphs (A) through (C).
    ``(c) Considerations in Making Awards.--In awarding grants, 
contracts, or cooperative agreements under this section, the Secretary 
shall consider the following:
        ``(1) Geographic distribution.--Providing an equitable 
    geographic distribution of such grants.
        ``(2) Rural and urban areas.--Distributing such grants to urban 
    and rural areas.
        ``(3) Range and type of institution.--Ensuring that the 
    activities to be assisted are developed for a range of types and 
    sizes of institutions of higher education.
        ``(4) Prior experience or exceptional programs.--Institutions 
    of higher education with demonstrated prior experience in, or 
    exceptional programs for, meeting the postsecondary educational 
    needs of students with disabilities.

``SEC. 763. APPLICATIONS.

    ``Each institution of higher education desiring to receive a grant, 
contract, or cooperative agreement under this part shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may require. Each 
application shall include--
        ``(1) a description of how such institution plans to address 
    each of the activities required under this part;
        ``(2) a description of how the institution consulted with a 
    broad range of people within the institution to develop activities 
    for which assistance is sought; and
        ``(3) a description of how the institution will coordinate and 
    collaborate with the office that provides services to students with 
    disabilities within the institution.

``SEC. 764. RULE OF CONSTRUCTION.

    ``Nothing in this part shall be construed to impose any additional 
duty, obligation, or responsibility on an institution of higher 
education or on the institution's faculty, administrators, or staff 
than are required by section 504 of the Rehabilitation Act of 1973 and 
the Americans with Disabilities Act of 1990.

``SEC. 765. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated for this part $10,000,000 
for fiscal year 1999 and such sums as may be necessary for each of the 
4 succeeding fiscal years.''.

SEC. 702. REPEALS.

    Except as otherwise provided in section 301(a), titles VIII (20 
U.S.C. 1133 et seq.), IX (20 U.S.C. 1134 et seq.), X (20 U.S.C. 1135 et 
seq.), XI (20 U.S.C. 1136), and XII (20 U.S.C. 1141) are repealed.

           TITLE VIII--STUDIES, REPORTS, AND RELATED PROGRAMS

                            PART A--STUDIES

SEC. 801. STUDY OF MARKET MECHANISMS IN FEDERAL STUDENT LOAN PROGRAMS.

    (a) Study Required.--The Comptroller General and the Secretary of 
Education shall convene a study group including the Secretary of the 
Treasury, the Director of the Office of Management and Budget, the 
Director of the Congressional Budget Office, representatives of 
entities making loans under part B of title IV of the Higher Education 
Act of 1965, representatives of other entities in the financial 
services community, representatives of other participants in the 
student loan programs, and such other individuals as the Comptroller 
General and the Secretary may designate. The Comptroller General and 
Secretary, in consultation with the study group, shall design and 
conduct a study to identify and evaluate means of establishing a market 
mechanism for the delivery of loans made pursuant to such title IV.
    (b) Design of Study.--The study required under this section shall 
identify not fewer than 3 different market mechanisms for use in 
determining lender return on student loans while continuing to meet the 
other objectives of the programs under parts B and D of such title IV, 
including the provision of loans to all eligible students. 
Consideration may be given to the use of auctions and to the 
feasibility of incorporating income-contingent repayment options into 
the student loan system and requiring borrowers to repay through income 
tax withholding.
    (c) Evaluation of Market Mechanisms.--The mechanisms identified 
under subsection (b) shall be evaluated in terms of the following 
areas:
        (1) The cost or savings of loans to or for borrowers, including 
    parent borrowers.
        (2) The cost or savings of the mechanism to the Federal 
    Government.
        (3) The cost, effect, and distribution of Federal subsidies to 
    or for participants in the program.
        (4) The ability of the mechanism to accommodate the potential 
    distribution of subsidies to students through an income-contingent 
    repayment option.
        (5) The effect on the simplicity of the program, including the 
    effect of the plan on the regulatory burden on students, 
    institutions, lenders, and other program participants.
        (6) The effect on investment in human capital and resources, 
    loan servicing capability, and the quality of service to the 
    borrower.
        (7) The effect on the diversity of lenders, including 
    community-based lenders, originating and secondary market lenders.
        (8) The effect on program integrity.
        (9) The degree to which the mechanism will provide market 
    incentives to encourage continuous improvement in the delivery and 
    servicing of loans.
        (10) The availability of loans to students by region, income 
    level, and by categories of institutions.
        (11) The proposed Federal and State role in the operation of 
    the mechanism.
        (12) A description of how the mechanism will be administered 
    and operated.
        (13) Transition procedures, including the effect on loan 
    availability during a transition period.
        (14) Any other areas the study group may include.
    (d) Preliminary Findings and Publication of Study.--Not later than 
November 15, 2000, the study group shall make the group's preliminary 
findings, including any additional or dissenting views, available to 
the public with a 60-day request for public comment. The study group 
shall review these comments and the Comptroller General and the 
Secretary shall transmit a final report, including any additional or 
dissenting views, to the Committee on Education and the Workforce of 
the House of Representatives, the Committee on Labor and Human 
Resources of the Senate, and the Committees on the Budget of the House 
of Representatives and the Senate not later than May 15, 2001.

SEC. 802. STUDY OF THE FEASIBILITY OF ALTERNATIVE FINANCIAL INSTRUMENTS 
              FOR DETERMINING LENDER YIELDS.

    (a) Study Required.--The Comptroller General and the Secretary of 
Education shall convene a study group including the Secretary of the 
Treasury, the Director of the Office of Management and Budget, the 
Director of the Congressional Budget Office, representatives of 
entities making loans under part B of title IV of the Higher Education 
Act of 1965, representatives of other entities in the financial 
services community, representatives of other participants in the 
student loan programs, and such other individuals as the Comptroller 
General and the Secretary of Education may designate. The Comptroller 
General and the Secretary of Education, in consultation with the study 
group, shall evaluate the 91-day Treasury bill, 30-day and 90-day 
commercial paper, and the 90-day London Interbank Offered Rate (in this 
section referred to as ``LIBOR'') in terms of the following:
        (1) The historical liquidity of the market for each, and a 
    historical comparison of the spread between: (A) the 30-day and 90-
    day commercial paper rate, respectively, and the 91-day Treasury 
    bill rate; and (B) the spread between the LIBOR and the 91-day 
    Treasury bill rate.
        (2) The historical volatility of the rates and projections of 
    future volatility.
        (3) Recent changes in the liquidity of the market for each such 
    instrument in a balanced Federal budget environment and a low-
    interest rate environment, and projections of future liquidity 
    assuming the Federal budget remains in balance.
        (4) The cost or savings to lenders with small, medium, and 
    large student loan portfolios of basing lender yield on either the 
    30-day or 90-day commercial paper rate or the LIBOR while 
    continuing to base the borrower rate on the 91-day Treasury bill, 
    and the effect of such change on the diversity of lenders 
    participating in the program.
        (5) The cost or savings to the Federal Government of basing 
    lender yield on either the 30-day or 90-day commercial paper rate 
    or the LIBOR while continuing to base the borrower rate on the 91-
    day Treasury bill.
        (6) Any possible risks or benefits to the student loan programs 
    under the Higher Education Act of 1965 and to student borrowers.
        (7) Any other areas the Comptroller General and the Secretary 
    of Education agree to include.
    (b) Report Required.--Not later than 6 months after the date of 
enactment of this Act, the Comptroller General and the Secretary shall 
submit a final report regarding the findings of the study group to the 
Committee on Education and the Workforce of the House of 
Representatives and the Committee on Labor and Human Resources of the 
Senate.

SEC. 803. STUDENT-RELATED DEBT STUDY REQUIRED.

    (a) In General.--The Secretary of Education shall conduct a study 
that analyzes the distribution and increase in student-related debt in 
terms of--
        (1) demographic characteristics, such as race or ethnicity, and 
    family income;
        (2) type of institution and whether the institution is a public 
    or private institution;
        (3) loan source, such as Federal, State, institutional or 
    other, and, if the loan source is Federal, whether the loan is or 
    is not subsidized;
        (4) academic field of study;
        (5) parent loans, and whether the parent loans are federally 
    guaranteed, private, or property-secured such as home equity loans; 
    and
        (6) relation of student debt or anticipated debt to--
            (A) students' decisions about whether and where to enroll 
        in college and whether or how much to borrow in order to attend 
        college;
            (B) the length of time it takes students to earn 
        baccalaureate degrees;
            (C) students' decisions about whether and where to attend 
        graduate school;
            (D) graduates' employment decisions;
            (E) graduates' burden of repayment as reflected by the 
        graduates' ability to save for retirement or invest in a home; 
        and
            (F) students' future earnings.
    (b) Report.--After conclusion of the study required by subsection 
(a), the Secretary of Education shall submit a final report regarding 
the findings of the study to the Committee on Labor and Human Resources 
of the Senate and the Committee on Education and the Workforce of the 
House of Representatives not later than 18 months after the date of 
enactment of the Higher Education Amendments of 1998.
    (c) Information.--After the study and report under this section are 
concluded, the Secretary of Education shall determine which information 
described in subsection (a) would be useful for families to know and 
shall include such information as part of the comparative information 
provided to families about the costs of higher education under the 
provisions of part C of title I.

SEC. 804. STUDY OF TRANSFER OF CREDITS.

    (a) Study Required.--The Secretary of Education shall conduct a 
study to evaluate policies or practices instituted by recognized 
accrediting agencies or associations regarding the treatment of the 
transfer of credits from one institution of higher education to 
another, giving particular attention to--
        (1) adopted policies regarding the transfer of credits between 
    institutions of higher education which are accredited by different 
    agencies or associations and the reasons for such policies;
        (2) adopted policies regarding the transfer of credits between 
    institutions of higher education which are accredited by national 
    agencies or associations and institutions of higher education which 
    are accredited by regional agencies and associations and the 
    reasons for such policies;
        (3) the effect of the adoption of such policies on students 
    transferring between such institutions of higher education, 
    including time required to matriculate, increases to the student of 
    tuition and fees paid, and increases to the student with regard to 
    student loan burden;
        (4) the extent to which Federal financial aid is awarded to 
    such students for the duplication of coursework already completed 
    at another institution; and
        (5) the aggregate cost to the Federal Government of the 
    adoption of such policies.
    (b) Report.--Not later than one year after the date of enactment of 
this Act, the Secretary of Education shall submit a report to the 
Chairman and Ranking Minority Member of the Committee on Education and 
the Workforce of the House of Representatives and the Committee on 
Labor and Human Resources of the Senate detailing the Secretary's 
findings regarding the study conducted under subsection (a). The 
Secretary's report shall include such recommendation with respect to 
the recognition of accrediting agencies or associations as the 
Secretary deems advisable.

SEC. 805. STUDY OF OPPORTUNITIES FOR PARTICIPATION IN ATHLETICS 
              PROGRAMS.

    (a) Study.--The Comptroller General shall conduct a study of the 
opportunities for participation in intercollegiate athletics. The study 
shall address issues including--
        (1) the extent to which the number of--
            (A) secondary school athletic teams has increased or 
        decreased in the 20 years preceding 1998 (in aggregate terms); 
        and
            (B) intercollegiate athletic teams has increased or 
        decreased in the 20 years preceding 1998 (in aggregate terms) 
        at 2-year and 4-year institutions of higher education;
        (2) the extent to which participation by student-athletes in 
    secondary school and intercollegiate athletics has increased or 
    decreased in the 20 years preceding 1998 (in aggregate terms);
        (3) over the 20-year period preceding 1998, a list of the men's 
    and women's secondary school and intercollegiate sports, ranked in 
    order of the sports most affected by increases or decreases in 
    levels of participation and numbers of teams (in the aggregate);
        (4) all factors that have influenced campus officials to add or 
    discontinue sports teams at secondary schools and institutions of 
    higher education, including--
            (A) institutional mission and priorities;
            (B) budgetary pressures;
            (C) institutional reforms and restructuring;
            (D) escalating liability insurance premiums;
            (E) changing student and community interest in a sport;
            (F) advancement of diversity among students;
            (G) lack of necessary level of competitiveness of the 
        sports program;
            (H) club level sport achieving a level of competitiveness 
        to make the sport a viable varsity level sport;
            (I) injuries or deaths; and
            (J) conference realignment;
        (5) the actions that institutions of higher education have 
    taken when decreasing the level of participation in intercollegiate 
    sports, or the number of teams, in terms of providing information, 
    advice, scholarship maintenance, counseling, advance warning, and 
    an opportunity for student-athletes to be involved in the 
    decisionmaking process;
        (6) the administrative processes and procedures used by 
    institutions of higher education when determining whether to 
    increase or decrease intercollegiate athletic teams or 
    participation by student-athletes;
        (7) the budgetary or fiscal impact, if any, of a decision by an 
    institution of higher education--
            (A) to increase or decrease the number of intercollegiate 
        athletic teams or the participation of student-athletes; or
            (B) to be involved in a conference realignment; and
        (8) the alternatives, if any, institutions of higher education 
    have pursued in lieu of eliminating, or severely reducing the 
    funding for, an intercollegiate sport, and the success of such 
    alternatives.
    (b) Report.--The Comptroller General shall submit a report 
regarding the results of the study to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the 
Workforce of the House of Representatives.

SEC. 806. STUDY OF THE EFFECTIVENESS OF COHORT DEFAULT RATES FOR 
              INSTITUTIONS WITH FEW STUDENT LOAN BORROWERS.

    (a) Study Required.--The Secretary of Education shall conduct a 
study of the effectiveness of cohort default rates as an indicator of 
administrative capability and program quality for institutions of 
higher education at which less than 15 percent of students eligible to 
borrow participate in the Federal student loan programs under title IV 
of the Higher Education Act of 1965 and fewer than 30 borrowers enter 
repayment in any fiscal year. At a minimum, the study shall include--
        (1) identification of the institutions included in the study 
    and of the student populations the institutions serve;
        (2) analysis of cohort default rates as indicators of 
    administrative shortcomings and program quality at the 
    institutions;
        (3) analysis of the effectiveness of cohort default rates as a 
    means to prevent fraud and abuse in the programs assisted under 
    such title;
        (4) analysis of the extent to which the institutions with high 
    cohort default rates are no longer participants in the Federal 
    student loan programs under such title; and
        (5) analysis of the costs incurred by the Department of 
    Education for the calculation, publication, correction, and appeal 
    of cohort default rates for the institutions in relation to any 
    benefits to taxpayers.
    (b) Consultation.--In conducting the study described in subsection 
(a), the Secretary of Education shall consult with institutions of 
higher education.
    (c) Report to Congress.--The Secretary of Education shall report to 
the Committee on Labor and Human Resources of the Senate and the 
Committee on Education and the Workforce of the House of 
Representatives not later than September 30, 1999, regarding the 
results of the study described in subsection (a).

              PART B--ADVANCED PLACEMENT INCENTIVE PROGRAM

SEC. 810. ADVANCED PLACEMENT INCENTIVE PROGRAM.

    (a) Program Established.--The Secretary of Education is authorized 
to make grants to States having applications approved under subsection 
(c) to enable the States to reimburse low-income individuals to cover 
part or all of the cost of advanced placement test fees, if the low-
income individuals--
        (1) are enrolled in an advanced placement class; and
        (2) plan to take an advanced placement test.
    (b) Information Dissemination.--The State educational agency shall 
disseminate information regarding the availability of test fee payments 
under this section to eligible individuals through secondary school 
teachers and guidance counselors.
    (c) Requirements for Approval of Applications.--In approving 
applications for grants the Secretary of Education shall--
        (1) require that each such application contain a description of 
    the advanced placement test fees the State will pay on behalf of 
    individual students;
        (2) require an assurance that any funds received under this 
    section, other than funds used in accordance with subsection (d), 
    shall be used only to pay advanced placement test fees;
        (3) contain such information as the Secretary may require to 
    demonstrate that the State will ensure that a student is eligible 
    for payments under this section, including the documentation 
    required by chapter 1 of subpart 2 of part A of title IV of the 
    Higher Education Act of 1965 (20 U.S.C. 1070a-11 et seq.); and
        (4) consider the number of children eligible to be counted 
    under section 1124(c) of the Elementary and Secondary Education Act 
    of 1965 in the State in relation to the number of such children in 
    all the States in determining grant award amounts.
    (d) Funding Rules.--
        (1) Use of funds.--A State educational agency in a State in 
    which no eligible low-income individual is required to pay more 
    than a nominal fee to take advanced placement tests in core 
    subjects may use any grant funds provided to that State educational 
    agency, that remain after fees have been paid on behalf of all 
    eligible low-income individuals, for activities directly related to 
    increasing--
            (A) the enrollment of low-income individuals in advanced 
        placement courses;
            (B) the participation of low-income individuals in advanced 
        placement tests; and
            (C) the availability of advanced placement courses in 
        schools serving high poverty areas.
        (2) Supplement, not supplant, rule.--Funds provided under this 
    section shall supplement and not supplant other non-Federal funds 
    that are available to assist low-income individuals in paying 
    advanced placement test fees.
    (e) Regulations.--The Secretary of Education shall prescribe such 
regulations as are necessary to carry out this section.
    (f) Report.--Each State annually shall report to the Secretary of 
Education regarding--
        (1) the number of low-income individuals in the State who 
    receive assistance under this section; and
        (2) the activities described in subsection (d)(1), if 
    applicable.
    (g) Definition.--In this section:
        (1) Advanced placement test.--The term ``advanced placement 
    test'' includes only an advanced placement test approved by the 
    Secretary of Education for the purposes of this section.
        (2) Low-income individual.--The term ``low-income individual'' 
    has the meaning given the term in section 402A(g)(2) of the Higher 
    Education Act of 1965 (20 U.S.C. 1070a-11(g)(2)).
    (h) Authorization of Appropriations.--There are authorized to be 
appropriated $6,800,000 for fiscal year 1999 and such sums as may be 
necessary for each of the 4 succeeding fiscal years to carry out this 
section.

               PART C--COMMUNITY SCHOLARSHIP MOBILIZATION

SEC. 811. SHORT TITLE.

    This part may be cited as the ``Community Scholarship Mobilization 
Act''.

SEC. 812. FINDINGS.

    Congress finds that--
        (1) the local community, when properly organized and 
    challenged, is one of the best sources of academic support, 
    motivation toward achievement, and financial resources for aspiring 
    postsecondary students;
        (2) local communities, working to complement or augment 
    services currently offered by area schools and colleges, can raise 
    the educational expectations and increase the rate of postsecondary 
    attendance of their youth by forming locally-based organizations 
    that provide both academic support (including guidance, counseling, 
    mentoring, tutoring, encouragement, and recognition) and tangible, 
    locally raised, effectively targeted, publicly recognized, 
    financial assistance;
        (3) proven methods of stimulating these community efforts can 
    be promoted through Federal support for the establishment of 
    regional, State, or community program centers to organize and 
    challenge community efforts to develop educational incentives and 
    support for local students; and
        (4) using Federal funds to leverage private contributions to 
    help students from low-income families attain educational and 
    career goals is an efficient and effective investment of scarce 
    taxpayer-provided resources.

SEC. 813. DEFINITIONS.

    In this part:
        (1) Regional, state, or community program center.--The term 
    ``regional, State, or community program center'' means an 
    organization that--
            (A) is a division or member of, responsible to, and 
        overseen by, a national organization; and
            (B) is staffed by professionals trained to create, develop, 
        and sustain local entities in towns, cities, and neighborhoods.
        (2) Local entity.--The term ``local entity'' means an 
    organization that--
            (A) is a nonprofit organization that is described in 
        section 501(c)(3) of the Internal Revenue Code of 1986, and 
        exempt from taxation under section 501(a) of such Code (or 
        shall meet this criteria through affiliation with the national 
        organization);
            (B) is formed for the purpose of providing educational 
        scholarships and academic support for residents of the local 
        community served by such organization;
            (C) solicits broad-based community support in its academic 
        support and fund-raising activities;
            (D) is broadly representative of the local community in the 
        structures of its volunteer-operated organization and has a 
        board of directors that includes leaders from local 
        neighborhood organizations and neighborhood residents, such as 
        school or college personnel, parents, students, community 
        agency representatives, retirees, and representatives of the 
        business community;
            (E) awards scholarships without regard to age, sex, marital 
        status, race, creed, color, religion, national origin, or 
        disability; and
            (F) gives priority to awarding scholarships for 
        postsecondary education to deserving students from low-income 
        families in the local community.
        (3) National organization.--The term ``national organization'' 
    means an organization that--
            (A) has the capacity to create, develop and sustain local 
        entities and affiliated regional, State, or community program 
        centers;
            (B) has the capacity to sustain newly created local 
        entities in towns, cities, and neighborhoods through ongoing 
        training support programs;
            (C) is described in section 501(c)(3) of the Internal 
        Revenue Code of 1986, and exempt from taxation under section 
        501(a) of such Code;
            (D) is a publicly supported organization within the meaning 
        of section 170(b)(1)(A)(iv) of such Code;
            (E) ensures that each of the organization's local entities 
        meet the criteria described in subparagraphs (C) and (D); and
            (F) has a program for or experience in cooperating with 
        secondary and postsecondary institutions in carrying out the 
        organization's scholarship and academic support activities.
        (4) High poverty area.--The term ``high poverty area'' means a 
    community with a higher percentage of children from low-income 
    families than the national average of such percentage and a lower 
    percentage of children pursuing postsecondary education than the 
    national average of such percentage.
        (5) Secretary.--The term ``Secretary'' means the Secretary of 
    Education.
        (6) Students from low-income families.--The term ``students 
    from low-income families'' means students determined, pursuant to 
    part F of title IV of the Higher Education Act of 1965 (20 U.S.C. 
    1087kk et seq.), to be eligible for a Federal Pell Grant under 
    subpart 1 of part A of title IV of such Act (20 U.S.C. 1070a).

SEC. 814. PURPOSE; ENDOWMENT GRANT AUTHORITY.

    (a) Purpose.--It is the purpose of this part to establish and 
support regional, State or community program centers to enable such 
centers to foster the development of local entities in high poverty 
areas that promote higher education goals for students from low-income 
families by--
        (1) providing academic support, including guidance, counseling, 
    mentoring, tutoring, and recognition; and
        (2) providing scholarship assistance for the cost of 
    postsecondary education.
    (b) Endowment Grant Authority.--From the funds appropriated 
pursuant to the authority of section 816, the Secretary shall award an 
endowment grant, on a competitive basis, to a national organization to 
enable such organization to support the establishment or ongoing work 
of regional, State or community program centers that foster the 
development of local entities in high poverty areas to improve 
secondary school graduation rates and postsecondary attendance through 
the provision of academic support services and scholarship assistance 
for the cost of postsecondary education.

SEC. 815. GRANT AGREEMENT AND REQUIREMENTS.

    (a) In General.--The Secretary shall award one or more endowment 
grants described in section 814(b) pursuant to an agreement between the 
Secretary and a national organization. Such agreement shall--
        (1) require a national organization to establish an endowment 
    fund in the amount of the grant, the corpus of which shall remain 
    intact and the interest income from which shall be used to support 
    the activities described in paragraphs (2) and (3);
        (2) require a national organization to use 70 percent of the 
    interest income from the endowment fund in any fiscal year to 
    support the establishment or ongoing work of regional, State or 
    community program centers to enable such centers to work with local 
    communities to establish local entities in high poverty areas and 
    provide ongoing technical assistance, training workshops, and other 
    activities to help ensure the ongoing success of the local 
    entities;
        (3) require a national organization to use 30 percent of the 
    interest income from the endowment fund in any fiscal year to 
    provide scholarships for postsecondary education to students from 
    low-income families, which scholarships shall be matched on a 
    dollar-for-dollar basis from funds raised by the local entities;
        (4) require that at least 50 percent of all the interest income 
    from the endowment be allocated to establish new local entities or 
    support regional, State or community program centers in high 
    poverty areas;
        (5) require a national organization to submit, for each fiscal 
    year in which such organization uses the interest from the 
    endowment fund, a report to the Secretary that contains--
            (A) a description of the programs and activities supported 
        by the interest on the endowment fund;
            (B) the audited financial statement of the national 
        organization for the preceding fiscal year;
            (C) a plan for the programs and activities to be supported 
        by the interest on the endowment fund as the Secretary may 
        require;
            (D) an evaluation of the programs and activities supported 
        by the interest on the endowment fund as the Secretary may 
        require; and
            (E) data indicating the number of students from low-income 
        families who receive scholarships from local entities, and the 
        amounts of such scholarships;
        (6) contain such assurances as the Secretary may require with 
    respect to the management and operation of the endowment fund; and
        (7) contain an assurance that if the Secretary determines that 
    such organization is not in substantial compliance with the 
    provisions of this part, then the national organization shall pay 
    to the Secretary an amount equal to the corpus of the endowment 
    fund plus any accrued interest on such fund that is available to 
    the national organization on the date of such determination.
    (b) Returned Funds.--All funds returned to the Secretary pursuant 
to subsection (a)(7) shall be available to the Secretary to carry out 
any scholarship or grant program assisted under title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.).

SEC. 816. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this part 
$10,000,000 for fiscal year 2000.

    PART D--GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION 
               TRAINING FOR INCARCERATED YOUTH OFFENDERS

SEC. 821. GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION 
              TRAINING FOR INCARCERATED YOUTH OFFENDERS.

    (a) Findings.--Congress makes the following findings:
        (1) Over 150,000 youth offenders age 21 and younger are 
    incarcerated in the Nation's jails, juvenile facilities, and 
    prisons.
        (2) Most youth offenders who are incarcerated have been 
    sentenced as first-time adult felons.
        (3) Approximately 75 percent of youth offenders are high school 
    dropouts who lack basic literacy and life skills, have little or no 
    job experience, and lack marketable skills.
        (4) The average incarcerated youth has attended school only 
    through grade 10.
        (5) Most of these youths can be diverted from a life of crime 
    into productive citizenship with available educational, vocational, 
    work skills, and related service programs.
        (6) If not involved with educational programs while 
    incarcerated, almost all of these youths will return to a life of 
    crime upon release.
        (7) The average length of sentence for a youth offender is 
    about 3 years. Time spent in prison provides a unique opportunity 
    for education and training.
        (8) Even with quality education and training provided during 
    incarceration, a period of intense supervision, support, and 
    counseling is needed upon release to ensure effective reintegration 
    of youth offenders into society.
        (9) Research consistently shows that the vast majority of 
    incarcerated youths will not return to the public schools to 
    complete their education.
        (10) There is a need for alternative educational opportunities 
    during incarceration and after release.
    (b) Definition.--For purposes of this part, the term ``youth 
offender'' means a male or female offender under the age of 25, who is 
incarcerated in a State prison, including a prerelease facility.
    (c) Grant Program.--The Secretary of Education (in this section 
referred to as the ``Secretary'') shall establish a program in 
accordance with this section to provide grants to the State 
correctional education agencies in the States, from allocations for the 
States under subsection (i), to assist and encourage incarcerated 
youths to acquire functional literacy, life, and job skills, through 
the pursuit of a postsecondary education certificate, or an associate 
of arts or bachelor's degree while in prison, and employment counseling 
and other related services which start during incarceration and 
continue through prerelease and while on parole.
    (d) Application.--To be eligible for a grant under this section, a 
State correctional education agency shall submit to the Secretary a 
proposal for a youth offender program that--
        (1) identifies the scope of the problem, including the number 
    of incarcerated youths in need of postsecondary education and 
    vocational training;
        (2) lists the accredited public or private educational 
    institution or institutions that will provide postsecondary 
    educational services;
        (3) lists the cooperating agencies, public and private, or 
    businesses that will provide related services, such as counseling 
    in the areas of career development, substance abuse, health, and 
    parenting skills;
        (4) describes the evaluation methods and performance measures 
    that the State correctional education agency will employ, which 
    methods and measures--
            (A) shall be appropriate to meet the goals and objectives 
        of the proposal; and
            (B) shall include measures of--
                (i) program completion;
                (ii) student academic and vocational skill attainment;
                (iii) success in job placement and retention; and
                (iv) recidivism;
        (5) describes how the proposed programs are to be integrated 
    with existing State correctional education programs (such as adult 
    education, graduate education degree programs, and vocational 
    training) and State industry programs;
        (6) addresses the educational needs of youth offenders who are 
    in alternative programs (such as boot camps); and
        (7) describes how students will be selected so that only youth 
    offenders eligible under subsection (f) will be enrolled in 
    postsecondary programs.
    (e) Program Requirements.--Each State correctional education agency 
receiving a grant under this section shall--
        (1) integrate activities carried out under the grant with the 
    objectives and activities of the school-to-work programs of such 
    State, including--
            (A) work experience or apprenticeship programs;
            (B) transitional worksite job training for vocational 
        education students that is related to the occupational goals of 
        such students and closely linked to classroom and laboratory 
        instruction;
            (C) placement services in occupations that the students are 
        preparing to enter;
            (D) employment-based learning programs; and
            (E) programs that address State and local labor shortages;
        (2) annually report to the Secretary and the Attorney General 
    on the results of the evaluations conducted using the methods and 
    performance measures contained in the proposal; and
        (3) provide to each State for each student eligible under 
    subsection (f) not more than $1,500 annually for tuition, books, 
    and essential materials, and not more than $300 annually for 
    related services such as career development, substance abuse 
    counseling, parenting skills training, and health education, for 
    each eligible incarcerated youth.
    (f) Student Eligibility.--A youth offender shall be eligible for 
participation in a program receiving a grant under this section if the 
youth offender--
        (1) is eligible to be released within 5 years (including a 
    youth offender who is eligible for parole within such time); and
        (2) is 25 years of age or younger.
    (g) Length of Participation.--A State correctional education agency 
receiving a grant under this section shall provide educational and 
related services to each participating youth offender for a period not 
to exceed 5 years, 1 year of which may be devoted to study in a 
graduate education degree program or to remedial education services for 
students who have obtained a secondary school diploma or its recognized 
equivalent. Educational and related services shall start during the 
period of incarceration in prison or prerelease and may continue during 
the period of parole.
    (h) Education Delivery Systems.--State correctional education 
agencies and cooperating institutions shall, to the extent practicable, 
use high-tech applications in developing programs to meet the 
requirements and goals of this section.
    (i) Allocation of Funds.--From the funds appropriated pursuant to 
subsection (j) for each fiscal year, the Secretary shall allot to each 
State an amount that bears the same relationship to such funds as the 
total number of students eligible under subsection (f) in such State 
bears to the total number of such students in all States.
    (j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $17,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.

   PART E--GRANTS TO COMBAT VIOLENT CRIMES AGAINST WOMEN ON CAMPUSES

SEC. 826. GRANTS TO COMBAT VIOLENT CRIMES AGAINST WOMEN ON CAMPUSES.

    (a) Grants Authorized.--
        (1) In general.--The Attorney General is authorized to make 
    grants to institutions of higher education, for use by such 
    institutions or consortia consisting of campus personnel, student 
    organizations, campus administrators, security personnel, and 
    regional crisis centers affiliated with the institution, to develop 
    and strengthen effective security and investigation strategies to 
    combat violent crimes against women on campuses, and to develop and 
    strengthen victim services in cases involving violent crimes 
    against women on campuses, which may include partnerships with 
    local criminal justice authorities and community-based victim 
    services agencies.
        (2) Award basis.--The Attorney General shall award grants and 
    contracts under this section on a competitive basis.
        (3) Equitable participation.--The Attorney General shall make 
    every effort to ensure--
            (A) the equitable participation of private and public 
        institutions of higher education in the activities assisted 
        under this section; and
            (B) the equitable geographic distribution of grants under 
        this section among the various regions of the United States.
    (b) Use of Grant Funds.--Grant funds awarded under this section may 
be used for the following purposes:
        (1) To provide personnel, training, technical assistance, data 
    collection, and other equipment with respect to the increased 
    apprehension, investigation, and adjudication of persons committing 
    violent crimes against women on campus.
        (2) To train campus administrators, campus security personnel, 
    and personnel serving on campus disciplinary or judicial boards to 
    more effectively identify and respond to violent crimes against 
    women on campus, including the crimes of sexual assault, stalking, 
    and domestic violence.
        (3) To implement and operate education programs for the 
    prevention of violent crimes against women.
        (4) To develop, enlarge, or strengthen support services 
    programs, including medical or psychological counseling, for 
    victims of sexual offense crimes.
        (5) To create, disseminate, or otherwise provide assistance and 
    information about victims' options on and off campus to bring 
    disciplinary or other legal action.
        (6) To develop and implement more effective campus policies, 
    protocols, orders, and services specifically devoted to prevent, 
    identify, and respond to violent crimes against women on campus, 
    including the crimes of sexual assault, stalking, and domestic 
    violence.
        (7) To develop, install, or expand data collection and 
    communication systems, including computerized systems, linking 
    campus security to the local law enforcement for the purpose of 
    identifying and tracking arrests, protection orders, violations of 
    protection orders, prosecutions, and convictions with respect to 
    violent crimes against women on campus, including the crimes of 
    sexual assault, stalking, and domestic violence.
        (8) To develop, enlarge, or strengthen victim services programs 
    for the campus and to improve delivery of victim services on 
    campus.
        (9) To provide capital improvements (including improved 
    lighting and communications facilities but not including the 
    construction of buildings) on campuses to address violent crimes 
    against women on campus, including the crimes of sexual assault, 
    stalking, and domestic violence.
        (10) To support improved coordination among campus 
    administrators, campus security personnel, and local law 
    enforcement to reduce violent crimes against women on campus.
    (c) Applications.--
        (1) In general.--In order to be eligible to be awarded a grant 
    under this section for any fiscal year, an institution of higher 
    education shall submit an application to the Attorney General at 
    such time and in such manner as the Attorney General shall 
    prescribe.
        (2) Contents.--Each application submitted under paragraph (1) 
    shall--
            (A) describe the need for grant funds and the plan for 
        implementation for any of the purposes described in subsection 
        (b);
            (B) describe how the campus authorities shall consult and 
        coordinate with nonprofit and other victim services programs, 
        including sexual assault and domestic violence victim services 
        programs;
            (C) describe the characteristics of the population being 
        served, including type of campus, demographics of the 
        population, and number of students;
            (D) provide measurable goals and expected results from the 
        use of the grant funds;
            (E) provide assurances that the Federal funds made 
        available under this section shall be used to supplement and, 
        to the extent practical, increase the level of funds that 
        would, in the absence of Federal funds, be made available by 
        the institution for the purposes described in subsection (b); 
        and
            (F) include such other information and assurances as the 
        Attorney General reasonably determines to be necessary.
        (3) Compliance with campus crime reporting required.--No 
    institution of higher education shall be eligible for a grant under 
    this section unless such institution is in compliance with the 
    requirements of section 485(f) of the Higher Education Act of 1965.
    (d) General Terms and Conditions.--
        (1) Nonmonetary assistance.--In addition to the assistance 
    provided under this section, the Attorney General may request any 
    Federal agency to use the agency's authorities and the resources 
    granted to the agency under Federal law (including personnel, 
    equipment, supplies, facilities, and managerial, technical, and 
    advisory services) in support of campus security, and investigation 
    and victim service efforts.
        (2) Grantee reporting.--
            (A) Annual report.--Each institution of higher education 
        receiving a grant under this section shall submit an annual 
        performance report to the Attorney General. The Attorney 
        General shall suspend funding under this section for an 
        institution of higher education if the institution fails to 
        submit an annual performance report.
            (B) Final report.--Upon completion of the grant period 
        under this section, the institution shall file a performance 
        report with the Attorney General and the Secretary of Education 
        explaining the activities carried out under this section 
        together with an assessment of the effectiveness of those 
        activities in achieving the purposes described in subsection 
        (b).
        (3) Report to congress.--Not later than 180 days after the end 
    of the fiscal year for which grants are awarded under this section, 
    the Attorney General shall submit to the committees of the House of 
    Representatives and the Senate responsible for issues relating to 
    higher education and crime, a report that includes--
            (A) the number of grants, and the amount of funds, 
        distributed under this section;
            (B) a summary of the purposes for which the grants were 
        provided and an evaluation of the progress made under the 
        grant;
            (C) a statistical summary of the persons served, detailing 
        the nature of victimization, and providing data on age, sex, 
        race, ethnicity, language, disability, relationship to 
        offender, geographic distribution, and type of campus; and
            (D) an evaluation of the effectiveness of programs funded 
        under this part, including information obtained from reports 
        submitted pursuant to section 485(f) of the Higher Education 
        Act of 1965.
        (4) Regulations or guidelines.--Not later than 120 days after 
    the date of enactment of this section, the Attorney General, in 
    consultation with the Secretary of Education, shall publish 
    proposed regulations or guidelines implementing this section. Not 
    later than 180 days after the date of enactment of this section, 
    the Attorney General shall publish final regulations or guidelines 
    implementing this section.
    (f) Definitions.--In this section--
        (1) the term ``domestic violence'' includes acts or threats of 
    violence, not including acts of self defense, committed by a 
    current or former spouse of the victim, by a person with whom the 
    victim shares a child in common, by a person who is cohabitating 
    with or has cohabitated with the victim, by a person similarly 
    situated to a spouse of the victim under the domestic or family 
    violence laws of the jurisdiction, or by any other person against a 
    victim who is protected from that person's acts under the domestic 
    or family violence laws of the jurisdiction;
        (2) the term ``sexual assault'' means any conduct proscribed by 
    chapter 109A of title 18, United States Code, whether or not the 
    conduct occurs in the special maritime and territorial jurisdiction 
    of the United States or in a Federal prison, including both 
    assaults committed by offenders who are strangers to the victim and 
    assaults committed by offenders who are known or related by blood 
    or marriage to the victim; and
        (3) the term ``victim services'' means a nonprofit, 
    nongovernmental organization that assists domestic violence or 
    sexual assault victims, including campus women's centers, rape 
    crisis centers, battered women's shelters, and other sexual assault 
    or domestic violence programs, including campus counseling support 
    and victim advocate organizations with domestic violence, stalking, 
    and sexual assault programs, whether or not organized and staffed 
    by students.
    (g) Authorization of Appropriations.--For the purpose of carrying 
out this part, there are authorized to be appropriated $10,000,000 for 
fiscal year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years.

SEC. 827. STUDY OF INSTITUTIONAL PROCEDURES TO REPORT SEXUAL ASSAULTS.

    (a) In General.--The Attorney General, in consultation with the 
Secretary of Education, shall provide for a national study to examine 
procedures undertaken after an institution of higher education receives 
a report of sexual assault.
    (b) Report.--The study required by subsection (a) shall include an 
analysis of--
        (1) the existence and publication of the institution of higher 
    education's and State's definition of sexual assault;
        (2) the existence and publication of the institution's policy 
    for campus sexual assaults;
        (3) the individuals to whom reports of sexual assault are given 
    most often and--
            (A) how the individuals are trained to respond to the 
        reports; and
            (B) the extent to which the individuals are trained;
        (4) the reporting options that are articulated to the victim or 
    victims of the sexual assault regarding--
            (A) on-campus reporting and procedure options; and
            (B) off-campus reporting and procedure options;
        (5) the resources available for victims' safety, support, 
    medical health, and confidentiality, including--
            (A) how well the resources are articulated both 
        specifically to the victim of sexual assault and generally to 
        the campus at large; and
            (B) the security of the resources in terms of 
        confidentiality or reputation;
        (6) policies and practices that may prevent or discourage the 
    reporting of campus sexual assaults to local crime authorities, or 
    that may otherwise obstruct justice or interfere with the 
    prosecution of perpetrators of campus sexual assaults;
        (7) policies and practices found successful in aiding the 
    report and any ensuing investigation or prosecution of a campus 
    sexual assault;
        (8) the on-campus procedures for investigation and disciplining 
    the perpetrator of a sexual assault, including--
            (A) the format for collecting evidence; and
            (B) the format of the investigation and disciplinary 
        proceeding, including the faculty responsible for running the 
        disciplinary procedure and the persons allowed to attend the 
        disciplinary procedure; and
        (9) types of punishment for offenders, including--
            (A) whether the case is directed outside the institution 
        for further punishment; and
            (B) how the institution punishes perpetrators.
    (c) Submission of Report.--The report required by subsection (b) 
shall be submitted to Congress not later than September 1, 2000.
    (d) Definition.--For purposes of this section, the term ``campus 
sexual assaults'' means sexual assaults occurring at institutions of 
higher education and sexual assaults committed against or by students 
or employees of such institutions.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000 for fiscal year 2000.

PART F--IMPROVING UNITED STATES UNDERSTANDING OF SCIENCE, ENGINEERING, 
                      AND TECHNOLOGY IN EAST ASIA

SEC. 831. IMPROVING UNITED STATES UNDERSTANDING OF SCIENCE, 
              ENGINEERING, AND TECHNOLOGY IN EAST ASIA.

    (a) Establishment.--The Director of the National Science Foundation 
is authorized, beginning in fiscal year 2000, to carry out an 
interdisciplinary program of education and research on East Asian 
science, engineering, and technology. The Director shall carry out the 
interdisciplinary program in consultation with the Secretary of 
Education.
    (b) Purposes.--The purposes of the program established under this 
section shall be to--
        (1) increase understanding of East Asian research, and 
    innovation for the creative application of science and technology 
    to the problems of society;
        (2) provide scientists, engineers, technology managers, and 
    students with training in East Asian languages, and with an 
    understanding of research, technology, and management of 
    innovation, in East Asian countries;
        (3) provide program participants with opportunities to be 
    directly involved in scientific and engineering research, and 
    activities related to the management of scientific and 
    technological innovation, in East Asia; and
        (4) create mechanisms for cooperation and partnerships among 
    United States industry, universities, colleges, not-for-profit 
    institutions, Federal laboratories (within the meaning of section 
    4(6) of the Stevenson-Wydler Technology Innovation Act of 1980 (15 
    U.S.C. 3703(6))), and government, to disseminate the results of the 
    program assisted under this section for the benefit of United 
    States research and innovation.
    (c) Participation by Federal Scientists, Engineers, and Managers.--
Scientists, engineers, and managers of science and engineering programs 
in Federal agencies and the Federal laboratories shall be eligible to 
participate in the program assisted under this section on a 
reimbursable basis.
    (d) Requirement for Merit Review.--Awards made under the program 
established under this section shall only be made using a competitive, 
merit-based review process.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $10,000,000 for fiscal year 
2000.

                      PART G--OLYMPIC SCHOLARSHIPS

SEC. 836. EXTENSION OF AUTHORIZATION.

    Section 1543(d) of the Higher Education Amendments of 1992 is 
amended by striking ``1993'' and inserting ``1999''.

                      PART H--UNDERGROUND RAILROAD

SEC. 841. UNDERGROUND RAILROAD EDUCATIONAL AND CULTURAL PROGRAM.

    (a) Program Established.--The Secretary of Education, in 
consultation and cooperation with the Secretary of the Interior, is 
authorized to make grants to 1 or more nonprofit educational 
organizations that are established to research, display, interpret, and 
collect artifacts relating to the history of the Underground Railroad.
    (b) Grant Agreement.--Each nonprofit educational organization 
awarded a grant under this section shall enter into an agreement with 
the Secretary of Education. Each such agreement shall require the 
organization--
        (1) to establish a facility to house, display, and interpret 
    the artifacts related to the history of the Underground Railroad, 
    and to make the interpretive efforts available to institutions of 
    higher education that award a baccalaureate or graduate degree;
        (2) to demonstrate substantial private support for the facility 
    through the implementation of a public-private partnership between 
    a State or local public entity and a private entity for the support 
    of the facility, which private entity shall provide matching funds 
    for the support of the facility in an amount equal to 4 times the 
    amount of the contribution of the State or local public entity, 
    except that not more than 20 percent of the matching funds may be 
    provided by the Federal Government;
        (3) to create an endowment to fund any and all shortfalls in 
    the costs of the on-going operations of the facility;
        (4) to establish a network of satellite centers throughout the 
    United States to help disseminate information regarding the 
    Underground Railroad throughout the United States, if such 
    satellite centers raise 80 percent of the funds required to 
    establish the satellite centers from non-Federal public and private 
    sources;
        (5) to establish the capability to electronically link the 
    facility with other local and regional facilities that have 
    collections and programs which interpret the history of the 
    Underground Railroad; and
        (6) to submit, for each fiscal year for which the organization 
    receives funding under this section, a report to the Secretary of 
    Education that contains--
            (A) a description of the programs and activities supported 
        by the funding;
            (B) the audited financial statement of the organization for 
        the preceding fiscal year;
            (C) a plan for the programs and activities to be supported 
        by the funding as the Secretary may require; and
            (D) an evaluation of the programs and activities supported 
        by the funding as the Secretary may require.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $6,000,000 for fiscal year 1999, 
$6,000,000 for fiscal year 2000, $6,000,000 for fiscal year 2001, 
$3,000,000 for fiscal year 2002, and $3,000,000 for fiscal year 2003.

                PART I--SUMMER TRAVEL AND WORK PROGRAMS

SEC. 846. AUTHORITY TO ADMINISTER SUMMER TRAVEL AND WORK PROGRAMS.

    The Director of the United States Information Agency is authorized 
to administer summer travel and work programs without regard to 
preplacement requirements.

                 PART J--WEB-BASED EDUCATION COMMISSION

SEC. 851. SHORT TITLE; DEFINITIONS.

    (a) In General.--This part may be cited as the ``Web-Based 
Education Commission Act''.
    (b) Definitions.--In this part:
        (1) Commission.--The term ``Commission'' means the Web-Based 
    Education Commission established under section 852.
        (2) Information technology.--The term ``information 
    technology'' has the meaning given that term in section 5002 of the 
    Information Technology Management Reform Act of 1996 (110 Stat. 
    679).
        (3) State.--The term ``State'' means each of the several States 
    of the United States and the District of Columbia.

SEC. 852. ESTABLISHMENT OF WEB-BASED EDUCATION COMMISSION.

    (a) Establishment.--There is established a commission to be known 
as the Web-Based Education Commission.
    (b) Membership.--
        (1) Composition.--The Commission shall be composed of 14 
    members, of which--
            (A) three members shall be appointed by the President, from 
        among individuals representing the Internet technology 
        industry;
            (B) three members shall be appointed by the Secretary, from 
        among individuals with expertise in accreditation, establishing 
        statewide curricula, and establishing information technology 
        networks pertaining to education curricula;
            (C) two members shall be appointed by the Majority Leader 
        of the Senate;
            (D) two members shall be appointed by the Minority Leader 
        of the Senate;
            (E) two members shall be appointed by the Speaker of the 
        House of Representatives; and
            (F) two members shall be appointed by the Minority Leader 
        of the House of Representatives.
        (2) Date.--The appointments of the members of the Commission 
    shall be made not later than 45 days after the date of enactment of 
    this Act.
    (c) Period of Appointment; Vacancies.--Members shall be appointed 
for the life of the Commission. Any vacancy in the Commission shall not 
affect its powers, but shall be filled in the same manner as the 
original appointment.
    (d) Initial Meeting.--Not later than 30 days after the date on 
which all members of the Commission have been appointed, the Commission 
shall hold the Commission's first meeting.
    (e) Meetings.--The Commission shall meet at the call of the 
Chairperson.
    (f) Quorum.--A majority of the members of the Commission shall 
constitute a quorum, but a lesser number of members may hold hearings.
    (g) Chairperson and Vice Chairperson.--The Commission shall select 
a chairperson and vice chairperson from among the members of the 
Commission.

SEC. 853. DUTIES OF THE COMMISSION.

    (a) Study.--
        (1) In general.--The Commission shall conduct a thorough study 
    to assess the educational software available in retail markets for 
    secondary and postsecondary students who choose to use such 
    software.
        (2) Public hearings.--As part of the study conducted under this 
    subsection, the Commission shall hold public hearings in each 
    region of the United States concerning the assessment referred to 
    in paragraph (1).
        (3) Existing information.--To the extent practicable, in 
    carrying out the study under this subsection, the Commission shall 
    identify and use existing information related to the assessment 
    referred to in paragraph (1).
    (b) Report.--Not later than 6 months after the first meeting of the 
Commission, the Commission shall submit a report to the President and 
Congress that shall contain a detailed statement of the findings and 
conclusions of the Commission resulting from the study, together with 
the Commission's recommendations--
        (1) for such legislation and administrative actions as the 
    Commission considers to be appropriate; and
        (2) regarding the appropriate Federal role in determining 
    quality educational software products.
    (c) Facilitation of Exchange of Information.--In carrying out the 
study under subsection (a), the Commission shall, to the extent 
practicable, facilitate the exchange of information concerning the 
issues that are the subject of the study among--
        (1) officials of the Federal Government, and State governments 
    and political subdivisions of States; and
        (2) educators from Federal, State, and local institutions of 
    higher education and secondary schools.

SEC. 854. POWERS OF THE COMMISSION.

    (a) Hearings.--The Commission may hold such hearings, sit and act 
at such times and places, take such testimony, and receive such 
evidence as the Commission considers advisable to carry out the duties 
of the Commission.
    (b) Information From Federal Agencies.--The Commission may request 
from the head of any Federal agency or instrumentality such information 
as the Commission considers necessary to carry out the provisions of 
this part. Each such agency or instrumentality shall, to the extent 
permitted by law and subject to the exceptions set forth in section 552 
of title 5, United States Code (commonly referred to as the Freedom of 
Information Act), furnish such information to the Commission upon 
request.
    (c) Postal Services.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    (d) Gifts.--The Commission may accept, use, and dispose of gifts or 
donations of services or property.

SEC. 855. COMMISSION PERSONNEL MATTERS.

    (a) Compensation of Members.--Except as provided in subsection (b), 
each member of the Commission who is not an officer or employee of the 
Federal Government shall serve without compensation. All members of the 
Commission who are officers or employees of the United States shall 
serve without compensation in addition to that received for their 
services as officers or employees of the United States.
    (b) Travel Expenses.--The members of the Commission shall be 
allowed travel expenses, including per diem in lieu of subsistence, at 
rates authorized for employees of agencies under subchapter I of 
chapter 57 of title 5, United States Code, while away from their homes 
or regular places of business in the performance of services for the 
Commission.
    (c) Staff.--
        (1) In general.--The Chairperson of the Commission may, without 
    regard to the civil service laws and regulations, appoint and 
    terminate an executive director and such other additional personnel 
    as may be necessary to enable the Commission to perform the 
    Commission's duties. The employment of an executive director shall 
    be subject to confirmation by the Commission.
        (2) Compensation.--The Chairperson of the Commission may fix 
    the compensation of the executive director and other personnel 
    without regard to the provisions of chapter 51 and subchapter III 
    of chapter 53 of title 5, United States Code, relating to 
    classification of positions and General Schedule pay rates, except 
    that the rate of pay for the executive director and other personnel 
    may not exceed the rate payable for level V of the Executive 
    Schedule under section 5316 of such title.
    (d) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Commission without reimbursement, and 
such detail shall be without interruption or loss of civil service 
status or privilege.
    (e) Procurement of Temporary and Intermittent Services.--The 
Chairperson of the Commission may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals that do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.

SEC. 856. TERMINATION OF THE COMMISSION.

    The Commission shall terminate on the date that is 90 days after 
the date on which the Commission submits the Commission's report under 
section 853(b).

SEC. 857. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated $450,000 
for fiscal year 1999 to the Commission to carry out this part.
    (b) Availability.--Any sums appropriated under the authorization 
contained in this section shall remain available, without fiscal year 
limitation, until expended.

                         PART K--MISCELLANEOUS

SEC. 861. EDUCATION-WELFARE STUDY.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of the effectiveness of educational approaches 
(including vocational and post-secondary education approaches) and 
rapid employment approaches to helping welfare recipients and other 
low-income adults become employed and economically self-sufficient. 
Such study shall include--
        (1) a survey of the available scientific evidence and research 
    data on the subject, including a comparison of the effects of 
    programs emphasizing a vocational or postsecondary educational 
    approach to programs emphasizing a rapid employment approach, along 
    with research on the impacts of programs which emphasize a 
    combination of such approaches;
        (2) an examination of the research regarding the impact of 
    postsecondary education on the educational attainment of the 
    children of recipients who have completed a postsecondary education 
    program; and
        (3) information regarding short and long-term employment, 
    wages, duration of employment, poverty rates, sustainable economic 
    self-sufficiency, prospects for career advancement or wage 
    increases, access to quality child care, placement in employment 
    with benefits including health care, life insurance and retirement, 
    and related program outcomes.
    (b) Report.--Not later than August 1, 1999, the Comptroller General 
of the United States shall prepare and submit to the Committees on Ways 
and Means and on Education and the Workforce of the House of 
Representatives and the Committees on Finance and on Labor and Human 
Resources of the Senate, a report that contains the finding of the 
study required by subsection (a).

SEC. 862. RELEASE OF CONDITIONS, COVENANTS, AND REVERSIONARY INTERESTS, 
              GUAM COMMUNITY COLLEGE CONVEYANCE, BARRIGADA, GUAM.

    (a) Release.--The Secretary of Education shall release all 
conditions and covenants that were imposed by the United States, and 
the reversionary interests that were retained by the United States, as 
part of the conveyance of a parcel of Federal surplus property located 
in Barrigada, Guam, consisting of approximately 314.28 acres and known 
as Naval Communications Area Master Station, WESTPAC, parcel IN, which 
was conveyed to the Guam Community College pursuant to--
        (1) the quitclaim deed dated June 8, 1990, conveying 61.45 
    acres, between the Secretary, acting through the Administrator for 
    Management Services, and the Guam Community College, acting through 
    its Board of Trustees; and
        (2) the quitclaim deed dated June 8, 1990, conveying 252.83 
    acres, between the Secretary, acting through the Administrator for 
    Management Services, and the Guam Community College, acting through 
    its Board of Trustees, and the Governor of Guam.
    (b) Consideration.--The Secretary shall execute the release of the 
conditions, covenants, and reversionary interests under subsection (a) 
without consideration.
    (c) Instrument of Release.--The Secretary shall execute and file in 
the appropriate office or offices a deed of release, amended deed, or 
other appropriate instrument effectuating the release of the 
conditions, covenants, and reversionary interests under subsection (a).

SEC. 863. SENSE OF CONGRESS REGARDING GOOD CHARACTER.

    (a) Findings.--Congress finds that--
        (1) the future of our Nation and world will be determined by 
    the young people of today;
        (2) record levels of youth crime, violence, teenage pregnancy, 
    and substance abuse indicate a growing moral crisis in our society;
        (3) character development is the long-term process of helping 
    young people to know, care about, and act upon such basic values as 
    trustworthiness, respect for self and others, responsibility, 
    fairness, compassion, and citizenship;
        (4) these values are universal, reaching across cultural and 
    religious differences;
        (5) a recent poll found that 90 percent of Americans support 
    the teaching of core moral and civic values;
        (6) parents will always be children's primary character 
    educators;
        (7) good moral character is developed best in the context of 
    the family;
        (8) parents, community leaders, and school officials are 
    establishing successful partnerships across the Nation to implement 
    character education programs;
        (9) character education programs also ask parents, faculty, and 
    staff to serve as role models of core values, to provide 
    opportunities for young people to apply these values, and to 
    establish high academic standards that challenge students to set 
    high goals, work to achieve the goals, and persevere in spite of 
    difficulty;
        (10) the development of virtue and moral character, those 
    habits of mind, heart, and spirit that help young people to know, 
    desire, and do what is right, has historically been a primary 
    mission of colleges and universities; and
        (11) the Congress encourages parents, faculty, and staff across 
    the Nation to emphasize character development in the home, in the 
    community, in our schools, and in our colleges and universities.
    (b) Sense of Congress.--It is the sense of Congress that Congress 
should support and encourage character building initiatives in schools 
across America and urge colleges and universities to affirm that the 
development of character is one of the primary goals of higher 
education.

SEC. 864. EDUCATIONAL MERCHANDISE LICENSING CODES OF CONDUCT.

    It is the sense of Congress that all American colleges and 
universities should adopt rigorous educational merchandise licensing 
codes of conduct to assure that university and college licensed 
merchandise is not made by sweatshop and exploited adult or child labor 
either domestically or abroad, and that such codes should include at 
least the following:
        (1) Public reporting of the code and the companies adhering to 
    the code.
        (2) Independent monitoring of the companies adhering to the 
    code by entities not limited to major international accounting 
    firms.
        (3) An explicit prohibition on the use of child labor.
        (4) An explicit requirement that companies pay workers at least 
    the governing minimum wage and applicable overtime.
        (5) An explicit requirement that companies allow workers the 
    right to organize without retribution.
        (6) An explicit requirement that companies maintain a safe and 
    healthy workplace.

                   TITLE IX--AMENDMENTS TO OTHER LAWS

   PART A--EXTENSION AND REVISION OF INDIAN HIGHER EDUCATION PROGRAMS

SEC. 901. TRIBALLY CONTROLLED COLLEGES AND UNIVERSITIES.

    (a) Reauthorization.--
        (1) Amount of grants.--Section 108(a)(2) of the Tribally 
    Controlled Community College Assistance Act of 1978 (25 U.S.C. 
    1808(a)(2)) is amended by striking ``$5,820'' and inserting 
    ``$6,000''.
        (2) Authorization of appropriations.--
            (A) Title i.--Section 110(a) of the Tribally Controlled 
        Community College Assistance Act of 1978 (25 U.S.C. 1810(a)) is 
        amended--
                (i) in paragraph (1), by striking ``1993'' and 
            inserting ``1999'';
                (ii) in paragraph (2), by striking ``$30,000,000 for 
            fiscal year 1993'' and inserting ``$40,000,000 for fiscal 
            year 1999'';
                (iii) in paragraph (3), by striking ``1993'' and 
            inserting ``1999''; and
                (iv) in paragraph (4), by striking ``1993'' and 
            inserting ``1999''.
            (B) Title iii.--Section 306(a) of the Tribally Controlled 
        Community College Assistance Act of 1978 (25 U.S.C. 1836(a)) is 
        amended by striking ``1993'' and inserting ``1999''.
            (C) Title iv.--Section 403 of the Tribal Economic 
        Development and Technology Related Education Assistance Act of 
        1990 (25 U.S.C. 1852) is amended by striking ``1993'' and 
        inserting ``1999''.
    (b) Extension to Colleges and Universities.--The Tribally 
Controlled Community College Assistance Act of 1978 (25 U.S.C. 1801 et 
seq.) is amended--
        (1) in the first section (25 U.S.C. 1801 note), by striking 
    ``Community College'' and inserting ``College or University'';
        (2) in the heading for title I (25 U.S.C. 1802 et seq.), by 
    striking ``COMMUNITY COLLEGES'' and inserting ``COLLEGES OR 
    UNIVERSITIES'';
        (3) in the heading for title III (25 U.S.C. 1831 et seq.), by 
    striking ``COMMUNITY COLLEGE'' and inserting ``COLLEGE OR 
    UNIVERSITY'';
        (4) in the heading for section 107, by striking ``community 
    colleges'' and inserting ``colleges or universities'';
        (5) in sections 2(a)(4), 2(a)(7), 2(b)(4), 102(b), 103, 105, 
    106(b), 107(a), 107(b), 108(a), 108(b)(3)(A), 108(b)(3)(B), 
    108(b)(4), 109(b)(2), 109(b)(3), 109(d), 113(a), 113(b), 113(c)(1), 
    113(c)(2), 302(b), 303, 304, 305(a), and 305(b) (25 U.S.C. 
    1801(a)(4), 1801(a)(7), 1801(b)(4), 1803(b), 1804, 1805, 1806(b), 
    1807(a), 1807(b), 1808(a), 1808(b)(3)(A), 1808(b)(3)(B), 
    1808(b)(4), 1809(b)(2), 1809(b)(3), 1809(d), 1813(a), 1813(b), 
    1813(c)(1), 1813(c)(2), 1832(b), 1833, 1834, 1835(a), and 1835(b)), 
    by striking ``community college'' each place the term appears and 
    inserting ``college or university'';
        (6) in sections 101, 102(a), 104(a)(1), 107(a), 108(c)(2), 
    109(b)(1), 111(a)(2), 112(a), 112(a)(2), 112(c)(2)(B), 301, 302(a), 
    and 402(a) (25 U.S.C. 1802, 1803(a), 1804a(a)(1), 1807(a), 
    1808(c)(2), 1809(b)(1), 1811(a)(2), 1812(a), 1812(a)(2), 
    1812(c)(2)(B), 1831, 1832(a), and 1851(a)), by striking ``community 
    colleges'' each place the term appears and inserting ``colleges or 
    universities'';
        (7) in sections 108(a)(1), 108(a), 113(b)(2), 113(c)(2), 
    302(a), 302(b), 302(b)(2)(B), 302(b)(4), 303, 304, 305(a), and 
    305(b) (25 U.S.C. 1808(a)(1), 1808(a), 1813(b)(2), 1813(c)(2), 
    1832(a), 1832(b), 1832(b)(2)(B), 1832(b)(4), 1833, 1834, 1835(a), 
    and 1835(b)), by striking ``such college'' each place the term 
    appears and inserting ``such college or university'';
        (8) in sections 104(a)(2), 109(b)(1), and 111(a)(2) (25 U.S.C. 
    1804a(a)(2), 1809(b)(1), and 1811(a)(2)), by striking ``such 
    colleges'' and inserting ``such colleges or universities'';
        (9) in section 2(b)(5) (25 U.S.C. 1801(b)(5)), by striking 
    ``community college's'' and inserting ``college or university's'';
        (10) in section 109(a) (25 U.S.C. 1809(a)), by inserting ``or 
    university'' after ``tribally controlled college'';
        (11) in section 110(a)(4) (25 U.S.C. 1810(a)(4)), by striking 
    ``Tribally Controlled Community Colleges'' and inserting ``tribally 
    controlled colleges or universities'';
        (12) in sections 102(b), 109(d), 113(c)(2)(E), 302(b)(6), and 
    305(a) (25 U.S.C. 1803(b), 1809(d), 1813(c)(2)(E), 1832(b)(6), and 
    1835(a)), by striking ``the college'' and inserting ``the college 
    or university'';
        (13) in section 112(c)(1) (25 U.S.C. 1812(c)(1)), by striking 
    ``colleges'' and inserting ``colleges or universities'';
        (14) in sections 302(b)(4) and 305(a) (25 U.S.C. 1832(b)(4) and 
    1835(a)), by striking ``that college'' and inserting ``that college 
    or university''; and
        (15) in section 302(b)(4) (25 U.S.C. 1832(b)(4)), by striking 
    ``other colleges'' and inserting ``other colleges or 
    universities''.
    (c) Additional Conforming Amendments.--
        (1) Recommended legislation.--The Secretary of Education shall 
    prepare and submit to Congress recommended legislation containing 
    technical and conforming amendments to reflect the changes made by 
    subsection (b).
        (2) Submission to congress.--Not later than 6 months after the 
    effective date of this title, the Secretary of Education shall 
    submit the recommended legislation referred to under paragraph (1).
    (d) References.--Any reference to a section or other provision of 
the Tribally Controlled Community College Assistance Act of 1978 shall 
be deemed to be a reference to the Tribally Controlled College or 
University Assistance Act of 1978.
    (e) Clerical Amendment.--Section 109 of the Tribally Controlled 
Colleges or University Act of 1978 (as renamed by subsection (b)(1)) 
(25 U.S.C. 1809) is amended by redesignating subsection (d) as 
subsection (c).

SEC. 902. REAUTHORIZATION OF NAVAJO COMMUNITY COLLEGE ACT.

    Section 5(a)(1) of the Navajo Community College Act (25 U.S.C. 
640c-1) is amended by striking ``1993'' and inserting ``1999''.

                     PART B--EDUCATION OF THE DEAF

SEC. 911. SHORT TITLE.

    This part may be cited as the ``Education of the Deaf Amendments of 
1998''.

SEC. 912. ELEMENTARY AND SECONDARY EDUCATION PROGRAMS.

    Section 104(b) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4304(b)) is amended--
        (1) in paragraph (1)--
            (A) in subparagraph (A), by inserting ``and'' after the 
        semicolon;
            (B) in subparagraph (B), by striking ``; and'' and 
        inserting a period; and
            (C) by striking subparagraph (C);
        (2) in the matter preceding subparagraph (A) of paragraph (2)--
            (A) by striking ``paragraph (1)'' and inserting ``paragraph 
        (1)(B)''; and
            (B) by striking ``section 618(b)'' and inserting ``section 
        618(a)(1)(A)'';
        (3) in paragraph (3), by striking ``intermediate educational 
    unit'' and inserting ``educational service agency'';
        (4) in paragraph (4)--
            (A) in subparagraph (A), by striking ``intermediate 
        educational unit'' and inserting ``educational service 
        agency''; and
            (B) in subparagraph (B), by striking ``intermediate 
        educational units'' and inserting ``educational service 
        agencies''; and
        (5) by amending subparagraph (C) to read as follows:
            ``(C) provide the child a free appropriate public education 
        in accordance with part B of the Individuals with Disabilities 
        Education Act and procedural safeguards in accordance with the 
        following provisions of section 615 of such Act:
                ``(i) Paragraphs (1), and (3) through (6) of subsection 
            (b).
                ``(ii) Subsections (c) through (g).
                ``(iii) Subsection (h), except for the matter in 
            paragraph (4) pertaining to transmission of findings and 
            decisions to a State advisory panel.
                ``(iv) Paragraphs (1) and (2) of subsection (i).
                ``(v) Subsection (j)--

                    ``(I) except that such subsection shall not be 
                applicable to a decision by the University to refuse to 
                admit a child; or
                    ``(II) to dismiss a child, except that, before 
                dismissing any child, the University shall give at 
                least 60 days written notice to the child's parents and 
                to the local educational agency in which the child 
                resides, unless the dismissal involves a suspension, 
                expulsion, or other change in placement covered under 
                section 615(k).

                ``(vi) Subsections (k) through (m).''.

SEC. 913. AGREEMENT WITH GALLAUDET UNIVERSITY.

    Section 105(a) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4305(a)) is amended--
        (1) by striking ``within 1 year after enactment of the 
    Education of the Deaf Act Amendments of 1992, a new'' and inserting 
    ``and periodically update, an''; and
        (2) by amending the second sentence to read as follows: ``The 
    Secretary or the University shall determine the necessity for the 
    periodic update described in the preceding sentence.''.

SEC. 914. AGREEMENT FOR THE NATIONAL TECHNICAL INSTITUTE FOR THE DEAF.

    Paragraph (2) of section 112(a) of the Education of the Deaf Act of 
1986 (20 U.S.C. 4332(a)) is amended to read as follows:
    ``(2) The Secretary and the institution of higher education with 
which the Secretary has an agreement under this section--
        ``(A) shall periodically assess the need for modification of 
    the agreement; and
        ``(B) shall periodically update the agreement as determined 
    necessary by the Secretary or the institution.''.

SEC. 915. DEFINITIONS.

    Section 201 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4351) is amended--
        (1) in paragraph (1)(C), by striking ``Palau (but only until 
    the Compact of Free Association with Palau takes effect),''; and
        (2) in paragraph (5)--
            (A) by inserting ``and'' after ``Virgin Islands,''; and
            (B) by striking ``, and Palau (but only until the Compact 
        of Free Association with Palau takes effect)''.

SEC. 916. GIFTS.

    Subsection (b) of section 203 of the Education of the Deaf Act of 
1986 (20 U.S.C. 4353) is amended to read as follows:
    ``(b) Independent Financial and Compliance Audit.--
        ``(1) In general.--Gallaudet University shall have an annual 
    independent financial and compliance audit made of the programs and 
    activities of the University, including the national mission and 
    school operations of the elementary and secondary education 
    programs at Gallaudet. The institution of higher education with 
    which the Secretary has an agreement under section 112 shall have 
    an annual independent financial and compliance audit made of the 
    programs and activities of such institution of higher education, 
    including NTID, and containing specific schedules and analyses for 
    all NTID funds, as determined by the Secretary.
        ``(2) Compliance.--As used in paragraph (1), compliance means 
    compliance with sections 102(b), 105(b)(4), 112(b)(5), and 203(c), 
    paragraphs (2) and (3) of section 207(b), subsections (b)(2), 
    (b)(3), and (c) through (f), of section 207, and subsections (b) 
    and (c) of section 210.
        ``(3) Submission of audits.--A copy of each audit described in 
    paragraph (1) shall be provided to the Secretary within 15 days of 
    acceptance of the audit by the University or the institution 
    authorized to establish and operate the NTID under section 112(a), 
    as the case may be, but not later than January 10 of each year.''.

SEC. 917. REPORTS.

    Section 204(3) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4354(3)) is amended--
        (1) in subparagraph (A), by striking ``The annual'' and 
    inserting ``A summary of the annual''; and
        (2) in subparagraph (B), by striking ``the annual'' and 
    inserting ``a summary of the annual''.

SEC. 918. MONITORING, EVALUATION, AND REPORTING.

    Section 205(c) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4355(c)) is amended by striking ``1993, 1994, 1995, 1996, and 1997'' 
and inserting ``1998 through 2003''.

SEC. 919. FEDERAL ENDOWMENT PROGRAMS.

    Section 207 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4357) is amended--
        (1) in subsection (b)--
            (A) by amending paragraph (2) to read as follows:
    ``(2) Subject to the availability of appropriations, the Secretary 
shall make payments to each Federal endowment fund in amounts equal to 
sums contributed to the fund from non-Federal sources during the fiscal 
year in which the appropriations are made available (excluding 
transfers from other endowment funds of the institution involved).''; 
and
            (B) by striking paragraph (3);
        (2) in subsection (c)(1), by inserting ``the Federal 
    contribution of'' after ``shall invest'';
        (3) in subsection (d)--
            (A) in paragraph (2)(C), by striking ``Beginning on October 
        1, 1992, the'' and inserting ``The''; and
            (B) in paragraph (3)(A), by striking ``prior'' and 
        inserting ``current''; and
        (4) in subsection (h)--
            (A) in paragraph (1), by striking ``1993 through 1997'' and 
        inserting ``1998 through 2003''; and
            (B) in paragraph (2), by striking ``1993 through 1997'' and 
        inserting ``1998 through 2003''.

SEC. 920. SCHOLARSHIP PROGRAM.

    Section 208 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4358) is repealed.

SEC. 921. OVERSIGHT AND EFFECT OF AGREEMENTS.

    Section 209 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4359) is amended--
        (1) in subsection (a), by striking ``Committee on Education and 
    Labor'' and inserting ``Committee on Education and the Workforce''; 
    and
        (2) by redesignating such section as section 208.

SEC. 922. INTERNATIONAL STUDENTS.

    (a) Amendment.--Section 210 of the Education of the Deaf Act of 
1986 (20 U.S.C. 4359a) is amended--
        (1) in subsection (a)--
            (A) by striking ``10 percent'' and inserting ``15 
        percent''; and
            (B) by inserting before the period the following: ``, 
        except that in any school year no United States citizen who is 
        qualified to be admitted to the University or NTID and applies 
        for admission to the University or NTID shall be denied 
        admission because of the admission of an international 
        student''; and
        (2) in subsection (b), by striking ``surcharge of 75 percent 
    for the academic year 1993-1994 and 90 percent beginning with the 
    academic year 1994-1995'' and inserting ``surcharge of 100 percent 
    for the academic year 1999-2000 and any succeeding academic year''.
    (b) Conforming Amendment.--Section 210 of such Act (20 U.S.C. 
4359a) is amended by redesignating such section as section 209.

SEC. 923. RESEARCH PRIORITIES.

    Title II of the Education of the Deaf Act of 1986 is amended by 
striking section 211 (20 U.S.C. 4360) and inserting the following:

``SEC. 210. RESEARCH PRIORITIES.

    ``(a) Research Priorities.--Gallaudet University and the National 
Technical Institute for the Deaf shall each establish and disseminate 
priorities for their national mission with respect to deafness related 
research, development, and demonstration activities, that reflect 
public input, through a process that includes consumers, constituent 
groups, and the heads of other federally funded programs. The 
priorities for the University shall include activities conducted as 
part of the University's elementary and secondary education programs 
under section 104.
    ``(b) Research Reports.--The University and NTID shall each prepare 
and submit an annual research report, to the Secretary, the Committee 
on Education and the Workforce of the House of Representatives, and the 
Committee on Labor and Human Resources of the Senate, not later than 
January 10 of each year, that shall include--
        ``(1) a summary of the public input received as part of the 
    establishment and dissemination of priorities required by 
    subsection (a), and the University's and NTID's response to the 
    input; and
        ``(2) a summary description of the research undertaken by the 
    University and NTID, the start and projected end dates for each 
    research project, the projected cost and source or sources of 
    funding for each project, and any products resulting from research 
    completed in the prior fiscal year.''.

SEC. 924. NATIONAL STUDY ON THE EDUCATION OF THE DEAF.

    The Education of the Deaf Act of 1986 (20 U.S.C. 4301 et seq.) is 
amended by adding after section 210 (as inserted by section 923) the 
following:

``SEC. 211. NATIONAL STUDY ON THE EDUCATION OF THE DEAF.

    ``(a) Conduct of Study.--
        ``(1) In general.--The Secretary shall conduct a national study 
    on the education of the deaf, to identify education-related 
    barriers to successful postsecondary education experiences and 
    employment for individuals who are deaf, and those education-
    related factors that contribute to successful postsecondary 
    education experiences and employment for individuals who are deaf.
        ``(2) Definition.--In this section the term `deaf', when used 
    with respect to an individual, means an individual with a hearing 
    impairment, including an individual who is hard of hearing, an 
    individual deafened later in life, and an individual who is 
    profoundly deaf.
    ``(b) Public Input and Consultation.--
        ``(1) In general.--In conducting such study, the Secretary 
    shall obtain input from the public. To obtain such input, the 
    Secretary shall--
            ``(A) publish a notice with an opportunity for comment in 
        the Federal Register;
            ``(B) consult with individuals and organizations 
        representing a wide range of perspectives on deafness-related 
        issues, including organizations representing individuals who 
        are deaf, parents of children who are deaf, educators, and 
        researchers; and
            ``(C) take such other action as the Secretary deems 
        appropriate, which may include holding public meetings.
        ``(2) Structured opportunities.--The Secretary shall provide 
    structured opportunities to receive and respond to the viewpoints 
    of the individuals and organizations described in paragraph (1)(B).
    ``(c) Report.--The Secretary shall report to Congress not later 
than 18 months after the date of enactment of the Education of the Deaf 
Amendments of 1998 regarding the results of the study. The report shall 
contain--
        ``(1) recommendations, including recommendations for 
    legislation, that the Secretary deems appropriate; and
        ``(2) a detailed summary of the input received under subsection 
    (b) and the ways in which the report addresses such input.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated $1,000,000 for each of the fiscal years 1999 and 2000 to 
carry out the provisions of this section.''.

SEC. 925. AUTHORIZATION OF APPROPRIATIONS.

    Title II of the Education of the Deaf Act of 1986 (20 U.S.C. 4351 
et seq.) is amended by adding after section 211 (as inserted by section 
924) the following:

``SEC. 212. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Gallaudet University.--There are authorized to be 
appropriated such sums as may be necessary for each of the fiscal years 
1998 through 2003 to carry out the provisions of title I and this 
title, relating to--
        ``(1) Gallaudet University;
        ``(2) Kendall Demonstration Elementary School; and
        ``(3) the Model Secondary School for the Deaf.
    ``(b) National Technical Institute for the Deaf.--There are 
authorized to be appropriated such sums as may be necessary for each of 
the fiscal years 1998 through 2003 to carry out the provisions of title 
I and this title relating to the National Technical Institute for the 
Deaf.''.

                PART C--UNITED STATES INSTITUTE OF PEACE

SEC. 931. AUTHORITIES OF THE UNITED STATES INSTITUTE OF PEACE.

    The United States Institute of Peace Act (22 U.S.C. 4601 et seq.) 
is amended--
        (1) in section 1705 (22 U.S.C. 4604)--
            (A) in subsection (f), by inserting ``personal service and 
        other'' after ``may enter into''; and
            (B) in subsection (o), by inserting after ``Services'' the 
        following: ``and use all sources of supply and services of the 
        General Services Administration'';
        (2) in section 1710(a)(1) (22 U.S.C. 4609(a)(1))--
            (A) by striking ``1993'' and inserting ``1999''; and
            (B) by striking ``6'' and inserting ``4''; and
        (3) in the second and third sentences of section 1712 (22 
    U.S.C. 4611), by striking ``shall'' each place the term appears and 
    inserting ``may''.

              PART D--VOLUNTARY RETIREMENT INCENTIVE PLANS

SEC. 941. VOLUNTARY RETIREMENT INCENTIVE PLANS.

    (a) In General.--Section 4 of the Age Discrimination in Employment 
Act of 1967 (29 U.S.C. 623) is amended by adding at the end the 
following:
    ``(m) Notwithstanding subsection (f)(2)(B), it shall not be a 
violation of subsection (a), (b), (c), or (e) solely because a plan of 
an institution of higher education (as defined in section 101 of the 
Higher Education Act of 1965) offers employees who are serving under a 
contract of unlimited tenure (or similar arrangement providing for 
unlimited tenure) supplemental benefits upon voluntary retirement that 
are reduced or eliminated on the basis of age, if--
        ``(1) such institution does not implement with respect to such 
    employees any age-based reduction or cessation of benefits that are 
    not such supplemental benefits, except as permitted by other 
    provisions of this Act;
        ``(2) such supplemental benefits are in addition to any 
    retirement or severance benefits which have been offered generally 
    to employees serving under a contract of unlimited tenure (or 
    similar arrangement providing for unlimited tenure), independent of 
    any early retirement or exit-incentive plan, within the preceding 
    365 days; and
        ``(3) any employee who attains the minimum age and satisfies 
    all non-age-based conditions for receiving a benefit under the plan 
    has an opportunity lasting not less than 180 days to elect to 
    retire and to receive the maximum benefit that could then be 
    elected by a younger but otherwise similarly situated employee, and 
    the plan does not require retirement to occur sooner than 180 days 
    after such election.''.
    (b) Plans Permitted.--Section 4(i)(6) of the Age Discrimination in 
Employment Act of 1967 (29 U.S.C. 623(i)(6)) is amended by adding after 
the word ``accruals'' the following: ``or it is a plan permitted by 
subsection (m).''
    (c) Construction.--Nothing in the amendment made by subsection (a) 
shall affect the application of section 4 of the Age Discrimination in 
Employment Act of 1967 (29 U.S.C. 623) with respect to--
        (1) any plan described in subsection (m) of section 4 of such 
    Act (as added by subsection (a)), for any period prior to enactment 
    of such Act;
        (2) any plan not described in subsection (m) of section 4 of 
    such Act (as added by subsection (a)); or
        (3) any employer other than an institution of higher education 
    (as defined in section 101 of the Higher Education Act of 1965).
    (d) Effective Date.--
        (1) In general.--This section shall take effect on the date of 
    enactment of this Act.
        (2) Effect on causes of action existing before date of 
    enactment.--The amendment made by subsection (a) shall not apply 
    with respect to any cause of action arising under the Age 
    Discrimination in Employment Act of 1967 prior to the date of 
    enactment of this Act.

           PART E--GENERAL EDUCATION PROVISIONS ACT AMENDMENT

SEC. 951. AMENDMENT TO FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT OF 
              1974

    Section 444(b) of the General Education Provisions Act (20 U.S.C. 
1232g(b)), also known as the Family Educational Rights and Privacy Act 
of 1974, is amended--
        (1) in paragraph (1), by amending subparagraph (C) to read as 
    follows:
        ``(C)(i) authorized representatives of (I) the Comptroller 
    General of the United States, (II) the Secretary, or (III) State 
    educational authorities, under the conditions set forth in 
    paragraph (3), or (ii) authorized representatives of the Attorney 
    General for law enforcement purposes under the same conditions as 
    apply to the Secretary under paragraph (3);''; and
        (2) in paragraph (6)--
            (A) by inserting ``(A)'' after ``(6)'';
            (B) in subparagraph (A), as designated by subparagraph (A) 
        of this paragraph--
                (i) by striking ``the results'' and inserting ``or a 
            nonforcible sex offense, the final results''; and
                (ii) by striking ``such crime'' each place the term 
            appears and inserting ``such crime or offense''; and
            (C) adding at the end thereof the following:
    ``(B) Nothing in this section shall be construed to prohibit an 
institution of postsecondary education from disclosing the final 
results of any disciplinary proceeding conducted by such institution 
against a student who is an alleged perpetrator of any crime of 
violence (as that term is defined in section 16 of title 18, United 
States Code), or a nonforcible sex offense, if the institution 
determines as a result of that disciplinary proceeding that the student 
committed a violation of the institution's rules or policies with 
respect to such crime or offense.
    ``(C) For the purpose of this paragraph, the final results of any 
disciplinary proceeding--
        ``(i) shall include only the name of the student, the violation 
    committed, and any sanction imposed by the institution on that 
    student; and
        ``(ii) may include the name of any other student, such as a 
    victim or witness, only with the written consent of that other 
    student.''.

SEC. 952. ALCOHOL OR DRUG POSSESSION DISCLOSURE.

    Section 444 of the General Education Provisions Act (20 U.S.C. 
1232g) is amended by adding at the end the following:
    ``(i) Drug and Alcohol Violation Disclosures.--
        ``(1) In general.--Nothing in this Act or the Higher Education 
    Act of 1965 shall be construed to prohibit an institution of higher 
    education from disclosing, to a parent or legal guardian of a 
    student, information regarding any violation of any Federal, State, 
    or local law, or of any rule or policy of the institution, 
    governing the use or possession of alcohol or a controlled 
    substance, regardless of whether that information is contained in 
    the student's education records, if--
            ``(A) the student is under the age of 21; and
            ``(B) the institution determines that the student has 
        committed a disciplinary violation with respect to such use or 
        possession.
        ``(2) State law regarding disclosure.--Nothing in paragraph (1) 
    shall be construed to supersede any provision of State law that 
    prohibits an institution of higher education from making the 
    disclosure described in subsection (a).''.

    PART F--LIAISON FOR PROPRIETARY INSTITUTIONS OF HIGHER EDUCATION

SEC. 961. LIAISON FOR PROPRIETARY INSTITUTIONS OF HIGHER EDUCATION.

    Title II of the Department of Education Organization Act (20 U.S.C. 
3411 et seq.) is amended by adding at the end the following:

``SEC. 219. LIAISON FOR PROPRIETARY INSTITUTIONS OF HIGHER EDUCATION.

    ``(a) Establishment.--There shall be in the Department a Liaison 
for Proprietary Institutions of Higher Education, who shall be an 
officer of the Department appointed by the Secretary.
    ``(b) Appointment.--The Secretary shall appoint, not later than 6 
months after the date of enactment of the Higher Education Amendments 
of 1998 a Liaison for Proprietary Institutions of Higher Education who 
shall be a person who--
        ``(1) has attained a certificate or degree from a proprietary 
    institution of higher education; or
        ``(2) has been employed in a proprietary institution setting 
    for not less than 5 years.
    ``(c) Duties.--The Liaison for Proprietary Institutions of Higher 
Education shall--
        ``(1) serve as the principal advisor to the Secretary on 
    matters affecting proprietary institutions of higher education;
        ``(2) provide guidance to programs within the Department that 
    involve functions affecting proprietary institutions of higher 
    education; and
        ``(3) work with the Federal Interagency Committee on Education 
    to improve the coordination of--
            ``(A) the outreach programs in the numerous Federal 
        departments and agencies that administer education and job 
        training programs;
            ``(B) collaborative business and education partnerships; 
        and
            ``(C) education programs located in, and involving, rural 
        areas.''.

                  PART G--AMENDMENTS TO OTHER STATUTES

SEC. 971. NONDISCHAREABILITY OF CERTAIN CLAIMS FOR EDUCATIONAL BENEFITS 
              PROVIDED TO OBTAIN HIGHER EDUCATION.

    (a) Amendment.--Section 523(a)(8) of title 11, United States Code, 
is amended by striking ``unless--'' and all that follows through ``(B) 
excepting such debt'' and inserting ``unless excepting such debt''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply only with respect to cases commenced under title 11, United 
States Code, after the date of enactment of this Act.

SEC. 972. GNMA GUARANTEE FEE.

    (a) In General.--Section 306(g)(3)(A) of the National Housing Act 
(12 U.S.C. 1721(g)(3)(A)) is amended by striking ``No fee or charge'' 
and all that follows through ``States)'' and inserting ``The 
Association shall assess and collect a fee in an amount equal to nine 
basis points''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 2004.

                            PART H--REPEALS

SEC. 981. REPEALS.

    Section 4122 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7132) is repealed.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
```