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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6 Referred in Senate (RFS)]

  2d Session
                                 H. R. 6

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 7, 1998

 Received; read twice and referred to the Committee on Labor and Human 
                               Resources

_______________________________________________________________________

                                 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.

    This Act may be cited as the ``Higher Education Amendments of 
1998''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. References.
Sec. 4. General effective date.
                      TITLE I--GENERAL PROVISIONS

          Part A--Extension and Revision of General Provisions

Sec. 101. Redesignation and transfer of provisions.
Sec. 102. Definitions.
Sec. 103. Regulatory reform.
  Part B--Performance-based Organization for the Delivery of Federal 
                     Student Financial Assistance.

Sec. 111. Performance-based organization for the delivery of Federal 
                            student financial assistance.
         TITLE II--POSTSECONDARY EDUCATION IMPROVEMENT PROGRAMS

Sec. 201. Urban community service.
Sec. 202. Fund for the Improvement of Postsecondary Education.
Sec. 203. Grants to States for workplace and community transition 
                            training for incarcerated youth offenders.
Sec. 204. Advanced placement fee payment program.
Sec. 205. Teacher quality enhancement grants.
Sec. 206. Campus safety.
Sec. 207. Accountability for institutions of higher education that 
                            prepare teachers.
Sec. 208. Additional repeal.
                      TITLE III--INSTITUTIONAL AID

Sec. 301. Strengthening institutions.
Sec. 302. Historically black colleges and universities.
Sec. 303. Minority science and engineering improvement program.
Sec. 304. General provisions.
                      TITLE IV--STUDENT ASSISTANCE

                       Part A--Grants to Students

Sec. 401. Pell grants.
Sec. 402. Federal TRIO programs.
Sec. 403. National early intervention and partnership program.
Sec. 404. Repeals.
Sec. 405. Establishment of new programs.
Sec. 406. Federal supplemental educational opportunity grants.
Sec. 407. Grants to States for State student incentives.
Sec. 408. Special programs for students whose families are engaged in 
                            migrant and seasonal farmwork.
Sec. 409. Byrd scholarships.
             Part B--Federal Family Education Loan Program

Sec. 411. Limitation repealed.
Sec. 412. Advances to reserve funds.
Sec. 412A. Guaranty agency reforms.
Sec. 413. Guaranty agency reforms.
Sec. 414. Scope and duration of program.
Sec. 415. Limitations on individual federally insured loans and Federal 
                            loan insurance.
Sec. 416. Applicable interest rates.
Sec. 417. Federally guaranteed student loans.
Sec. 418. Voluntary agreements with guaranty agencies.
Sec. 419. Federal consolidation loans.
Sec. 420. Disbursement.
Sec. 421. Unsubsidized Stafford loans.
Sec. 422. Repeal of loan forgiveness.
Sec. 423. Legal powers and responsibilities.
Sec. 424. Student loan information.
Sec. 425. Definitions.
Sec. 426. Discharge.
Sec. 427. Cancellation of loans for certain public service.
Sec. 428. Debt management options.
Sec. 429. Special allowances.
Sec. 430. Loan forgiveness for child care providers.
                  Part C--Federal Work-Study Programs

Sec. 435. Amendments to part C.
          Part D--William D. Ford Federal Direct Loan Program

Sec. 436. Selection of institutions.
Sec. 437. Terms and conditions.
Sec. 438. Contracts.
Sec. 439. Funds for administrative expenses.
Sec. 440. Authority to sell loans.
Sec. 441. Cancellation of loans for certain public service.
                     Part E--Federal Perkins Loans

Sec. 445. Amendments to part E.
                         Part F--Need Analysis

Sec. 446. Cost of attendance.
Sec. 447. Data elements.
Sec. 448. Family contribution for dependent students.
Sec. 449. Family contribution for independent students without 
                            dependents other than a spouse.
Sec. 450. Family contribution for independent students with dependents 
                            other than a spouse.
Sec. 451. Regulations; updated tables and amounts.
Sec. 452. Simplified needs test; zero expected family contribution.
Sec. 453. Discretion of student financial aid administrators.
Sec. 454. Treatment of other financial assistance.
                       Part G--General Provisions

Sec. 461. Definitions.
Sec. 462. Master calendar.
Sec. 463. Forms and regulations.
Sec. 464. Student eligibility.
Sec. 465. State court judgments.
Sec. 466. Information for students.
Sec. 467. National student loan data system.
Sec. 468. Program participation agreements.
Sec. 469. Quality assurance and regulatory simplification.
Sec. 470. Distance education demonstration programs.
Sec. 471. Garnishment requirements.
Sec. 472. Administrative subpoena authority.
Sec. 473. Advisory committee on student financial assistance.
Sec. 474. Meetings and negotiated rulemaking.
                       Part H--Program Integrity

Sec. 476. State postsecondary review program.
Sec. 477. Accrediting agency recognition.
Sec. 478. Eligibility and certification procedures.
Sec. 479. Program review and data.
                    TITLE V--DEVELOPING INSTITUTIONS

Sec. 501. Establishment of new title V.
        TITLE VI--INTERNATIONAL AND GRADUATE 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.
Sec. 605. Transfer and reauthorization of graduate assistance in areas 
                            of national need program.
  TITLE VII--CONSTRUCTION, RECONSTRUCTION, AND RENOVATION OF ACADEMIC 
                               FACILITIES

Sec. 701. Extension of prior rights and obligations.
Sec. 702. Repeal of part A.
Sec. 703. Extension of authorization of part B.
Sec. 704. Extension of authorization of part C.
                   TITLE VIII--ADDITIONAL PROVISIONS

Sec. 801. Study of transfer of credits.
Sec. 802. Study of market mechanisms in Federal student loan programs.
Sec. 803. Improvements in market information and public accountability 
                            in higher education.
Sec. 804. Differential regulation.
Sec. 805. Annual report on cost of higher education.
Sec. 806. Study of consolidation options.
Sec. 807. Educational merchandise licensing codes of conduct.
Sec. 808. Repeals and extensions of previous higher education 
                            amendments provisions.
Sec. 809. Limitation.
Sec. 810. Procedures for cancellations and deferments for eligible 
                            disabled veterans.
                   TITLE IX--AMENDMENTS TO OTHER LAWS

                   Pasubpart 1-gallaudet universityt
Sec. 901. Board of Trustees membership.
Sec. 902. Elementary and secondary education programs.
Sec. 903. Agreesubpart 2-national institute for the deaf
Sec. 911. Agreement fosubpart 3-general provisionstitute for the Deaf.
Sec. 921. Definitions.
Sec. 922. Audits.
Sec. 923. Reports.
Sec. 924. Monitoring, evaluation, and reporting.
Sec. 925. Responsibility of the liaison.
Sec. 926. Federal endowment programs.
Sec. 927. Scholarship program.
Sec. 928. Oversight and effect of agreements.
Sec. 929. International students.
Sec. 930. Authorization of appropriations.
   Part B--Extension and Revision of Indian Higher Education Programs

Sec. 951. Tribally controlled colleges and universities.
Sec. 952. Reauthorization of provisions from Higher Education 
                            Amendments of 1992.
Sec. 953. Reauthorization of Navajo Community College Act.
                Part C--General Education Provisions Act

Sec. 961. Access to records concerning crimes of violence.
                 TITLE X--FACULTY RETIREMENT PROVISIONS

Sec. 1001. Voluntary retirement incentive plans.
                       TITLE XI--OFFESTS REQUIRED

Sec. 1101. Assurance of offsets.
                     TITLE XII--ALCOHOL CONSUMPTION

Sec. 1201. Sense of the House of Representatives.
    TITLE XIII--PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS

Sec. 1301. Protection of student speech and association rights.
                 TITLE XIV--DRUG AND ALCOHOL PREVENTION

Sec. 1401. Drug and alcohol abuse prevention.
 TITLE XV--EQUAL OPPORTUNITY FOR INDIVIDUALS WITH LEARNING DISABILITIES

Sec. 1501. Demonstration projects ensuring equal opportunity for 
                            individuals with learning disabilities.
TITLE XVI--SENSE OF THE HOUSE OF REPRESENTATIVES REGARDING DETECTION OF 
    LEARNING DISABILITIES, PARTICULARLY DYSLEXIA, IN POSTSECONDARY 
                               EDUCATION

Sec. 1601. Sense of the House of Representatives.
                     TITLE XVII--SPECIAL PROVISION

Sec. 1701. Ternmination of effectiveness.

SEC. 3. 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. 4. 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

          PART A--EXTENSION AND REVISION OF GENERAL PROVISIONS

SEC. 101. REDESIGNATION AND TRANSFER OF PROVISIONS.

    (a) In General.--
            (1) Repeal of title i.--Title I (20 U.S.C. 1001 et seq.) is 
        repealed.
            (2) Repeal of title xii provisions.--The following sections 
        of title XII are repealed: sections 1206, 1211, and 1212 (20 
        U.S.C. 1145a, 1145e, and 1145f).
            (3) Redesignations.--
                    (A) Title XII is redesignated as title I.
                    (B) Sections 1201, 1202, and 1203 (20 U.S.C. 1141, 
                1142, and 1143) are redesignated as sections 101, 102, 
                and 103, respectively.
                    (C) Section 1204(b), as redesignated by section 251 
                of the Higher Education Amendments of 1968 (20 U.S.C. 
                1144(b); 82 Stat. 1042), is redesignated as section 
                104.
                    (D) Section 1204, as added by section 1201 of the 
                Education Amendments of 1980 (20 U.S.C. 1144a; 94 Stat. 
                1495), is amended by striking subsection (a), and by 
                redesignating subsection (b) as section 105.
                    (E) Sections 1205, 1207, 1208, 1209, 1210, and 1213 
                (20 U.S.C. 1145, 1145b, 1145c, 1145d, 1145d-1, and 
                1145g) are redesignated as sections 106 through 111, 
                respectively.
            (4) Transfer.--Title I (including sections 101 through 
        111), as redesignated by paragraph (3), is transferred to 
        immediately follow the short title of the Higher Education Act 
        of 1965 (20 U.S.C. 1001 note).
    (b) Internal Cross-References.--The Higher Education Act of 1965 is 
amended--
            (1) in section 106 (as redesignated by subsection (a)(3)), 
        by striking ``481(a)'' and inserting ``101(a)'';
            (2) in section 485(f)(1)(I), by striking ``section 1213'' 
        and inserting ``section 111'';
            (3) in section 498(j)(2), by striking ``section 
        1201(a)(2)'' and inserting ``section 101(a)(2)'';
            (4) in section 591(d)(2), by striking ``section 1201(a)'' 
        and inserting ``section 101(a)(1)''; and
            (5) in section 631(a)(8), by striking ``section 1201(a)'' 
        each place it appears and inserting ``section 101(a)(1)''.
    (c) Conforming Amendments.--
            (1) Title 10, united states code.--Sections 2193(c)(1) and 
        2199(2) of title 10, United States Code, are each amended by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (2) Title 18, united states code.--Section 207(j)(2)(B) of 
        title 18, United States Code, is amended by striking 
        ``1201(a)'' and inserting ``101(a)(1)''.
            (3) Title 39, united states code.--Section 3626(b)(3) of 
        title 39, United States Code, is amended by striking ``1201(a) 
        of the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101(a)(1) of the Higher Education Act of 1965''.
            (4) Anti-drug abuse act of 1988.--Section 3601(7) of the 
        Anti-Drug Abuse Act of 1988 (42 U.S.C. 11851(7)) is amended by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (5) 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(a)(1)''.
            (6) Department of state authorization act, fiscal years 
        1984 and 1985.--Section 803(1) of the Department of State 
        Authorization Act, Fiscal Years 1984 and 1985 (22 U.S.C. 
        4502(1)) is amended by striking ``1201(a)'' and inserting 
        ``101(a)(1)''.
            (7) Education for economic security act.--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(a)(1)''.
            (8) Elementary and secondary education act of 1965.--The 
        Elementary and Secondary Education Act of 1965 is amended--
                    (A) in section 7501(4) (20 U.S.C. 7601(4)) by 
                striking ``1201(a)'' and inserting ``101(a)(1)''; and
                    (B) in section 14101(17) (20 U.S.C. 8801(17)), by 
                striking ``1201(a)'' and inserting ``101(a)(1)''.
            (9) Federal agriculture improvement and reform act of 
        1996.--Section 922 of the Federal Agriculture Improvement and 
        Reform Act of 1996 (7 U.S.C. 2279c) is amended in subsections 
        (a)(1)(B) and (b)(1) by striking ``1201 of the Higher Education 
        Act of 1965 (20 U.S.C. 1141)'' and inserting ``101(a)(1) of the 
        Higher Education Act of 1965''.
            (10) Follow through act.--Section 670G(5) of the Follow 
        Through Act (42 U.S.C. 9877(5)) is amended by striking ``1201 
        of the Higher Education Act of 1965'' and inserting ``101(a)(1) 
        of the Higher Education Act of 1965''.
            (11) Food and agriculture act of 1977.--Section 
        1417(h)(1)(A) of the Food and Agriculture Act of 1977 (7 U.S.C. 
        3152(h)(1)(A)) is amended by striking ``1201(a) of the Higher 
        Education Act of 1965 (20 U.S.C. 1141(a))'' and inserting 
        ``101(a)(1) of the Higher Education Act of 1965''.
            (12) Foreign relations authorization act, fiscal years 1986 
        and 1987.--Section 603(d) of the Foreign Relations 
        Authorization Act, Fiscal Years 1986 and 1987 (20 U.S.C. 
        4703(d)) is amended by striking ``1201(a)'' and inserting 
        ``101(a)(1)''.
            (13) General education provisions act.--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(a)(1)''.
            (14) Harry s truman memorial scholarship act.--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(a)(1)''.
            (15) Head start act.--Section 649(c)(3) of the Head Start 
        Act (42 U.S.C. 9844(c)(3)) is amended by striking ``1201(a) of 
        the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101(a)(1) of the Higher Education Act of 1965''.
            (16) Higher education amendments of 1992.--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(a)(1)''.
            (17) Intelligence authorization act, fiscal year 1992.--
        Section 808(3) of the Intelligence Authorization Act, Fiscal 
        Year 1992 (20 U.S.C. 1908(3)) is amended by striking ``1201(a) 
        of the Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101(a)(1) of the Higher Education Act of 1965''.
            (18) Job training partnership act.--The Job Training 
        Partnership Act is amended--
                    (A) in section 4(12) (29 U.S.C. 1503(12)), by 
                striking ``1201(a)'' and inserting ``101(a)(1)''; and
                    (B) in section 141(d)(3)(B) (29 U.S.C. 
                1551(d)(3)(B)), by striking ``1201(a) of the Higher 
                Education Act of 1965 (20 U.S.C. 1141(a))'' and 
                inserting ``101(a)(1) of the Higher Education Act of 
                1965''.
            (19) Justice system improvement act of 1979.--Section 
        901(a)(17) of the Justice System Improvement Act of 1979 (42 
        U.S.C. 3791(a)(17)) is amended by striking ``1201(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101(a)(1) of the Higher Education Act of 1965''.
            (20) Mutual educational and cultural exchange act of 
        1961.--Section 112(a)(8) of the Mutual Educational and Cultural 
        Exchange Act of 1961 (22 U.S.C. 2460(a)(8)) is amended by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (21) National and community service act of 1990.--Sections 
        101(13) and 166(6) of the National and Community Service Act of 
        1990 (42 U.S.C. 12511(13); 12626(6)) are each 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''.
            (22) National defense authorization act for fiscal year 
        1987.--Section 1403(4) of the National Defense Authorization 
        Act for Fiscal Year 1987 (20 U.S.C. 4702(4)) is amended by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (23) National defense authorization act for fiscal year 
        1993.--The National Defense Authorization Act for Fiscal Year 
        1993 is amended in section 4451(b)(1) (10 U.S.C. 2701 note) by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (24) National defense authorization act for fiscal years 
        1992 and 1993.--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 by striking ``1201(a) of the Higher 
        Education Act of 1965 (20 U.S.C. 1141(a))'' and inserting 
        ``101(a)(1) of the Higher Education Act of 1965''.
            (25) National defense authorization act for fiscal year 
        1994.--The National Defense Authorization Act for Fiscal Year 
        1994 is amended--
                    (A) in section 841(c)(2) (10 U.S.C. 2324(2) note), 
                by striking ``1201(a) of the Higher Education Act of 
                1965 (20 U.S.C. 1141(a))'' and inserting ``101(a)(1) of 
                the Higher Education Act of 1965'';
                    (B) in section 1333(i)(3) (10 U.S.C. 2701 note), by 
                striking ``1201(a) of the Higher Education Act of 1965 
                (20 U.S.C. 1141(a))'' and inserting ``101(a)(1) of the 
                Higher Education Act of 1965''; and
                    (C) in section 1334(k)(3) (10 U.S.C. 2701 note), by 
                striking ``1201(a) of the Higher Education Act of 1965 
                (20 U.S.C. 1141(a))'' and inserting ``101(a)(1) of the 
                Higher Education Act of 1965''.
            (26) National education statistics act of 1994.--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(a)(1)''.
            (27) Older americans act of 1965.--Section 102(32) of the 
        Older Americans Act of 1965 (42 U.S.C. 3002(32)) is amended by 
        striking ``1201(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1141(a))'' and inserting ``101(a)(1) of the Higher 
        Education Act of 1965''.
            (28) 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(a)(1) of the Higher 
        Education Act of 1965''.
            (29) Public law 85 of the 67th congress.--Public Law 85 of 
        the 67th Congress (42 Stat. 208; 25 U.S.C. 13), popularly 
        referred to as the Snyder Act, is amended by striking ``1201'' 
        and inserting ``101(a)(1)''.
            (30) Communication act of 1934.--Section 223(h)(4) of the 
        Communication Act of 1934 (47 U.S.C. 223(h)(4)) is amended by 
        striking ``1201 of the Higher Education Act of 1965 (20 U.S.C. 
        1141)'' and inserting ``101(a)(1) of the Higher Education Act 
        of 1965''.
            (31) Federal water pollution control act.--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(a)(1)''.
            (32) Carl d. perkins vocational and applied technology 
        education act.--Section 347(2)(A) of the Carl D. Perkins 
        Vocational and Applied Technology Education Act (20 U.S.C. 
        2394(2)(A)) is amended by striking ``1201(a)'' and inserting 
        ``101(a)(1)''.
            (33) Energy policy and conservation act.--Section 
        362(f)(5)(A) of the Energy Policy and Conservation Act (42 
        U.S.C. 6322(f)(5)(A)) is amended by striking ``1201(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1141(a))'' and 
        inserting ``101(a)(1) of the Higher Education Act of 1965''.
            (34) James madison memorial fellowship act.--Section 815 of 
        the James Madison Memorial Fellowship Act (20 U.S.C. 4514) is 
        amended--
                    (A) in paragraph (3), by striking ``1201(a)'' and 
                inserting ``101(a)(1)''; and
                    (B) in paragraph (4), by striking ``1201(d)'' and 
                inserting ``101(a)(1)''.
            (35) Rehabilitation act of 1973.--Sections 7(32) and 
        101(a)(7)(A)(iv)(II) of the Rehabilitation Act of 1973 (29 
        U.S.C. 706(32); 29 U.S.C. 721(a)(7)(A)(iv)(II)) are each 
        amended by striking ``1201(a) of the Higher Education Act of 
        1965 (20 U.S.C. 1141(a))'' and inserting ``101(a)(1) of the 
        Higher Education Act of 1965''.
            (36) 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(a)(1) of the Higher Education Act of 1965''.
            (37) Tribally controlled community college assistance act 
        of 1978.--The Tribally Controlled Community College Assistance 
        Act of 1978 is amended--
                    (A) in section 2(a)(5) (25 U.S.C. 1801(a)(5)), by 
                striking ``1201(a)'' and inserting ``101(a)(1)''; and
                    (B) in section 113(b)(2) (25 U.S.C. 1813(b)(2)), by 
                striking ``1201(a) of the Higher Education Act of 1965 
                (20 U.S.C. 1141(a))'' and inserting ``101(a)(1) of the 
                Higher Education Act of 1965''.
            (38) Violent crime control and law enforcement act of 
        1994.--The Violent Crime Control and Law Enforcement Act of 
        1994 is amended--
                    (A) in sections 200103 and 200202 (42 U.S.C. 14092; 
                14111), by striking ``1201(a) of the Higher Education 
                Act of 1965 (20 U.S.C. 1141(a))'' and inserting 
                ``101(a)(1) of the Higher Education Act of 1965''; and
                    (B) in section 30401(b) (42 U.S.C. 13791(b)), by 
                striking ``a public'' through ``that Act'' and 
                inserting ``an elementary school as defined in section 
                14101(14) of the Elementary and Secondary Education Act 
                of 1965, and a secondary school as defined by section 
                14101(25) of such Act, which are public institutions''.
            (39) 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 101(a)(3)''; 
                and
                    (B) in paragraph (12), by striking ``section 481'' 
                and inserting ``section 101(a)(2)''.
            (40) 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 101(a)(2) of the Higher Education Act of 
        1965''.

SEC. 102. DEFINITIONS.

    (a) Institution of Higher Education.--Section 101 (as redesignated 
by section 101(a)(3) of this Act) is amended by striking subsections 
(a) and (b) and inserting the following:
    ``(a) Institution of Higher Education.--
            ``(1) In general.--Subject to paragraphs (2) through (4) of 
        this subsection:
                    ``(A) Principal criteria.--The term `institution of 
                higher education' means an educational institution in 
                any State that--
                            ``(i) 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;
                            ``(ii) is legally authorized within such 
                        State to provide a program of education beyond 
                        secondary education;
                            ``(iii) provides an educational program for 
                        which it awards a bachelor's degree or provides 
                        not less than a two-year program that is 
                        acceptable for full credit toward such a 
                        degree;
                            ``(iv) is a public or other nonprofit 
                        institution; and
                            ``(v) 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.--The term 
                `institution of higher education' also includes--
                            ``(i) any school that provides not less 
                        than a one-year program of training to prepare 
                        students for gainful employment in a recognized 
                        occupation and that meets the provision of 
                        clauses (i), (ii), (iv), and (v) of 
                        subparagraph (A); and
                            ``(ii) a public or nonprofit private 
                        educational institution in any State that, in 
                        lieu of the requirement in subparagraph (A)(i), 
                        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 subsection, the Secretary shall publish a list 
                of nationally recognized accrediting agencies or 
                associations that he determines, pursuant to subpart 2 
                of part H of title IV of this Act, to be reliable 
                authority as to the quality of the education or 
                training offered.
            ``(2) Definition for purposes of title iv programs.--
                    ``(A) Inclusion of additional institutions.--
                Subject to subparagraphs (B) through (D) of this 
                paragraph, the term `institution of higher education' 
                for purposes of title IV of this Act includes, in 
                addition to the institutions covered by the definition 
                in paragraph (1) of this subsection--
                            ``(i) a proprietary institution of higher 
                        education;
                            ``(ii) a postsecondary vocational 
                        institution; and
                            ``(iii) 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 paragraph (1) of 
                        this subsection and that has been approved by 
                        the Secretary for the purpose of part B of 
                        title IV.
                    ``(B) Institutions outside the united states.--
                            ``(i) For the purpose of qualifying as an 
                        institution under subparagraph (A)(iii) of this 
                        paragraph, 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 paragraph (1) of this 
                        subsection. 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 of this 
                        title unless--
                                    ``(I)(aa) at least 60 percent of 
                                those enrolled 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
                                    ``(bb) 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.
                            ``(ii) For the purpose of qualifying as an 
                        institution under subparagraph (A)(iii) of this 
                        paragraph, 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.
                        If such accreditation standards are determined 
                        not to be comparable, the foreign medical 
                        school shall be required to meet the 
                        requirements of paragraph (1) of this 
                        subsection.
                            ``(iii) 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 clause (i) of 
                        this subparagraph shall render such institution 
                        ineligible for the purpose of part B of title 
                        IV.
                            ``(iv) If, pursuant to this subparagraph, 
                        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.
                    ``(C) 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 subparagraph (A) of this paragraph if such 
                institution--
                            ``(i) 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;
                            ``(ii) enrolls 50 percent or more of its 
                        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 clause to 
                        such institution for good cause, as determined 
                        by the Secretary in the case of an institution 
                        of higher education that provides a 2-year or 
                        4-year program of instruction for which the 
                        institution awards an associate or 
                        baccalaureate degree;
                            ``(iii) has a student enrollment in which 
                        more than 25 percent of the students are 
                        incarcerated, except that the Secretary may 
                        waive the prohibition of this clause for a 
                        nonprofit institution that provides a 4-year or 
                        a 2-year program of instruction (or both) for 
                        which it awards a bachelor's or associate's 
                        degree or diploma, respectively; or
                            ``(iv) has a student enrollment in which 
                        more than 50 percent of the students do not 
                        have a high school diploma or its recognized 
                        equivalent and does not provide a 4-year or a 
                        2-year program of instruction (or both) for 
                        which it awards a bachelor's or associate's 
                        degree, respectively, except that the Secretary 
                        may waive the limitation contained in this 
                        clause if a nonprofit institution demonstrates 
                        to the satisfaction of the Secretary that it 
                        exceeds such limitation because it serves, 
                        through contracts with Federal, State, or local 
                        government agencies, significant numbers of 
                        students who do not have a high school diploma 
                        or its recognized equivalent.
                    ``(D) Limitations based on management.--An 
                institution shall not be considered to meet the 
                definition of an institution of higher education in 
                subparagraph (A) of this paragraph if--
                            ``(i) 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; or
                            ``(ii) the institution, its owner, or its 
                        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.
                    ``(E) Certification.--The Secretary shall certify 
                an institution's qualification as an institution of 
                higher education in accordance with the requirements of 
                subpart 2 of part H.
                    ``(F) Loss of eligibility.--An institution of 
                higher education shall not be considered to meet the 
                definition of an institution of higher education in 
                subparagraph (A) of this paragraph 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.
            ``(3) Proprietary institution of higher education.--
                    ``(A) Principal criteria.--For the purpose of this 
                subsection, the term `proprietary institution of higher 
                education' means a school that--
                            ``(i) provides an eligible program of 
                        training to prepare students for gainful 
                        employment in a recognized occupation;
                            ``(ii) meets the requirements of clauses 
                        (i) and (ii) of paragraph (1)(A) of this 
                        subsection;
                            ``(iii) does not meet the requirement of 
                        clause (iv) of paragraph (1)(A) of this 
                        subsection;
                            ``(iv) is accredited by a nationally 
                        recognized accrediting agency or association 
                        approved by the Secretary pursuant to part H of 
                        title IV;
                            ``(v) has been in existence for at least 2 
                        years; and
                            ``(vi) has at least 15 percent of its 
                        revenues from sources that are not derived from 
                        funds provided under title IV, as determined in 
                        accordance with regulations prescribed by the 
                        Secretary.
                In determining such 15 percent of revenues for purposes 
                of clause (vi), funds from programs of education and 
                training that do not meet the definition of an eligible 
                program in section 481(b), but are provided on a 
                contractual basis under Federal, State, or local 
                training programs, or under specialized business and 
                industry training requests, shall be counted.
                    ``(B) 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 clause (i) of 
                paragraph (1)(A) of this subsection, admits as regular 
                students persons who are beyond the age of compulsory 
                school attendance in the State in which the institution 
                is located.
            ``(4) Postsecondary vocational institution.--
                    ``(A) Principal criteria.--For the purpose of this 
                subsection, the term `postsecondary vocational 
                institution' means a school that--
                            ``(i) provides an eligible program of 
                        training to prepare students for gainful 
                        employment in a recognized occupation;
                            ``(ii) meets the requirements of clauses 
                        (i), (ii), (iv), and (v) of paragraph (1)(A) of 
                        this subsection; and
                            ``(iii) has been in existence for at least 
                        2 years.
                    ``(B) Additional institutions.--The term 
                `postsecondary vocational institution' also includes an 
                educational institution in any State that, in lieu of 
                the requirement in clause (i) of paragraph (1)(A) of 
                this subsection, admits as regular students persons who 
                are beyond the age of compulsory school attendance in 
                the State in which the institution is located.
    ``(b) State; Freely Associated States.--
            ``(1) State.--The term `State' includes, in addition to the 
        several States of the Union, the Commonwealth of Puerto Rico, 
        the District of Columbia, Guam, American Samoa, the Virgin 
        Islands, the Commonwealth of the Northern Mariana Islands, and 
        the Freely Associated States.
            ``(2) Freely associated states.--The term `Freely 
        Associated States' means the Republic of the Marshall Islands, 
        the Republic of Palau, and the Federated States of 
        Micronesia.''.
    (b) Conforming Amendments.--
            (1) Section 481 (20 U.S.C. 1088) is amended--
                    (A) by striking subsections (a), (b), and (c); and
                    (B) by redesignating subsections (d) through (f) as 
                subsections (a) through (c), respectively.
            (2) Each of the following provisions are amended by 
        striking ``section 481'' and inserting ``section 101(a)(2)'': 
        sections 435(a)(1), 487(d), and 496(j) and (k).
            (3) Section 498(i) (20 U.S.C. 1099c) is amended by striking 
        ``section 481 (other than the requirements in subsections 
        (b)(5) and (c)(3))'' and inserting ``section 101(a) (other than 
        the requirements in paragraphs (3)(A)(v) and (4)(A)(iii))''.
            (4) Section 498(j) is amended by striking ``sections 
        481(b)(5) and 481(c)(3)'' and inserting ``paragraphs (3)(A)(v) 
        and (4)(A)(iii) of section 101(a)''.
            (5) Section 105 (as redesignated by section 101(a)(3)(D)) 
        is amended by adding at the end the following new sentence: 
        ``This subsection shall cease to be effective on October 1, 
        2001.''.

SEC. 103. REGULATORY REFORM.

    Title I is amended by adding at the end the following new section:

``SEC. 112. REGULATORY REFORM.

    ``(a) Biennial Review of Regulations.--In every even-numbered year 
(beginning with 1998), the Secretary--
            ``(1) shall review all regulations issued under title IV of 
        the Higher Education Act of 1965 in effect at the time of the 
        review that apply to the operations or activities of any 
        participant in those programs; and
            ``(2) shall determine whether any such regulation is no 
        longer necessary in the public interest.
    ``(b) Effect of Determination.--The Secretary shall repeal, 
consolidate, simplify, or otherwise modify any regulation the Secretary 
determines to be no longer necessary in the public interest.
    ``(c) Report to Congress.--The Secretary shall report to the 
Congress any legislative changes necessary to permit regulatory 
simplification under this section.''.

  PART B--PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL 
                     STUDENT FINANCIAL ASSISTANCE.

SEC. 111. PERFORMANCE-BASED ORGANIZATION FOR THE DELIVERY OF FEDERAL 
              STUDENT FINANCIAL ASSISTANCE.

    Title I (as amended by part A of this title) is amended--
            (1) by striking the heading of such title and inserting the 
        following:

            ``TITLE I--GENERAL AND ADMINISTRATIVE PROVISIONS

                    ``PART A--GENERAL PROVISIONS'';

        and
            (2) by adding at the end the following new part:

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

``SEC. 131. 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 information systems 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 the level of service to students 
                and participants in the programs;
                    ``(B) to reduce the costs of administering the 
                Federal student financial assistance programs 
                authorized under title IV;
                    ``(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; and
                    ``(F) to implement an open, common, integrated 
                system for the delivery of student financial assistance 
                under title IV.
    ``(b) Authority.--
            ``(1) Authority of secretary.-- Notwithstanding any other 
        provision of this Act, the Secretary shall maintain 
        responsibility for the development and promulgation of policy 
        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;
                    ``(C) consider the Chief Operating Officer's 
                comments and estimates prior to finalizing such 
                regulations, policies, administrative guidance, or 
                procedures;
                    ``(D) assist the Chief Operating Officer in 
                identifying goals for the administration and 
                modernization of the delivery system for student 
                financial assistance under title IV; and
                    ``(E) if necessary, arrange for additional funding 
                to ensure that the PBO can efficiently perform its 
                functions.
            ``(2) Functions.--The PBO shall carry out the following 
        functions:
                    ``(A) All aspects of contracting for the data and 
                information systems supporting student financial 
                assistance under title IV, including the operational 
                administration of the William D. Ford Federal Direct 
                Loan Program, but not including the development of 
                policy relating to such programs.
                    ``(B) 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) technical specifications for 
                        software development and systems supporting the 
                        delivery of student financial assistance under 
                        title IV;
                            ``(iii) information technology and systems 
                        infrastructure related to the delivery and 
                        management of student financial assistance 
                        under title IV;
                            ``(iv) all software and hardware 
                        acquisitions and all information technology 
                        contracts related to the delivery and 
                        management of student financial assistance 
                        under title IV; and
                            ``(v) all customer service, training and 
                        user support related to the functions described 
                        in clauses (i) through (iv).
                    ``(C) 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.
                    ``(D) Annual development of goals, in consultation 
                with the Secretary, for the administration and 
                modernization of the system for delivery of student 
                financial assistance under title IV.
                    ``(E) Other functions proposed by the Secretary, 
                and agreed to by the Chief Operating Officer as are not 
                inconsistent with the functions of the PBO.
            ``(3) Independence.--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.
            ``(4) Review of pbo.--The PBO shall be subject to the usual 
        and customary Federal audit procedures, and be subject to 
        review by the Inspector General of the Department.
    ``(c) Authorization of Appropriations.--For the purpose of funding 
the administrative costs incurred by the PBO in administering systems 
supporting programs under this part, there are authorized to be 
appropriated such sums as may be necessary for fiscal year 1999 and 
each of the 4 succeeding fiscal years, except that funds authorized 
under section 458 shall be made available to the PBO by the Secretary 
for administrative costs authorized to be funded under that section.
    ``(d) Organizational Reports.--
            ``(1) Performance plan.--Within 6 months of the hiring of 
        the Chief Operating Officer, and every 12 months thereafter, 
        the Secretary and the Chief Operating Officer of the Department 
        shall develop a performance plan for the PBO that establishes 
        measurable goals and objectives for the organization. In 
        developing this performance plan, the Secretary and the Chief 
        Operating Officer shall consult with the Committee on Education 
        and the Workforce of the House of Representatives, the 
        Committee on Labor and Human Resources of the Senate, and the 
        Advisory Committee on Student Financial Assistance. The 
        performance plan shall include a concise statement of goals for 
        a modernized system for the delivery of student financial 
        assistance under title IV and identify action steps necessary 
        to achieve such goals. Such goals shall be used in evaluating 
        the performance of the Chief Operating Officer and the PBO 
        pursuant to paragraph (2).
            ``(2) Annual accountability report.--The Chief Operating 
        Officer shall prepare and submit an annual accountability 
        report to the Secretary and the Committee on Education and the 
        Workforce of the House of Representatives and the Committee on 
        Labor and Human Resources of the Senate. The accountability 
        report shall include--
                    ``(A) an independent financial audit of the 
                expenditures of both the PBO and programs administered 
                by it;
                    ``(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 results of the evaluations of performance 
                of the Chief Operating Officer and senior managers 
                under subsections (e)(2) and (f)(2), including the 
                amounts of bonus compensation awarded to these 
                individuals;
                    ``(E) a discussion of the effectiveness of 
                coordination between the PBO and the Secretary;
                    ``(F) recommendations for legislative and 
                regulatory changes to improve service to students and 
                their families, and to improve program efficiency and 
                integrity; and
                    ``(G) other such information as the Director of the 
                Office of Management and Budget shall prescribe for 
                performance based organizations.
    ``(e) Chief Operating Officer.--
            ``(1) In general.--The management of the PBO shall be 
        vested in a Chief Operating Officer who shall be appointed by 
        the Secretary to a 5-year term 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 of the date of enactment of this part. The Secretary 
        shall consult with the Chairmen of the Committee on Education 
        and the Workforce of the House of Representatives and the 
        Committee on Labor and Human Resources of the Senate prior to 
        making an appointment. The appointment shall be made on the 
        basis of demonstrated management ability and expertise in 
        information technology, including extensive experience in the 
        financial services industry, and without regard to political 
        affiliation or activity. The Secretary may reappoint the Chief 
        Operating Officer to subsequent terms so long as the 
        performance of the Chief Operating Officer, as set forth in the 
        performance agreement, is satisfactory or better. 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 (2).
        The President or Secretary shall communicate the reasons for 
        any such removal to the appropriate committees of Congress.
            ``(2) Performance agreement.--The Secretary and the Chief 
        Operating Officer shall enter into an annual performance 
        agreement which shall set forth measurable organization and 
        individual goals for the Chief Operating Officer in key 
        operational areas. The agreement shall be subject to review and 
        renegotiation at the end of each term. 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.
            ``(3) Compensation.--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 5. In addition, the Chief Operating Officer may receive a 
        bonus in an amount up to, but not in excess of, 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 performance goals set forth in the performance 
        agreement described in paragraph (2). Payment of a bonus under 
        this paragraph 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.
    ``(f) Senior Management.--
            ``(1) In general.--The Chief Operating Officer may appoint 
        up to 5 senior managers as may be necessary without regard to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service, and 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.
            ``(2) Performance agreement.--The Chief Operating Officer 
        shall enter into an annual performance agreement with each 
        senior manager appointed under this subsection which shall set 
        forth measurable organization and individual goals in key 
        operational areas. The agreement shall be subject to review and 
        renegotiation at the end of each term.
            ``(3) Compensation.--The Chief Operating Officer is 
        authorized to pay senior managers at an annual rate of basic 
        pay not to exceed 75 percent of 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 5. In addition, a senior manager 
        may receive a bonus in an amount up to, but not in excess of, 
        50 percent of such annual rate of basic pay, based upon the 
        Chief Operating Officer's evaluation of the manager's 
        performance in relation to the performance goals set forth in 
        the performance agreement described in paragraph (2).
    ``(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.
    ``(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) Procurement Flexibility.--
            ``(1) In general.--Except as provided in this subsection, 
        the PBO shall abide by all applicable Federal procurement laws 
        and regulations when procuring property and services. The PBO 
        shall--
                    ``(A) enter into contracts for information systems 
                supporting the programs authorized under title IV to 
                carry out the functions set forth in subsection (b)(2); 
                and
                    ``(B) 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.
            ``(2) 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.
            ``(3) Fee for service arrangements.--The Chief Operating 
        Officer shall, to the extent practicable and consistent with 
        the purpose of the PBO, utilize services available outside of 
        the Federal Government in the delivery of Federal student 
        financial assistance. To achieve this purpose, the PBO is 
        authorized to pay fees to an organization that are equivalent 
        to those paid by other entities for such services, if the Chief 
        Operating Officer determines that such organization currently 
        provides an information system or service that meets the 
        requirements of the PBO.
    ``(j) Focus Groups.--To facilitate information sharing and customer 
involvement, the Chief Operating Officer may establish focus groups 
composed of students, institutions, and other participants in the 
programs authorized by title IV to provide advice on student aid 
delivery matters.

``SEC. 132. ADMINISTRATIVE SIMPLIFICATION OF STUDENT AID DELIVERY.

    ``(a) In General.--The Secretary, and the Chief Operating Officer 
shall improve the efficiency and effectiveness of the student aid 
delivery system by encouraging and participating 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) Adoption of Voluntary Consensus Standards.--Except with 
respect to the common financial reporting form under section 483(a), 
the Secretary shall adopt voluntary consensus standards 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.
    ``(c) Requirements for Adoption of Voluntary Consensus Standards.--
Any voluntary consensus standard adopted under this section shall--
            ``(1) be a standard that has been developed, adopted, or 
        modified by a standard setting organization that is open to the 
        participation of the various entities engaged in the delivery 
        of Federal student financial assistance; and
            ``(2) be consistent with the objective of reducing the 
        administrative costs of delivering student financial assistance 
        under title IV.
    ``(d) 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 from funds available 
        under subsection (j).
    ``(e) Procedures for Adoption and Implementation of Voluntary 
Consensus Standards.--In adopting voluntary consensus standards and 
implementation timetables under this section, including modifications 
of existing standards, the Secretary shall follow the procedures for 
negotiated rulemaking in section 492.
    ``(f) Initial Voluntary Consensus Standards To Be Adopted.--Through 
coordinated participation between the Chief Operating Officer and 
standard setting organizations, the initial standards adopted by the 
Secretary shall include the following:
            ``(1) Electronic personal identifier number.--The Secretary 
        shall adopt standards for a single electronic personal 
        identifier number for students receiving assistance under title 
        IV.
            ``(2) Electronic signature.--The Secretary, in coordination 
        with the Secretary of Commerce, shall adopt standards 
        specifying procedures for the electronic transmission and 
        authentication of signatures with respect to transactions 
        requiring a signature under title IV.
            ``(3) Single institutional identifier.--The Secretary shall 
        adopt standards for a single identifier for eligible 
        institutions under title IV.
    ``(g) Use of Clearinghouses.--Nothing in this section shall 
restrict the ability of participating institutions and lenders from 
using a clearinghouse to comply with the standards for the exchange of 
information established under this section.
    ``(h) Applicability to Current Systems.--
            ``(1) General rule.--Except as provided in paragraph (2) 
        and (3), this section shall apply to all Department of 
        Education information systems supporting the delivery of 
        programs under title IV no later than 12 months from the date 
        of enactment of this part.
            ``(2) National student loan data system.--This section 
        shall apply to sections 485B(e) and (f) no later than 18 months 
        after the date of enactment of this part.
            ``(3) Integrated postsecondary education data system.--The 
        Secretary shall coordinate the adoption of voluntary consensus 
        standards under this section to ensure that standards are 
        compatible with the integrated postsecondary education data 
        system (IPEDS).
    ``(i) 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.
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated in any fiscal year or made available from funds 
appropriated to carry out activities in this section in any fiscal year 
such sums as may be necessary to carry out the provisions of this 
section, except that if no funds are appropriated pursuant to this 
subsection, the Secretary shall make funds available to carry out this 
section from amounts appropriated for the operations and expenses of 
the Department of Education.
    ``(k) Definitions.--For purposes of this section:
            ``(1) The term `voluntary consensus standard' means a 
        standard developed or used by a standard setting organization 
        accredited by the American National Standards Institute.
            ``(2) The term `standard setting organization' means a 
        standard setting organization accredited by the American 
        National Standards Institute that develops standards for 
        information transactions, data elements, or any other standard 
        that is necessary to, or will facilitate, the implementation of 
        this section.
            ``(3) For purposes of this section, 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.''.

         TITLE II--POSTSECONDARY EDUCATION IMPROVEMENT PROGRAMS

SEC. 201. URBAN COMMUNITY SERVICE.

    (a) Designation of Title.--The Higher Education Act of 1965 is 
amended by inserting at the end of title I (20 U.S.C. 1001 et seq.) the 
following:

      ``TITLE II--POSTSECONDARY EDUCATION IMPROVEMENT PROGRAMS''.

    (b) Redesignation and Transfer of Urban Community Service 
Program.--
            (1) Internal cross-references.--Part A of title XI is 
        amended--
                    (A) in section 1102(b), by striking ``section 
                1104'' and inserting ``section 204'';
                    (B) in section 1104(12), by striking ``section 
                1103(a)(2)(B)'' and inserting ``section 203(a)(2)(B)''; 
                and
                    (C) in section 1108(1), by striking ``section 
                1103'' and inserting ``section 203''.
            (2) Redesignation.--Part A of title XI (20 U.S.C. 1136 et 
        seq.) is redesignated as part A of title II, and sections 1101 
        through 1109 are redesignated as sections 201 through 209.
            (3) Transfer.--Part A of title II (including sections 201 
        through 209), as redesignated by paragraph (2), is transferred 
        to immediately follow the heading inserted by subsection (a) of 
        this section.
            (4) Repeal.--Part B of title XI (20 U.S.C. 1137 et seq.) 
        and the heading of title XI are repealed.
    (c) Allowable Activities.--Section 204 (as redesignated by 
subsection (b)(2)) is amended by adding at the end the following new 
paragraph:
            ``(14) Improving access to technology in local 
        communities.''.
    (d) Designation of Urban Grant Institutions.--Section 207 (as 
redesignated by subsection (b)(2)) is amended by adding at the end the 
following new sentence: ``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, including the Internet.''.
    (e) Authorization of Appropriations.--Section 209 (as redesignated 
by subsection (b)(2)) is amended by striking ``1993'' and inserting 
``1999''.

SEC. 202. FUND FOR THE IMPROVEMENT OF POSTSECONDARY EDUCATION.

    (a) Redesignation and Transfer of Programs.--
            (1) Redesignation.--Part A of title X (20 U.S.C. 1135 et 
        seq.) is redesignated as part B of title II (as amended by 
        section 201) and--
                    (A) sections 1001 through 1003 (20 U.S.C. 1135 et 
                seq.) are redesignated as sections 221 through 223; and
                    (B) section 1011 (20 U.S.C. 1135a-11) is 
                redesignated as section 224.
            (2) Transfer.--Part B of title II (including sections 221 
        through 224), as redesignated by paragraph (1), is transferred 
        to follow part A of title II.
            (3) Repeal.--Section 1004 and parts B, C, and D of title X 
        (20 U.S.C. 1135a-3, 1135e et seq.) and the heading of title X 
        are repealed.
    (b) Endowment Grants.--Section 221(a) (as redesignated by 
subsection (a)(2)) 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 adding at the end the following new paragraph:
            ``(9) awarding an endowment grant, on a competitive basis, 
        to a national organization to enable such organization to 
        support the establishment or ongoing work of area program 
        centers that foster the development of local affiliated 
        chapters in high-poverty areas to improve graduation rates and 
        postsecondary attendance through the provision of academic 
        support services and scholarship assistance for the pursuit of 
        postsecondary education.''.
    (c) Special Projects.--Section 224 (as redesignated by subsection 
(a)(2)(B)) is amended--
            (1) by striking paragraphs (1), (2), and (3) of subsection 
        (c) and inserting the following:
            ``(1) institutional restructuring to improve learning and 
        promote productivity, efficiency, quality improvement, and cost 
        and price control;
            ``(2) articulation agreements between two-year and four-
        year institutions;
            ``(3) cooperation between institutions to encourage cost 
        saving initiatives through joint purchase of goods and 
        services, and shared use of facilities and faculty resources.
            ``(4) evaluation and dissemination of model programs; and
            ``(5) international cooperation and student exchange among 
        postsecondary educational institutions.''; and
            (2) by striking subsection (d).
    (d) Authorization of Appropriations.--
            (1) Combination of subparts.--Part B of title II (as 
        redesignated by subsection (a)) is amended by striking the 
        subpart designations and headings.
            (2) Authorization.--Part B of title II (as so redesignated) 
        is amended by adding at the end the following:

``SEC. 225. 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.''.

SEC. 203. GRANTS TO STATES FOR WORKPLACE AND COMMUNITY TRANSITION 
              TRAINING FOR INCARCERATED YOUTH OFFENDERS.

    (a) Redesignation and Transfer of Programs.--
            (1) Redesignation.--Part E of title X (20 U.S.C. 1135g) is 
        redesignated as part C of title II and section 1091 is 
        redesignated as section 231.
            (2) Transfer.--Part C of title II (including section 231), 
        as redesignated by paragraph (1), is transferred to follow part 
        B of title II (as amended by section 202 of this Act).
    (b) Reauthorization.--Section 231(j) (as so redesignated) is 
amended to read as follows:
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $5,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the four succeeding 
fiscal years.''.

SEC. 204. ADVANCED PLACEMENT FEE PAYMENT PROGRAM.

    (a) Redesignation and Transfer of Programs.--
            (1) Redesignation.--Part G of title XV of the Higher 
        Education Amendments of 1992 (20 U.S.C. 1170) is redesignated 
        as part D of title II and section 1545 of such Act is 
        redesignated as section 241.
            (2) Transfer.--Part D of title II (including section 241), 
        as redesignated by paragraph (1), is transferred to follow part 
        C of title II (as amended by section 203 of this Act).
    (b) Reauthorization.--Section 241(f) (as so redesignated) is 
amended by striking ``1993'' and inserting ``1999''.

SEC. 205. TEACHER QUALITY ENHANCEMENT GRANTS.

    Title II is further amended by adding at the end the following new 
part:

              ``PART E--TEACHER QUALITY ENHANCEMENT GRANTS

``SEC. 271. PURPOSE.

    ``The purposes of this part are--
            ``(1) to provide competitive grants to States for 
        assistance in strengthening the quality of the teaching force 
        by improving the academic knowledge of teachers in the subject 
        areas in which they teach, such as math, science, English, 
        foreign languages, history, economics, art, civics, Government, 
        and geography;
            ``(2) to hold institutions of higher education with teacher 
        preparation programs accountable for preparing teachers who are 
        highly competent in the academic content areas in which they 
        plan to teach, including training in the effective uses of 
        technologies in the classroom; and
            ``(3) to recruit high quality individuals, including 
        individuals from other occupations, into the teaching force.

``SEC. 272. ELIGIBILITY.

    ``(a) Definitions.--For purposes of this part:
            ``(1) Eligible Grant Recipient.--The term `eligible grant 
        recipient' means--
                    ``(A) other than for the purpose of section 273(b), 
                a Governor of a State, except that if, pursuant to the 
                law or constitution of such State, another individual, 
                entity, or agency in a State that is responsible for 
                the teacher certification and preparation activities 
                contained in the application, such term means that 
                individual, entity, or agency; and
                    ``(B) for the purpose of section 273(b), an 
                eligible partnership.
            ``(2) Eligible partnership.--The term `eligible 
        partnership' means an entity consisting of an exemplary private 
        independent or State-supported public institution of higher 
        education which prepares teachers, and a local educational 
        agency, and which may also consist of the eligible grant 
        recipient, other institutions of higher education, public 
        charter schools, public and private nonprofit elementary and 
        secondary schools, or other public and private nonprofit 
        agencies or organizations.
    ``(b) Applications.--To be eligible to receive a grant under this 
part, an eligible grant recipient shall, at the time of the initial 
grant application, submit an application to the Secretary that meets 
the requirements of this part.
    ``(c) Contents of Application.--Such application shall include a 
description of how the eligible grant recipient intends to use funds 
provided under this part and such other information and assurances as 
the Secretary may require.

``SEC. 273. USE OF FUNDS.

    ``(a) General Activities.--The eligible grant recipient of a State 
that receives a grant under this subpart shall use a portion of such 
grant to carry out 1 or more of the following activities:
            ``(1) Reforming State teacher certification requirements to 
        ensure that current and future teachers possess the necessary 
        academic content knowledge in the subject areas in which they 
        are certified and assigned to teach.
            ``(2) Providing prospective teachers alternatives to 
        schools of education through programs at colleges of arts and 
        sciences or at nonprofit organizations.
            ``(3) Funding programs which establish or expand 
        alternative routes to State certification for highly qualified 
        individuals, including mid-career professionals from other 
        occupations, paraprofessionals, and former military personnel.
            ``(4) Implementing reforms which hold institutions of 
        higher education with teacher preparation programs accountable 
        for preparing teachers who are highly competent in the academic 
        content areas in which they plan to teach.
            ``(5) Developing and implementing effective mechanisms to 
        expeditiously remove incompetent or unqualified teachers.
            ``(6) Recruiting minorities, and others, into the teaching 
        and counseling professions, including education 
        paraprofessionals, former military personnel, and mid-career 
        professionals, by providing financial and other assistance 
        related to instruction, induction, mentoring, and support 
        services that include pre-service and in-service components, to 
        serve within schools which have--
                    ``(A) a high percentage of children in poverty;
                    ``(B) low retention rates for teachers; or
                    ``(C) a high percentage of teachers teaching 
                subjects for which they are not qualified to teach.
            ``(7) Developing and implementing effective mechanisms to 
        provide principals and superintendents with advanced managerial 
        skills.
            ``(8) Creating opportunities for school principals and 
        superintendents to further their professional development by 
        providing advanced managerial skills training.
    ``(b) Partnership Activities.--An eligible partnership that 
receives a grant under this subpart shall use such funds to carry out 1 
or more of the following activities:
            ``(1) Implementing reforms which hold institutions of 
        higher education with teacher preparation programs accountable 
        for preparing teachers who are highly competent in the academic 
        content areas in which they plan to teach.
            ``(2) Creating opportunities for enhanced and ongoing 
        professional development which improves the academic content 
        knowledge of teachers in the subject areas in which they are 
        certified to teach or in which they are working toward 
        certification to teach.
            ``(3) Providing programs designed to implement the 
        successful integration of technology into teaching and 
        learning.
            ``(4) Recruiting minorities, and others, into the teaching 
        and counseling professions, including education 
        paraprofessionals, former military personnel, and mid-career 
        professionals, by providing financial and other assistance 
        related to instruction, induction, mentoring, and support 
        services that include pre-service and in-service components, to 
        serve within schools which have--
                    ``(A) a high percentage of children in poverty;
                    ``(B) low retention rates for teachers; or
                    ``(C) a high percentage of teachers teaching 
                subjects for which they are not qualified to teach.

``SEC. 274. COMPETITIVE AWARDS.

    ``(a) Competitive Grants.--
            ``(1) Applicability.--The Secretary shall make grants in 
        accordance with the requirements of this subsection for any 
        fiscal year for which the amount appropriated under section 276 
        does not equal or exceed $250,000,000.
            ``(2) Competitive basis for awards.--The Secretary shall 
        make annual grants under this subsection on a competitive 
        basis.
            ``(3) Peer review panel.--The Secretary shall provide the 
        applications submitted by eligible grant recipients under 
        section 272 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.
            ``(4) Priority.--In recommending applications to the 
        Secretary, the panel shall give priority to--
                    ``(A) applications from States with proposals which 
                promise initiatives to reform State teacher 
                certification requirements which are designed to ensure 
                that current and future teachers possess the necessary 
                academic content knowledge in the subject areas in 
                which they are certified to teach or which 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 areas in which they plan to teach; and
                    ``(B) eligible partnership applications which--
                            ``(i) include the eligible grant recipient 
                        and demonstrate a high degree of collaboration 
                        with the State agency responsible for teacher 
                        certification and preparation; and
                            ``(ii) include a local educational agency 
                        which includes a school with--
                                    ``(I) a high percentage of children 
                                in poverty;
                                    ``(II) low retention rates for 
                                teachers; or
                                    ``(III) a high percentage of 
                                teachers teaching subjects for which 
                                they are not qualified to teach.
            ``(5) Ranking of applications.--With respect to each 
        application recommended for funding, the panel shall assign the 
        application a rank, relative to other recommended applications, 
        based on the priority described in subsection (c), the extent 
        to which the application furthers the purposes of this part, 
        and the overall quality of the application, based on the 
        quality and scope of State-supported strategies to improve 
        quality of teacher preparation and their teaching force.
            ``(6) Recommendation of amount.--With respect to each 
        application recommended for funding, the panel shall make a 
        recommendation to the Secretary with respect to the amount of 
        the grant that should be made. The Secretary shall use \1/3\ of 
        the funds made available under this part to fund applications 
        submitted by eligible partnerships.
            ``(7) Secretarial selection.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall determine, based on the peer review 
                panel's recommendations, which applications shall 
                receive funding and the amounts of such grants. In 
                determining grant amounts, the Secretary shall take 
                into account the total amount of funds available for 
                all grants under this part and the types of activities 
                proposed to be carried out.
                    ``(B) Effect of ranking by panel.--In making grants 
                under this part, the Secretary shall select 
                applications according to the ranking of the 
                applications by the peer review panel, except in cases 
                where the Secretary determines, for good cause, that a 
                variation from that order is appropriate.
    ``(b) Formula Grants.--
            ``(1) Allotment.--For any fiscal year for which the amount 
        appropriated to carry out this part exceeds $250,000,000, the 
        Secretary shall make allotments to the eligible grant recipient 
        of each State, pursuant to the formula described in paragraph 
        (2), to enable the eligible grant recipient to carry out the 
        activities under this part, including the funding of eligible 
        partnerships to carry out activities described in section 
        273(b).
            ``(2) Allotment formula.--For any such fiscal year, an 
        eligible grant recipient from each State that submits an 
        application under section 272(a) shall receive an allotment 
        under this part in an amount that bears the same ratio to the 
        amount appropriated as the school age population ages 5 through 
        17 of the State bears to the school age population ages 5 
        through 17 of all the States, except that no State shall 
        receive less than an amount equal to \1/4\ of 1 percent of the 
        total amount.
    ``(c) Additional Requirements.--
            ``(1) Matching requirement.--Each State receiving funds 
        under this part shall provide, from non-Federal sources, an 
        amount equal to \1/2\ of the amount of the grant in cash or in 
        kind to carry out the activities supported by the grant.
            ``(2) Limitation on administrative expenses.--An eligible 
        recipient that receives a grant under this part may use not 
        more than 2 percent of the grant funds for administrative 
        costs.
            ``(3) Reporting.--
                    ``(A) In general.--An eligible grant recipient that 
                receives a grant under this section shall submit an 
                accountability report to the Secretary and the 
                Committee on Education and the Workforce of the House 
                of Representatives and the Committee on Labor and Human 
                Resources of the Senate. Such reports shall include a 
                description of the degree to which substantial progress 
                has been made in meeting the following goals:
                            ``(i) Raising the State academic standards 
                        required to enter the teaching profession.
                            ``(ii) Increasing the percentage of classes 
                        taught in core academic subject areas by 
                        teachers fully certified by the State to teach 
                        in those subject areas.
                            ``(iii) Decreasing shortages of qualified 
                        teachers in poor urban and rural areas.
                            ``(iv) Increasing opportunities for 
                        enhanced and ongoing professional development 
                        which improves the academic content knowledge 
                        of teachers in the subject areas in which they 
                        are certified to teach or in which they are 
                        working toward certification to teach.
                    ``(B) Accountability of state institution of higher 
                education.--Prior to receiving funds under this part, 
                an eligible grant recipient shall demonstrate that at 
                least 80 percent of graduates of each of the exemplary 
                institutions of higher education in any eligible 
                partnership described in section 273(a)(2) who enter 
                the field of teaching pass all applicable State 
                qualification assessments of new teachers, which must 
                include assessments of each prospective teacher's 
                subject matter knowledge in the content area or areas 
                in which the teacher provides instruction. Prior to 
                each subsequent receipt of funds under this part, such 
                State shall demonstrate that 70 percent of the 
                graduates of each institution of higher education in 
                the State have met such goal and continue to progress 
                to exceed such goal. Such assessment shall be at least 
                as rigorous as those in place on the date of enactment 
                of this Act and shall have qualifying scores no lower 
                than those in place on the date of enactment of this 
                Act.
                    ``(C) Provision to peer review panel.--The 
                Secretary shall provide the reports submitted under 
                subparagraph (A) to the peer review panel convened 
                under subsection (a)(3). The panel shall use such 
                accountability report in recommending applications for 
                subsequent funding under this section.
            ``(4) Teachers qualifications provided to parent upon 
        request.--Any local educational agency that participates as an 
        eligible recipient or partner under this part shall make 
        available, upon request and in an understandable and uniform 
        format, to any parent of a student attending any school in the 
        local educational agency, information regarding the 
        qualifications of the student's classroom teacher, both 
        generally and with regard to the subject matter in which the 
        teacher provides instruction.

``SEC. 275. LIMITATIONS.

    ``(a) Federal Control Prohibited.--Nothing in this part 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 bar private, 
religious, or home schools from participation in programs or services 
under this part.
    ``(b) No Change in State Control Encouraged or Required.--Nothing 
in this part 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.
    ``(c) National System of Teacher Certification Prohibited.--Nothing 
in this part shall be construed to permit, allow, encourage, or 
authorize any national system of teacher certification.

``SEC. 276. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
such sums as may be necessary for each of the fiscal years 1999 through 
2003.''.

SEC. 206. CAMPUS SAFETY.

    (a) Grants to Combat Violent Crimes Against Women on Campuses.--
Title II is further amended by adding at the end the following new 
part:

  ``Part F--Grants to Combat Violent Crimes Against Women on Campuses

``SEC. 281. GRANTS TO COMBAT VIOLENT CRIMES AGAINST WOMEN ON CAMPUSES.

    ``(a) Grants Authorized.--
            ``(1) In general.--The Secretary is authorized to make 
        grants to institutions of higher education for use to provide 
        training to administrators, security personnel, and campus 
        personnel and student organizations for the purpose of 
        developing and strengthening 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 victims services agencies.
            ``(2) Award basis.--The Secretary shall award grants and 
        contracts under this section on a competitive basis.
            ``(3) Equitable participation.--The Secretary shall make 
        every effort to ensure the equitable participation of private 
        and public institutions of higher education and to ensure the 
        equitable geographic participation of such institutions in the 
        activities assisted under this part.
            ``(4) Priority.--In the award of grants and contracts under 
        this section, the Secretary shall give priority to institutions 
        of higher education or consortia of such institutions that show 
        the greatest need for the sums requested.
    ``(b) Use of Grant Funds.--Funds provided under this part may be 
used for the following purposes:
            ``(1) To provide training for campus security and college 
        personnel, including campus disciplinary or judicial boards, 
        that address the issues of sexual assaults, stalking, and 
        domestic violence.
            ``(2) To implement and operate education programs for the 
        prevention of violent crimes against women.
            ``(3) To develop, enlarge, or strengthen support services 
        programs including medical or psychological counseling for 
        victims of sexual offense crimes.
            ``(4) To create, disseminate, or otherwise provide 
        assistance and information about victims' options on and off 
        campus to bring disciplinary or other legal action.
            ``(5) To train campus administrators and campus security 
        personnel to more effectively identify and respond to violent 
        crimes against women on campus, including the crimes of sexual 
        assault, stalking, and domestic violence.
            ``(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, enlarge, or strengthen victim services 
        programs for local campuses and to improve delivery of victim 
        services on campuses.
            ``(8) 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.
            ``(9) To support improved coordination between 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 Secretary 
        at such time and in such manner as the Secretary 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) provide measurable goals and expected results 
                from the use of the grants funds;
                    ``(D) 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 applicant for the 
                purpose described in this part; and
                    ``(E) include such other information and assurances 
                as the Secretary 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 this Act.
    ``(d) Reporting.--Not later than 180 days after the end of the 
fiscal year for which grants are made under this part, the Secretary 
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--
            ``(1) the number of grants and funds distributed under this 
        part;
            ``(2) a summary of the purposes for which these grants were 
        provided and an evaluation of their progress;
            ``(3) a statistical summary of the persons served, 
        detailing the nature of victimization, and providing data on 
        age, sex, race, ethnicity, disability, relationship to 
        offender, geographic distribution, and type of campus; and
            ``(4) an evaluation of the effectiveness of programs funded 
        under this part, including an evaluation based on the reduction 
        observed in crimes reported pursuant to section 485(f).
    ``(f) Grantee Reporting.--Upon completion of the grant or contract 
period under this section, the grantee institution or consortium of 
such institutions shall file a performance report with the Secretary 
explaining the activities carried out together with an assessment of 
the effectiveness of those activities in achieving the purposes of this 
section. The Secretary shall suspend funding for an approved 
application if an applicant fails to submit an annual performance 
report.
    ``(g) Definitions.--In this part--
            ``(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 and includes 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.
    ``(h) 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. 207. ACCOUNTABILITY FOR INSTITUTIONS OF HIGHER EDUCATION THAT 
              PREPARE TEACHERS.

    Title II is further amended by adding at the end the following new 
part:

  ``PART F--ACCOUNTABILITY FOR INSTITUTIONS OF HIGHER EDUCATION THAT 
                            PREPARE TEACHERS

``SEC. 281. DATA COLLECTION.

    ``(a) Data Required.--Within one year after the date of enactment 
of the Higher Education Amendments of 1998, and annually thereafter, 
the Secretary shall collect from each State receiving funds under this 
Act and publish the following information:
            ``(1) A description of the teacher licensing and 
        credentialing assessments used by each State, including any and 
        all assessments required in the subject matter area or areas in 
        which a teacher provides instruction.
            ``(2) The standards and criteria established by each State 
        that teachers or prospective teachers must meet in order to 
        receive a passing score on such assessments, including 
        information on the extent to which passing such examinations is 
        required in order for an individual to be a classroom teacher.
            ``(3) 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 they 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.
            ``(4) Information on the extent to which each State waives 
        teacher credentialing and licensing requirements, including the 
        proportion of all teachers or prospective teachers in the State 
        for whom such licensing and credentialing requirements have 
        been waived and the distribution of such individuals across 
        high- and low-poverty schools and across grade levels and 
        subject areas.
            ``(5) The pass rate, for the preceding year, on all teacher 
        licensing and credentialing assessments for all individuals in 
        the State who took such assessments, disaggregated by the 
        institution of higher education from which the teacher received 
        his or her most recent degree.
    ``(b) Coordination.--The Secretary, to the extent practicable, 
shall coordinate the information collected and published under this 
part among States for individuals who took State teacher licensing or 
credentialing assessments in a State other than the State in which the 
individual received his or her most recent degree.
    ``(c) Use of Local Agencies.--For each State in which there are no 
State licensing or credentialing assessments, the Secretary shall, to 
the extent practicable, collect data comparable to the data described 
in paragraphs (1) through (5) of subsection (a) from local educational 
agencies, colleges and universities, or other entities that administer 
such assessments to teachers or prospective teachers.

``SEC. 282. DATA DISSEMINATION.

    ``(a) Effective Date of Requirements.--The data required to be 
distributed under this section shall be distributed beginning within 3 
years after the date of enactment of the Higher Education Amendments of 
1998 and annually thereafter.
    ``(b) Passing Rates.--Each institution of higher education that has 
a course of study that prepares elementary and secondary school 
teachers and receives Federal funds will report and distribute widely, 
including through prominent publications such as catalogs and 
promotional materials sent to potential applicants, high school 
guidance counselors, and the employers of graduates of such 
institutions, their pass rate for graduates of the institution on each 
of the State's initial teacher certification and licensing assessments 
for the most recent year for which data are available at the time of 
publication of such materials.
    ``(c) Identification of Institutions With Passing Rates Below 70 
Percent.--Each State shall submit to the Secretary a list of 
institutions of higher education that prepare teachers and receive 
Federal funds under this Act for which, for the preceding year, less 
than 70 percent of graduates who took any of the State's initial 
teacher licensing and credentialing assessments failed to receive a 
passing score on any such assessment. For each assessment, data shall 
be disaggregated by the institution of higher education from which the 
student received his or her most recent degree, unless such degree was 
granted more than 3 years prior to the date such assessment was 
administered.

``SEC. 283. STATE FUNCTIONS.

    ``(a) State Assessment.--In order to receive funds under this Act, 
a State shall, no later than one year after the date of enactment of 
the Higher Education Amendments of 1998, have in place a procedure to 
identify low performing programs of teacher preparation within 
institutions of higher education. Such levels of performance shall be 
determined solely by the State and may include criteria based upon 
information collected pursuant to this part. Such assessment shall be 
described in the report under section 281.
    ``(b) Termination of Eligibility.--Any institution of higher 
education that offers a program of teacher preparation in which the 
State has withdrawn its approval or terminated its financial support 
due to the low performance of its teacher preparation program based 
upon the State assessment described in section (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 its 
        teacher preparation program.

``SEC. 284. NEGOTIATED RULEMAKING.

    ``If the Secretary develops any regulations implementing section 
283(b)(2), the Secretary shall submit such proposed regulations to a 
negotiated rulemaking process which shall include representatives of 
States and institutions of higher education for their review and 
comment.

SEC. 208. ADDITIONAL REPEAL.

    Title VIII (20 U.S.C. 1133 et seq.), relating to cooperative 
education, is repealed.

                      TITLE III--INSTITUTIONAL AID

SEC. 301. STRENGTHENING INSTITUTIONS.

    (a) Program Purpose; Use of Funds.--Section 311 (20 U.S.C. 1057) is 
amended--
            (1) in subsection (b)(2), by striking ``or'' at the end of 
        subparagraph (A) and inserting ``and'';
            (2) by amending paragraph (3) of subsection (b) to read as 
        follows:
    ``(3) Special consideration shall be given to applications which 
propose, pursuant to the institution's plan, the use of funds for 
integrating computer technology into institutional facilities to create 
smart buildings.''; and
            (3) by adding at the end the following new subsections:
    ``(c) 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, 
        and faculty fellowships to assist in attaining advanced degrees 
        in their 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; and
            ``(11) other activities proposed in the application 
        submitted pursuant to subsection (c) that--
                    ``(A) contribute to carrying out the purposes of 
                this section; and
                    ``(B) are approved by the Secretary as part of the 
                review and acceptance of such application.
    ``(d) Endowment Fund Limitations.--
            ``(1) Portion of grant.--An institution may not use more 
        than 20 percent of its grant under this part for any fiscal 
        year for establishing or improving an endowment fund.
            ``(2) Matching required.--An institution that uses any 
        portion of its grant under this part for any fiscal year for 
        establishing or improving an endowment fund shall provide an 
        equal or greater amount for such purposes from non-Federal 
        funds.
            ``(3) Regulations.--The Secretary shall publish rules and 
        regulations specifically governing the use of funds for 
        establishing or improving an endowment fund.''.
    (b) Endowment Fund Definition.--Section 312 (20 U.S.C. 1058) is 
amended by adding at the end the following new subsection:
    ``(g) 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 (a), by inserting before the period at 
        the end the following: ``, except that no institution shall be 
        eligible to secure a subsequent 5-year grant award under this 
        part until two calendar years have elapsed since the expiration 
        of its most recent 5-year grant award''; and
            (2) in subsection (b), by inserting ``subsection (c) and a 
        grant under'' before ``section 354(a)(1)''.
    (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 351.''.
    (e) Program for 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 American Indian Tribal Colleges and Universities 
to enable such institutions to improve and expand their capacity to 
serve Indian students.
    ``(b) Definitions.--For the purposes of this section:
            ``(1) The term `Indian' has the same meaning as in section 
        2 of the Tribally Controlled Community Colleges Act of 1978.
            ``(2) The term `Indian tribe' has the same meaning as in 
        section 2 of such Act.
            ``(3) The term `Tribal College or University' has the 
        meaning given the term `tribally controlled college or 
        university' in section 2 of such Act, and includes an 
        institution listed in the Equity in Educational Land Grant 
        Status Act of 1994.
            ``(4) The term `institution of higher education' means an 
        institution of higher education as defined by section 101(a)(1) 
        of this Act, except that subparagraph (A)(ii) of such section 
        shall not be applicable.
    ``(c) Authorized Activities.--Grants awarded under this section 
shall be used by Tribal Colleges or Universities to assist such 
institutions to plan, develop, undertake, and carry out authorized 
activities. Such authorized activities may include--
            ``(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 purchase or rental of 
        telecommunications technology equipment or services;
            ``(3) support of faculty exchanges, faculty development, 
        and faculty fellowships to assist in attaining advanced degrees 
        in their field of instruction;
            ``(4) academic instruction in disciplines in which American 
        Indians are underrepresented;
            ``(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 enhancing a program of teacher 
        education designed to qualify students to teach in elementary 
        or secondary schools, with a particular emphasis on teaching 
        American Indian children and youth, that shall include, as part 
        of such program, preparation for teacher certification;
            ``(11) establishing community outreach programs which will 
        encourage American Indian elementary and secondary students to 
        develop the academic skills and the interest to pursue 
        postsecondary education;
            ``(12) establishing or improving an endowment fund; and
            ``(13) other activities proposed in the application 
        submitted pursuant to this subsection that--
                    ``(A) contribute to carrying out the purposes of 
                this section; and
                    ``(B) are approved by the Secretary as part of the 
                review and acceptance of such application.
    ``(d) Application Process.--
            ``(1) Institutional eligibility.--To be eligible to receive 
        assistance under this section, an institution shall be an 
        institution which--
                    ``(A) is an eligible institution under section 
                312(b);
                    ``(B) is eligible to receive assistance under the 
                Tribally Controlled Community College Assistance Act of 
                1978 (Public Law 95-471); or
                    ``(C) is eligible to receive funds under the Equity 
                in Educational Land Grant Status Act of 1994.
            ``(2) Application.--Any institution 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 high 
                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 subparagraphs (A) and (B) 
                of paragraph (1).
            ``(3) Special rule.--For the purposes of this part, no 
        Tribal College or University which is eligible for and receives 
        funds under this section may concurrently receive other funds 
        under this part or part B.''.

SEC. 302. HISTORICALLY BLACK COLLEGES AND UNIVERSITIES.

    (a) Uses of Funds.--Section 323(a) (20 U.S.C. 1062(a)) is amended--
            (1) by redesignating paragraph (12) as paragraph (13); and
            (2) by inserting after paragraph (11) the following new 
        paragraph:
            ``(12) Establishing or improving an endowment fund.''.
    (b) Limitations.--Section 323(b) is amended by striking paragraph 
(3) and inserting the following:
    ``(3)(A) An institution may not use more than 20 percent of its 
grant under this part for any fiscal year for establishing or improving 
an endowment fund.
    ``(B) An institution that uses any portion of its grant under this 
part for any fiscal year for establishing or improving an endowment 
fund shall provide an equal or greater amount for such purposes from 
non-Federal funds.
    ``(C) The Secretary shall publish rules and regulations 
specifically governing the use of funds for establishing or improving 
an endowment fund.''.
    (c) Professional or Graduate Institutions.--
            (1) General authorization.--Section 326(a) (20 U.S.C. 
        1063b(a)) is amended--
                    (A) in paragraph (1), by inserting ``in mathematics 
                or the physical or natural sciences'' after ``graduate 
                education opportunities''; and
                    (B) in paragraph (2), 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 $500,000 of its award from the 
                Secretary. After allocations are made to each eligible 
                institution under the funding rules provided in 
                subsection (f), the Secretary shall reallocate, on a 
                pro rata basis, any amounts which remain unallocated 
                (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.''.
            (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 used exclusively for the purposes of 
        this section, 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 their enrollment 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 of this title; 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 (F) through (J);
                            (iii) by striking ``and'' at the end of 
                        subparagraph (O);
                            (iv) by inserting ``University'' after 
                        ``Jackson State'' in subparagraph (P);
                            (v) by striking the period at the end of 
                        such subparagraph and inserting a semicolon; 
                        and
                            (vi) by inserting after such subparagraph 
                        the following new subparagraphs:
                    ``(Q) Norfolk State University qualified graduate 
                program; and
                    ``(R) Tennessee State University qualified graduate 
                program.''; and
                    (B) by striking paragraphs (2) and (3) and 
                inserting the following:
            ``(2) Qualified graduate program.--For the purposes of this 
        section, the term `qualified graduate program' means a graduate 
        or professional program that provides an accredited 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.
            ``(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) in paragraph (4), by inserting before the 
                period at the end the following: ``, except that 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 one fiscal year''.
            (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 ``$26,000,000''; and
                            (ii) by striking ``(A) through (E)'' and 
                        inserting ``(A) through (P)''.
                    (C) by striking paragraph (2) and inserting the 
                following:
            ``(2) the next $1,000,000 in excess of $26,000,000 shall be 
        available for the purpose of making grants to institutions or 
        programs identified in subparagraphs (Q) and (R) of subsection 
        (e)(1); and
            ``(3) if the amount appropriated exceeds $27,000,000, the 
        Secretary shall develop a formula for making allotments of such 
        excess to each of the institutions or programs identified in 
        subparagraphs (A) through (R) using the following elements:
                    ``(A) the number of students enrolled in the 
                eligible institution's professional or graduate school, 
                or qualified graduate program which received funding 
                under this section in the previous year;
                    ``(B) the average cost of education per student for 
                all full-time graduate or professional students (or the 
                equivalent) enrolled in the eligible professional 
                school, graduate school or doctoral students in the 
                qualified graduate program; and
                    ``(C) the number of students who received their 
                first professional or doctoral degree at the 
                professional or graduate school or the qualified 
                graduate program in the preceding year for which the 
                institution received funding under this section.''.
            (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.''.

SEC. 303. MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM.

    (a) Amendment.--Title III (20 U.S.C. 1051) is amended--
            (1) by redesignating part D as part E; and
            (2) by inserting after part C the following new part:

     ``PART D--MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM

``SEC. 341. PROGRAM AUTHORIZED.

    ``The Secretary shall, in accordance with the provisions of this 
part, carry out a program of making grants to institutions of higher 
education that are designed to effect long-range improvements in 
science and engineering education, and improve support programs for 
minority students enrolled in science and engineering programs at 
predominantly minority institutions.

``SEC. 342. USE OF FUNDS.

    ``Funds appropriated for the purpose of this subpart may be made 
available for--
            ``(1) providing needed services to groups of minority 
        institutions or providing training for scientists and engineers 
        from eligible minority institutions;
            ``(2) providing needed services to groups of institutions 
        serving significant numbers of minority students or providing 
        training for scientists and engineers from such institutions to 
        improve their ability to train minority students in science or 
        engineering;
            ``(3) assisting minority institutions to improve the 
        quality of preparation of their students for graduate work or 
        careers in science, mathematics, and technology;
            ``(4) improving access of undergraduate students at 
        minority institutions to careers in the sciences, mathematics, 
        and engineering;
            ``(5) improving access of minority students, particularly 
        minority women, to careers in the sciences, mathematics, and 
        engineering;
            ``(6) improving access for pre-college minority students to 
        careers in science, mathematics, and engineering through 
        community outreach programs conducted through colleges and 
        universities eligible for support through the Minority Science 
        and Engineering Improvement Programs;
            ``(7) disseminating activities, information, and 
        educational materials designed to address specific barriers to 
        the entry of minorities into science and technology, and 
        conducting activities and studies concerning the flow of 
        underrepresented ethnic minorities into scientific careers;
            ``(8) supporting curriculum models to encourage minority 
        student participation in research careers in science, 
        mathematics, and technology; and
            ``(9) improving the capability of minority institutions for 
        self-assessment, management, and evaluation of their science, 
        mathematics, and engineering programs and dissemination of 
        their results.

``SEC. 343. ELIGIBILITY FOR GRANTS.

    ``The Secretary may make grants under this part to minority 
institutions (as defined in section 347), organizations, and entities 
to enable them to carry out programs and activities authorized by this 
part:
            ``(1)(A) institutions of higher education granting 
        baccalaureate degrees; and
            ``(B) institutions of higher education granting associate 
        degrees which--
                    ``(i) have a curriculum including science or 
                engineering subjects;
                    ``(ii) apply jointly with institutions described in 
                subparagraph (A); and
                    ``(iii) have an articulation agreement with 
                institutions described in subparagraph (A) for its 
                science or engineering students; and
            ``(2) consortia of--
                    ``(A) institutions which have a curriculum in 
                science or engineering;
                    ``(B) graduate institutions which have a curriculum 
                in science or engineering;
                    ``(C) Federal Education Research Centers;
                    ``(D) research laboratories of, or under contract 
                with, the Department of Energy;
                    ``(E) private organizations which have science or 
                engineering facilities; or
                    ``(F) quasi-governmental entities which have a 
                significant scientific or engineering mission;
        to enable such institutions and consortia to carry programs and 
        activities authorized by this part.

``SEC. 344. GRANT APPLICATION.

    ``(a) Submission and Contents of Applications.--An eligible 
applicant (as determined under section 343) that desires to receive a 
grant under this part shall submit to the Secretary an application 
therefore at such time or times, in such manner, and containing such 
information as the Secretary may prescribe by regulation. Such 
application shall set forth--
            ``(1) a program of activities for carrying out one or more 
        of the purposes described in section 342 in such detail as will 
        enable the Secretary to determine the degree to which such 
        program will accomplish such purpose or purposes; and
            ``(2) such other policies, procedures, and assurances as 
        the Secretary may require by regulation.
    ``(b) Approval Based on Likelihood of Progress.--The Secretary 
shall approve an application only if the Secretary determines that the 
application sets forth a program of activities which are likely to make 
substantial progress toward achieving the purposes of this part.

``SEC. 345. CROSS PROGRAM AND CROSS AGENCY COOPERATION.

    ``The Minority Science and Engineering Improvement Programs shall 
cooperate and consult with other programs within the Department and 
within Federal, State, and private agencies which carry out programs to 
improve the quality of science, mathematics, and engineering education.

``SEC. 346. ADMINISTRATIVE PROVISIONS.

    ``(a) Technical Staff.--The Secretary shall appoint, without regard 
to the provisions of title 5 of the United States Code governing 
appointments in the competitive service, not less than one technical 
employees with appropriate scientific and educational background to 
administer the programs under 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 for Grant Review.--The Secretary shall establish 
procedures for reviewing and evaluating grants and contracts made or 
entered into under such programs. Procedures for reviewing grant 
applications, based on the peer review system, or contracts for 
financial assistance under this title may not be subject to any review 
outside of officials responsible for the administration of the Minority 
Science and Engineering Improvement Program.

``SEC. 347. DEFINITIONS.

    ``For the purpose of this part--
            ``(1) The term `minority institution' means an institution 
        of higher education whose enrollment of a single minority or a 
        combination of minorities (as defined in paragraph (2)) exceeds 
        50 percent of the total enrollment. The Secretary shall verify 
        this information from the data on enrollments in the higher 
        education general information surveys (HEGIS) furnished by the 
        institution to the Office for Civil Rights, Department of 
        Education.
            ``(2) The term `minority' means American Indian, Alaskan 
        Native, Black (not of Hispanic origin), Hispanic (including 
        persons of Mexican, Puerto Rican, Cuban, and Central or South 
        American origin), Pacific Islander or other ethnic group 
        underrepresented in science and engineering.
            ``(3) The term `science' means, for the purpose of this 
        program, the biological, engineering, mathematical, physical, 
        behavioral, and social sciences, and history and philosophy of 
        science; also included are interdisciplinary fields which are 
        comprised of overlapping areas among two or more sciences.''.

SEC. 304. GENERAL PROVISIONS.

    (a) Applications for Assistance.--Section 351(a) (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 its 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);
                    ``(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.
            ``(2) Preliminary applications.--In carrying out paragraph 
        (1), the Secretary shall develop a preliminary application for 
        use by eligible institutions applying under part A prior to the 
        submission of the principal application.''.
    (b) Contents of Applications.--Section 351(b) is amended--
            (1) in paragraph (5)(A), by inserting ``and the Government 
        Performance and Results Act'' after ``under this title''; and
            (2) in paragraph (6), by inserting before the semicolon the 
        following: ``, except that for purposes of section 316, 
        paragraphs (2) and (3) shall not apply''.
    (c) Waivers.--Section 352(a) (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 community college as 
        defined in the Tribally Controlled Community College Act of 
        1978; or''.
    (d) Application Review Process.--Section 353(a) (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) in paragraph (3)--
                    (A) by striking subparagraph (A); and
                    (B) by redesignating subparagraphs (B) and (C) as 
                subparagraphs (A) and (B), respectively.
    (e) Continuation Awards.--Part D of title III is amended by 
inserting after section 354 (20 U.S.C. 1069) the following new section:

``SEC. 355. 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.''.
    (f) Authorization of Appropriations.--Section 360 (20 U.S.C. 1069f) 
is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) Authorizations.--
            ``(1) Part a.--(A) There are authorized to be appropriated 
        to carry out part A (other that sections 316), $135,000,000 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 316, $10,000,000 for fiscal year 1999, and such sums as 
        may be necessary for each of the 4 succeeding fiscal years.
            ``(2) Part b.--(A) There are authorized to be appropriated 
        to carry out part B (other than section 326), $135,000,000 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 326, $35,000,000 for fiscal year 1999, and such sums as 
        may be necessary for each of the 4 succeeding fiscal years.
            ``(3) Part c.--There are authorized to be appropriated to 
        carry out part C, $10,000,000 for fiscal year 1999, and such 
        sums as may be necessary for each of the 4 succeeding fiscal 
        years.
            ``(4) Part d.--There are authorized to be appropriated to 
        carry out Part D, $10,000,000 for fiscal year 1999, and such 
        sums as may be necessary for each of the 4 succeeding fiscal 
        years.''; and
            (2) by striking subsections (c), (d), and (e).

                      TITLE IV--STUDENT ASSISTANCE

                       PART A--GRANTS TO STUDENTS

SEC. 401. PELL GRANTS.

    (a) Extension of Authority.--Section 401(a) (20 U.S.C. 1070a(a)) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking ``September 30, 1998'' and 
                inserting ``September 30, 2004''; and
                    (B) by striking the second sentence; and
            (2) in paragraph (2), by striking ``the disbursement system 
        required by paragraph (1)'' and inserting ``the disbursement of 
        Federal Pell Grants''.
    (b) Amount of Grant.--Section 401(b)(2)(A) 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) $4,700 for academic year 2000-2001;
            ``(iii) $4,900 for academic year 2001-2002;
            ``(iv) $5,100 for academic year 2002-2003; and
            ``(v) $5,300 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.--Section 
401(b)(3) is amended--
            (1) by striking ``$2,400'' each place it appears and 
        inserting ``$3,000''; and
            (2) by adding at the end the following new subparagraph:
    ``(C) An institution that charged only fees in lieu of tuition as 
of January 31, 1997, may include in its determination of tuition 
charged, fees that would normally constitute tuition.''.
    (d) Dependent Care and Disability Related Expenses.--Section 
401(b)(3)(B) is amended by striking ``$750'' and inserting ``$1,500''.
    (e) Institutional Ineligibility Based on Default Rates.--Section 
401 is amended by adding at the end the following new subsection:
    ``(j) Institutional Ineligibility Based on Default Rates.--
            ``(1) In general.--No institution of higher education shall 
        be an eligible institution for purposes of this section if such 
        institution of higher education is ineligible to participate in 
        a loan program under this title as a result of a final default 
        rate determination made by the Secretary under part B or D of 
        this title, or both, after the final publication of fiscal year 
        1996 cohort default rates.
            ``(2) Sanctions subject to appeal opportunity.--No 
        institution may be subject to the terms of this subsection 
        unless it has had the opportunity to appeal its default rate 
        determination under regulations issued by the Secretary for the 
        Federal Family Education Loan or Federal Direct Loan Program, 
        as applicable. This subsection shall not apply to an 
        institution that was not participating in the loan programs 
        authorized under part B or D of this title on the date of 
        enactment of the Higher Education Amendments of 1998, unless 
        the institution subsequently participates in the loan 
        programs.''.
    (f) pell grant incentives.--Subpart 1 of part A of title IV of the 
Higher Education Act of 1965 is amended by inserting after section 401 
(20 U.S.C. 1070a) the following new section:

``SEC. 401A. PELL GRANT INCENTIVES.

    ``(a) Program Authority.--From the amounts appropriated pursuant to 
subsection (d), the Secretary shall establish a program to increase the 
Pell grant awards under section 401 during their first two academic 
years of undergraduate education to students who graduate after May 1, 
1998, in the top 10 percent of their high school graduating class.
    ``(b) Amount of Increase.--The additional amount of Pell grant that 
shall be awarded under this section to any student who qualifies under 
this section shall be an amount equal to the amount for which the 
student is eligible under section 401 (determined without regard to the 
provisions of this section), except that if the amount appropriated 
pursuant to subsection (d) is less than the amount required to award 
such additional amounts to all such students, the additional amount 
awarded to each such student under this section shall be ratably 
reduced.
    ``(c) Determinations of Eligibility.--
            ``(1) Procedures established by regulation.--The Secretary 
        shall establish by regulation procedures for the determination 
        of eligibility of students for increased Pell grant awards 
        under this section. Such procedures shall include measures to 
        prevent any secondary school from certifying more than 10 
        percent of it's students for eligibility under this section.
            ``(2) Coordination with need analysis.--In prescribing 
        procedures under paragraph (1), the Secretary shall ensure that 
        the determination of eligibility and the amount of the increase 
        in the Pell grant award is determined in a timely 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 of a student's two academic years of eligibility under 
        this section, class rank may be determined prior to graduation, 
        at such time and in such manner as the Secretary may specify in 
        the regulations prescribed under this subsection.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to award increased Pell grants under this section 
$240,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.''.
    (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 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 it 
                appears and inserting ``Federal Pell Grant''; and
                    (D) by striking ``basic grants'' each place it 
                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 subparagraph (A);
                    (B) by striking the period at the end of 
                subparagraph (B) and inserting ``; and'';
                    (C) by redesignating subparagraph (B) as 
                subparagraph (A); and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(B) 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 section 110 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 assure 
        that, to the extent practicable, members of groups 
        underrepresented in higher education, including African 
        Americans, Hispanics, Native Americans, Alaska Natives, Asian 
        Americans, Native American Pacific Islanders (including Native 
        Hawaiians), are represented as readers of applications 
        submitted under this chapter. The Secretary shall also assure 
        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 3 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 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--
                    (A) by striking ``$650,000,000 for fiscal year 
                1993'' and inserting ``$800,000,000 for fiscal year 
                1999''; and
                    (B) by striking everything after the first 
                sentence.
    (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;''; and
            (2) in paragraph (8), by striking ``parents'' and inserting 
        ``families''.
    (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 (6)--
                            (i) by inserting ``work-study and other'' 
                        before ``activities''; and
                            (ii) by inserting before the semicolon at 
                        the end the following: ``, including careers 
                        requiring a postsecondary degree'';
                    (C) in paragraph (9), by striking ``and'' at the 
                end;
                    (D) in paragraph (10), by striking ``through (9)'' 
                and inserting ``through (10)''; and
                    (E) by redesignating paragraph (10) as paragraph 
                (11) and by inserting after paragraph (9) the following 
                new paragraph:
            ``(10) special services to enable veterans to make the 
        transition to postsecondary education; and''; and
            (2) in subsection (c), by inserting ``, other than a 
        project a majority of the participants in which are veterans,'' 
        after ``this chapter''.
    (d) Student Support Services.--Section 402D(c)(6) (20 U.S.C. 1070a-
14(c)(6)) is amended by inserting before the period at the end the 
following: ``and minimize the student's loan burden''.
    (e) Postbaccalaureate Achievement Program.--Section 402E (20 U.S.C. 
1070a-15) is amended--
            (1) in subsection (c)(3), by inserting ``or accepted in a 
        graduate program'' after ``degree program''; and
            (2) in subsection (e)(1), by striking ``$2,400'' and 
        inserting ``$3,200''.
    (f) Staff Development Activities.--Section 402G(b) (20 U.S.C. 
1070a-17(b)) is amended 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 for Project Improvement.--Section 402H(b) (20 U.S.C. 
1070a-18(b)) is amended by adding at the end the following new 
sentence: ``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.''.

SEC. 403. NATIONAL EARLY INTERVENTION AND PARTNERSHIP PROGRAM.

    Section 404G (20 U.S.C. 1070a-27) is amended by striking ``1993'' 
and inserting ``1999''.

SEC. 404. REPEALS.

    (a) Repeals of Subpart 2 Provisions.--The following provisions of 
subpart 2 of part A of title IV are repealed:
            (1) Chapter 3 (20 U.S.C. 1070a-31 et seq.).
            (2) Chapter 4 (20 U.S.C. 1070a-41 et seq.).
            (3) Chapter 5 (20 U.S.C. 1070a-51 et seq.).
            (4) Chapter 6 (20 U.S.C. 1070a-61 et seq.).
            (5) Chapter 7 (20 U.S.C. 1070a-71 et seq.).
            (6) Chapter 8 (20 U.S.C. 1070a-81 et seq.).
    (b) Subpart 8.--Subpart 8 of part A of title IV (20 U.S.C. 1070f) 
is repealed.
    (c) Conforming Amendment.--Section 400(b) (20 U.S.C. 1070(b)) is 
amended by striking ``subparts 1 through 8'' and inserting ``subparts 1 
through 6''.

SEC. 405. ESTABLISHMENT OF NEW PROGRAMS.

    Subpart 2 of part A of title IV is amended by inserting after 
chapter 2 (20 U.S.C. 1070a-81) the following new chapters:

                  ``CHAPTER 3--HIGH HOPES FOR COLLEGE

           ``Subchapter A--21st Century Scholar Certificates

``SEC. 406A. 21ST CENTURY SCHOLAR CERTIFICATES.

    ``(a) Findings.--The Congress makes the following findings:
            ``(1) Among low-income students who, despite high test 
        scores, are not planning on attending college, nearly 60 
        percent cite an inability to afford school as the reason.
            ``(2) About 80 percent of our 12th graders who are 
        interested in continuing their education after high school go 
        on to college if their parents read materials about financial 
        aid, compared to only 55 percent of such students if their 
        parents do not read this material.
            ``(3) In 1996, the American Council on Education found that 
        the public overestimated the tuition of public 2-year colleges 
        by about 3 times the actual average tuition, of public 4-year 
        colleges by over twice the actual average tuition, and of 
        private 4-year universities by almost one-third more than the 
        actual average tuition.
            ``(4) There is a need for, and a significant benefit from, 
        providing students, and through them their parents, with 
        information about the variety of Federal student financial 
        assistance programs, such as Pell grants, Federal work-study 
        and loans, and the AmeriCorps Education Awards that make 
        college more affordable than ever before.
    ``(b) Authority.--
            ``(1) The Secretary, using funds appropriated under section 
        407H(a) of this Act--
                    ``(A) shall ensure that certificates, to be known 
                as 21st Century Scholar Certificates, are provided to 
                all students participating in projects under chapter 2; 
                and
                    ``(B) 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 free 
                or reduced-price lunch.
            ``(2) A 21st Century Scholar Certificate shall be 
        personalized for each student and indicate the amount of 
        Federal financial aid for college for which a student may be 
        eligible.

                ``Subchapter B--High Hopes Partnerships

``SEC. 407A. PURPOSE.

    ``It is the purpose of this chapter to encourage and prepare 
students in low-income communities, beginning not later than the 7th 
grade, to prepare for, enter, and successfully complete college by 
assisting college-school-community partnerships to--
            ``(1) provide in-school and on-campus early college 
        awareness activities to these students and their parents;
            ``(2) ensure ongoing adult guidance and other support to 
        these students;
            ``(3) provide useful, early information to these students 
        and their parents on the need for, options related to, and 
        financing (including the availability of financial assistance) 
        of a college education; and
            ``(4) help ensure that these students have access to 
        rigorous core courses, such as algebra and geometry, that 
        prepare them for college.

``SEC. 407B. GRANTS.

    ``(a) Grants Authorized.--From funds appropriated under section 
407H(a), the Secretary shall make grants to college-school-community 
partnerships for activities under section 407D.
    ``(b) Eligible Partnership.--For purposes of this chapter, an 
eligible partnership shall include--
            ``(1) one or more local educational agencies acting on 
        behalf of--
                    ``(A) one or more participating schools; and
                    ``(B) the public secondary schools that students 
                from these schools would normally attend;
            ``(2) one or more degree granting institutions of higher 
        education; and
            ``(3) at least two community organizations or entities, 
        such as State agencies, businesses, professional associations, 
        community-based organizations, or other public or private 
        agencies or organizations.
    ``(c) Definitions.--For the purpose of this chapter--
            ``(1) `participating school' means a public school in 
        which--
                    ``(A) there is a 7th grade;
                    ``(B) one or more cohorts of students receive 
                services under this chapter; and
                    ``(C) at least 50 percent of the students enrolled 
                are eligible for free or reduced-price lunch; and
            ``(2) `cohort of students' means--
                    ``(A) an entire grade level of students in a 
                participating school; or
                    ``(B) if the partnership determines that it would 
                promote the effectiveness of a project, 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.
    ``(d) Duration.--Each grant awarded under this chapter shall be for 
a 6-year period.
    ``(e) Cost Sharing.--
            ``(1) Federal funds shall provide no more than 80 percent 
        of the cost of the project in the first year, 70 percent of the 
        cost in the second year, 60 percent of the cost in the third 
        year, 50 percent of the cost in the fourth year, 40 percent of 
        the cost in the fifth year, and 30 percent of the cost in the 
        sixth year.
            ``(2) The non-Federal share of grants awarded under this 
        chapter may--
                    ``(A) be in cash or in kind, fairly evaluated, 
                including services, supplies, or equipment; and
                    ``(B) include the non-Federal share of work-study 
                grants under part C of title IV of this Act awarded to 
                students who serve as tutors or mentors in projects 
                under this chapter.
            ``(3) The Secretary may waive the cost sharing requirement 
        described in paragraph (1) for any eligible partnership that 
        demonstrates to the satisfaction of the Secretary an 
        extraordinary hardship that prevents compliance with that 
        requirement.
    ``(f) Equitable Geographic Distribution.--To the extent possible, 
the Secretary shall award grants under this chapter in a manner that 
achieves an equitable geographic distribution of those grants.
    ``(g) Priority Awards Under Chapter 2.--Before making grants under 
this chapter for fiscal year 1999, the Secretary shall, as appropriate, 
make awards to recipients eligible for continuation awards under 
chapter 2 of subpart 2 of this title as it was in effect prior to the 
enactment of the Higher Education Amendments of 1998.

``SEC. 407C. GRANT APPLICATION; PREFERENCES.

    ``(a) Application Required.--An eligible partnership desiring to 
receive a grant under this chapter shall submit an application to the 
Secretary, in such form and containing such information, as the 
Secretary may require.
    ``(b) Application Contents.--Each application shall include--
            ``(1) the name of each partner and a description of its 
        responsibilities, including the designation of either an 
        institution of higher education or a local educational agency 
        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 existing 
        services and activities, if any;
            ``(3) a listing of the human, financial (other than funds 
        under this chapter), 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;
            ``(4) a description of how the project will operate, 
        including how grant funds will be used to meet the purpose of 
        this chapter;
            ``(5) a description of how services will be coordinated 
        with, and will complement and enhance, services received by 
        participating schools and students under other related Federal 
        and non-Federal programs, including programs under title I, 
        part A of title VII, and part 1 of title X of the Elementary 
        and Secondary Education Act of 1965, the School-to-Work 
        Opportunities Act of 1994, section 402 of this Act, and the 
        Individuals with Disabilities Education Act;
            ``(6) a description of how the partnership will support and 
        continue the services under this chapter after the grant has 
        expired;
            ``(7) an assurance from each local educational agency using 
        funds under this chapter that--
                    ``(A) at least 50 percent of the students enrolled 
                in each participating school are eligible for free or 
                reduced-price lunch;
                    ``(B) its aggregate expenditures per student for 
                activities described in this chapter will not be 
                reduced from the level of such expenditures in the year 
                prior to the grant; and
                    ``(C) someone at each participating school will be 
                designated as the primary point of contact for the 
                partnership;
            ``(8) an assurance that participating students will have 
        access to rigorous core academic courses that reflect 
        challenging State or local academic standards; and
            ``(9) an assurance that members will provide the 
        performance information required by the Secretary, which would 
        be used to base continuation of the grant.
    ``(c) Preferences.--In reviewing applications under this chapter, 
the Secretary shall give preference to projects that--
            ``(1) will serve participating schools in which at least 75 
        percent of the students enrolled are eligible for free or 
        reduced-price lunch;
            ``(2) provide a commitment from non-Federal sources to pay 
        all or part of the cost of college, through tuition assistance 
        or guarantees (not already available), such as `last-dollar 
        grants', for participating students; and
            ``(3) hold participating students responsible for school or 
        community service and high academic performance.

``SEC. 407D. PROGRAM REQUIREMENTS; USES OF FUNDS.

    ``(a) Program Requirements.--Projects under this chapter shall--
            ``(1) have a program coordinator who is either full-time or 
        whose primary responsibility is the project under this chapter;
            ``(2) provide services to at least one cohort of students, 
        beginning not later than the 7th grade;
            ``(3) ensure that the services authorized under this 
        chapter are provided through the 12th grade to students in the 
        cohort, including students who attend another participating 
        school or a secondary school identified under section 
        407B(b)(1)(B);
            ``(4) include activities and information that foster and 
        improve parent involvement in promoting postsecondary education 
        for their children, including the provision of useful early 
        information on the advantages of a college education, academic 
        admissions requirements, and the need to take core courses, 
        admissions and achievement tests, application procedures, 
        college costs and options, and the availability of student 
        financial aid;
            ``(5) include academic counseling, career awareness, and 
        tutoring or mentoring from trained personnel, as well as other 
        student support services that enable students to succeed 
        academically and apply for, enter, and complete college;
            ``(6) include training in promoting early college awareness 
        for classroom teachers, guidance counselors, and staff of the 
        schools involved in the project; faculty and program personnel 
        in participating institutions of higher education; and 
        participating mentors and tutors;
            ``(7) include activities on college campuses and enrichment 
        activities associated with postsecondary education; and
            ``(8) include arrangements that ensure that all 
        participating students have access to rigorous core courses 
        that reflect challenging State or local academic standards and 
        that prepare them for college.
    ``(b) Use of Funds.--In addition to the activities described in 
subsection (a), recipient of funds under this chapter may use them--
            ``(1) where necessary and appropriate to ensure active 
        participation, to pay stipends to participating students and 
        their mentors;
            ``(2) where necessary and appropriate to ensure active 
        participation, to pay transportation costs for participants to 
        attend project-sponsored activities;
            ``(3) to provide out-of-school and summer activities 
        related to the project;
            ``(4) for project evaluation; and
            ``(5) to recognize the responsibility and achievement of 
        participating students through ceremonies, awards, and other 
        means.

``SEC. 407E. SERVICES FOR STUDENTS ATTENDING PRIVATE SCHOOLS.

    ``A local educational agency that participates in an eligible 
partnership shall provide services supported with Federal funds under 
this chapter on an equitable basis, consistent with section 14503 of 
Elementary and Secondary Education Act of 1965, to students in private 
schools that--
            ``(1) have a 7th grade;
            ``(2) have students at least 50 percent of whom are 
        eligible for free or reduced-price lunch; and
            ``(3) are located in the normal attendance area of a 
        participating school.

``SEC. 407F. EVALUATION.

    ``In order to improve the operation of the program assisted under 
this chapter, the Secretary shall, with funds appropriated under 
section 407H(a), make grants to, and enter into contracts and 
cooperative agreements with, institutions of higher education and other 
public and private institutions and organizations to evaluate the 
effectiveness of the program assisted under this chapter and, as 
appropriate, disseminate such results.

``SEC. 407G. PEER REVIEW.

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

``SEC. 407H. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Authorization of Appropriation.--There are authorized to be 
appropriated $140,000,000 for fiscal year 1999 and such sums as may be 
necessary for each of the 5 succeeding fiscal years to carry out this 
chapter.
    ``(b) Reservation for Technical Assistance and Peer Review.--From 
the amount appropriated under subsection (a) for any fiscal year, the 
Secretary may reserve up 0.5 percent of that amount to obtain 
additional qualified readers and additional staff to review 
applications, to increase the level of oversight monitoring, to support 
impact studies, program assessments and reviews, and to provide 
technical assistance to potential applicants and current grantees.

             ``CHAPTER 4--FRANK TEJEDA SCHOLARSHIP PROGRAM

``SEC. 408A. STATEMENT OF PURPOSE.

    ``It is the purpose of this chapter to establish a Frank Tejeda 
Scholarship Program to recruit and train teachers who are proficient in 
both Spanish and English and who show promise of academic achievement.

``SEC. 408B. SCHOLARSHIPS AUTHORIZED.

    ``(a) Program Authority.--The Secretary is authorized, in 
accordance with the provisions of this chapter, to award scholarships 
to individuals consistent with the purposes of this chapter.
    ``(b) Tejeda Scholars.--Individuals awarded scholarships under this 
chapter shall be known as `Tejeda Scholars'.

``SEC. 408C. ALLOCATION AMONG STATES.

    ``(a) Allocation Formula.--From the sums appropriated pursuant to 
the authority of section 408H for any fiscal year, the Secretary shall 
allocate to each State an amount equal to $5,000 multiplied by the 
number of scholarships determined by the Secretary to be available to 
such State in accordance with subsection (b).
    ``(b) Number of Scholarships Available.--The number of scholarships 
to be made available in a State for any fiscal year shall bear the same 
ratio to the number of scholarships made available to all States as the 
State's population ages 5 through 17 bears to the population ages 5 
through 17 in all the States, except that not less than 10 scholarships 
shall be made available to any State.
    ``(c) Use of Census Data.--For the purpose of this section, the 
population ages 5 through 17 in a State and in all the States shall be 
determined by the most recently available data, satisfactory to the 
Secretary, from the Bureau of the Census. The Bureau of the Census 
shall produce and publish intercensal data for Puerto Rico and the 
other territories.

``SEC. 408D. ELIGIBILITY OF SCHOLARS.

    ``(a) High School Graduation or Equivalent and Admission to 
Institution Required.--Each student awarded a scholarship under this 
chapter shall--
            ``(1) be--
                    ``(A) a low-income individual, as that term is 
                defined in section 402A(g)(2) of this title; or
                    ``(B) an individual who is eligible for a Pell 
                Grant under subpart 1 of this part;
            ``(2) be a citizen of the United States;
            ``(3) be a resident of the State in which he or she 
        applies;
            ``(4) be enrolled or accepted for enrollment on a full- or 
        part-time basis, at a graduate or undergraduate level, in an 
        institution of higher education that has an accredited teacher 
        preparation program;
            ``(5) have demonstrated proficiency in the English and 
        Spanish languages, as certified by the applicant's academic 
        institution; and
            ``(6) have agreed, upon graduation from such program--
                    ``(A) to serve no less than one year for each year 
                of scholarship assistance, but no fewer than two years 
                of service in total, as a teacher in a public 
                elementary or secondary school in which there is a 
                demonstrated need for Spanish-speaking teachers and 
                professionals, as determined by the Secretary;
                    ``(B) to complete such service within 6 years of 
                graduation; and
                    ``(C) that if the student is unable to complete 
                such service, the student will, except as provided in 
                subsection (c), repay the Secretary the total amount, 
                or a pro rata amount of the scholarship received under 
                this chapter in proportion to the amount of service 
                completed, plus interest and collection costs in the 
                same manner as repayment of a student loan made under 
                part D of this title.
    ``(b) Selection Based on Promise of Academic Achievement.--Each 
student awarded a scholarship under this chapter must demonstrate 
outstanding academic achievement and show promise of continued academic 
achievement, as certified by the student's academic institution.
    ``(c) Exception to Repayment Obligation.--
            ``(1) Deferral during certain periods.--A recipient shall 
        not be considered in violation of the agreement entered into 
        pursuant to subsection (a)(4)(C) during any period in which the 
        recipient--
                    ``(A) is pursuing a full-time course of study 
                related to the field of teaching at an eligible 
                institution;
                    ``(B) is serving, not in excess of 3 years, as a 
                member of the armed services of the United States;
                    ``(C) is temporarily totally disabled for a period 
                of time not to exceed 3 years as established by sworn 
                affidavit of a qualified physician;
                    ``(D) is unable to secure employment for a period 
                not to exceed 12 months by reason of having to care for 
                a spouse, child, parent, or immediate family member who 
                is disabled;
                    ``(E) is seeking and unable to find full-time 
                employment for a single period not to exceed 12 months;
                    ``(F) is seeking and unable to find full-time 
                employment as a teacher in a public or private 
                nonprofit preschool, elementary or secondary school, or 
                education program for a single period not to exceed 27 
                months; or
                    ``(G) satisfies the provisions of additional 
                repayment exceptions that may be prescribed by the 
                Secretary in regulations issued pursuant to this 
                subpart.
            ``(2) Forgiveness if permanently totally disabled.--A 
        recipient shall be excused from repayment of any scholarship 
        assistance received under this chapter if the recipient becomes 
        permanently totally disabled as established by sworn affidavit 
        of a qualified physician.

``SEC. 408E. SELECTION OF SCHOLARS.

    ``(a) Establishment of Criteria.--The Secretary shall establish 
criteria for the selection of scholars under this chapter that meet the 
requirements of section 408D.
    ``(b) Timing of Selection.--The selection process shall be 
completed, and the awards made, no later than May 1 of the academic 
year preceding the academic year for which the award will be used.

``SEC. 408F. STIPENDS AND SCHOLARSHIP CONDITIONS.

    ``(a) Amount of Award.--Each student awarded a scholarship under 
this chapter shall receive a stipend of $5,000 for the academic year of 
study for which the scholarship is awarded, except that in no case 
shall the total amount of financial aid awarded to such student exceed 
such student's total cost-of-attendance.
    ``(b) Use of Award.--The State educational agency shall establish 
procedures to assure that a scholar awarded a scholarship under this 
chapter pursues a course of study at an institution of higher 
education.

``SEC. 408G. CONSTRUCTION OF NEEDS PROVISIONS.

    ``Notwithstanding section 471, nothing in this chapter, or any 
other Act, shall be construed to permit the receipt of a scholarship 
under this chapter to be counted for any needs test in connection with 
the awarding of any grant or the making of any loan under this Act or 
any other provision of Federal law relating to educational assistance.

``SEC. 408H. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated for this chapter 
$5,000,000 for fiscal year 1998 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.

                  ``CHAPTER 5--CAMPUS-BASED CHILD CARE

``SEC. 410A. CAMPUS-BASED CHILD CARE.

    ``(a) 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 and payments.--
                    ``(A) Duration.--The Secretary shall award a grant 
                under this section for a period of 3 years.
                    ``(B) Payments.--Subject to paragraph (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 serving the needs 
        of low-income students enrolled at the institution of higher 
        education.
            ``(6) 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.
    ``(b) 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 (a)(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 student demographics and other relevant 
        data;
            ``(4) identify the resources 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, accessing 
        foundation, corporate, or other institutional support, and 
        demonstrating that the use of the resources will not result in 
        increases in student tuition;
            ``(5) 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;
            ``(6) 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;
            ``(7) 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;
            ``(8) 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.
    ``(c) 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.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $30,000,000 for fiscal year 1999 
and such sums as may be necessary for each of the 4 succeeding fiscal 
years.

        ``CHAPTER 6--PUBLIC SAFETY OFFICER MEMORIAL SCHOLARSHIPS

``SEC. 411A. SCHOLARSHIPS AUTHORIZED.

    ``(a) In General.--
            ``(1) Scholarship Awards.--The Secretary is authorized to 
        award a scholarship to any eligible applicant who is enrolled, 
        or has been accepted for enrollment, in an eligible institution 
        as a full-time or part-time postsecondary level student.
            ``(2) Application.--To receive a scholarship award under 
        this chapter, each eligible applicant shall submit an 
        application to the Secretary in such time and manner as may be 
        determined appropriate by the Secretary--
                    ``(A) accompanied by a certification from the head 
                of the agency that employed the public safety officer 
                to whom the applicant was married (in the case of a 
                surviving spouse), or with whom the applicant was 
                living or from whom the applicant was receiving support 
                contributions (in the case of a dependent child), 
                stating that such officer died as a result of the 
                performance of the officer's official duties; and
                    ``(B) demonstrating the applicant's need for 
                financial aid under part F of this title, determined 
                without regard to any assets derived from death 
                benefits for such officer, to pursue a program of 
                postsecondary education.
    ``(b) Maximum Award.--For any academic year, the maximum amount of 
a scholarship award under this section for a postsecondary student may 
equal, but not exceed, the lesser of the following:
            ``(1) The average cost of attendance (as defined in section 
        472), at a State university in the State in which the student 
        resides, for a State resident carrying the same academic 
        workload as the student, with the same number of dependents as 
        the student, and residing in the same type of housing as the 
        student.
            ``(2) The actual cost of attendance (as defined in section 
        472) of such student.
    ``(c) Award Period.--The duration of each award under this chapter 
for a postsecondary student, shall be the lesser of--
            ``(1) the time actually required by the student to complete 
        a course of study and obtain a diploma; and
            ``(2) 6 years in the case of a student engaged in 
        undergraduate studies and 3 years in the case of a student 
        engaged in postgraduate studies.
    ``(d) Notification.--The Secretary shall notify the recipient and 
the eligible institution of the applicant's selection for receipt of an 
award under this chapter, the conditions pertaining to award 
eligibility and continuance.
    ``(e) Fiscal Agent.--The Secretary shall, if practicable, use the 
eligible institution as fiscal agent for payment of an award.

``SEC. 411B. ADDITIONAL AWARD REQUIREMENTS.

    ``A student awarded a scholarship grant under this chapter, as a 
condition for initial receipt of such award and periodically thereafter 
as a condition for its continuation, shall demonstrate to the 
satisfaction of the Secretary that the student is--
            ``(1) maintaining satisfactory progress in the course of 
        study the student is pursuing consistent with section 484(c);
            ``(2) committed to remaining drug-free; and
            ``(3) attending class on a regular basis as to not 
        interfere with normal course of studies except for excused 
        absence for vacation, illness, military service and such other 
        periods deemed good cause by the eligible institution or the 
        Secretary.

``SEC. 411C. AGREEMENTS WITH ELIGIBLE INSTITUTIONS.

    ``For the purposes of this chapter, the Secretary is authorized to 
enter into agreements with eligible institutions in which any student 
receiving a scholarship award under this chapter has enrolled or has 
been accepted for enrollment. Each such agreement shall--
            ``(1) provide that an eligible institution will cooperate 
        with the Secretary in carrying out the provisions of this 
        chapter, including the provision of information necessary for a 
        student to satisfy the requirements in section 411B;
            ``(2) provide that the institution will conduct a periodic 
        review to determine whether students enrolled and receiving 
        scholarship awards continue to be entitled to payments under 
        this chapter and will notify the Secretary of the results of 
        such reviews; and
            ``(3) provide for control and accounting procedures as may 
        be necessary to assure proper disbursements and accounting of 
        funds paid under to the institution under section 411A(e).

``SEC. 411D. DEFINITIONS.

    ``In this chapter:
            ``(1) Dependent child.--The term `dependent child' means a 
        child who is either living with or receiving regular support 
        contributions from a public safety officer at the time of the 
        officer's death, including a stepchild or an adopted child.
            ``(2) Eligible applicant.--The term `eligible applicant' 
        means a person residing in a State who is--
                    ``(A) a surviving spouse; or
                    ``(B) a dependent child.
            ``(3) Eligible institution.--The term `eligible 
        institution' means an eligible institution as defined in 
        section 435(a) that--
                    ``(A) is located in a State; and
                    ``(B) complies with the antidiscrimination 
                provisions of section 601 of the Civil Rights Act of 
                1964 and does not discriminate on the basis of race.
            ``(4) Public safety officer.--The term `public safety 
        officer' means a person serving a public agency of a State or 
        of a unit of general local government, with or without 
        compensation, as--
                    ``(A) a law enforcement officer, including a 
                corrections or a court officer engaged in--
                            ``(i) apprehending or attempting to 
                        apprehend of any person--
                                    ``(I) for the commission of a 
                                criminal act; or
                                    ``(II) who at the time was sought 
                                as a material witness in a criminal 
                                proceeding; or
                            ``(ii) protecting or guarding a person held 
                        for the commission of a criminal act, or held 
                        as a material witness in connection with a 
                        criminal act; or
                            ``(iii) lawfully preventing of, or lawfully 
                        attempting to prevent the commission of, a 
                        criminal act or an apparent criminal act in the 
                        performance of his official duty; or
                    ``(B) a firefighter.
            ``(5) Surviving spouse.--The term `surviving spouse' means 
        the legally married husband or wife of a public safety officer 
        at the time of the officer's death.
            ``(6) Unit of general local government.--The term `unit of 
        general local government' means any city, county, township, 
        town, borough, parish, village, or any other general purpose 
        subdivision of a State, or any Indian tribe which the Secretary 
        of the Interior determines performs law enforcement 
        functions.''.

SEC. 406. FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS.

    (a) Extension of Authority.--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(d)) is amended by striking ``and if 
the total financial need'' and all that follows and inserting the 
following: ``, then grant funds shall be made available to such 
independent and less-than-full-time students.''.
    (c) Allocation of Funds.--Section 413D (20 U.S.C. 1070b-3) is 
amended--
            (1) by striking subsection (b);
            (2) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (3) in subsection (c)(2)(A)(i), by striking ``subsection 
        (d)'' and inserting ``subsection (c)'';
            (4) by redesignating subsections (c), (d), (e), and (f) as 
        subsections (b), (c), (d), and (e), respectively; and
            (5) by inserting after subsection (e) (as so redesignated) 
        the following new subsection:
    ``(f) Carry-Over/Carry-Back Authority.--
            ``(1) Carry-over authority.--
                    ``(A) Carry-over up to 10 percent.--Of the sums 
                granted to an eligible institution under this subpart 
                for any fiscal year, 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) Reallocation of excess.--Any of the sums so 
                granted to an institution for a fiscal year which are 
                not needed by that institution to operate programs 
                under this subpart during that fiscal year, and which 
                it does not wish to use during the next fiscal year as 
                authorized in the preceding sentence, shall remain 
                available to the Secretary for making grants under 
                section 413B to other institutions in the same State 
                until the close of the second fiscal year next 
                succeeding the fiscal year for which such funds were 
                appropriated.
            ``(2) Carry-back authority.--
                    ``(A) Carry-back up to 10 percent.--Up to 10 
                percent of the sums the Secretary determines an 
                eligible institution may receive from funds which have 
                been appropriated for a fiscal year may be used by the 
                institution for expenditure during the fiscal year 
                preceding the fiscal year for which the sums were 
                appropriated.
                    ``(B) 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. GRANTS TO STATES FOR STATE STUDENT INCENTIVES.

    (a) Authorization of Appropriations.--Section 415A(b) of the Higher 
Education Act of 1965 (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 $25,000,000, 
        the excess shall be available to carry out section 415E.''.
    (b) Special Leveraging Educational Assistance Partnership 
Program.--Subpart 4 of part A of title IV of the Higher Education Act 
of 1965 (20 U.S.C. 1070c et seq.) is amended--
            (1) by redesignating section 415E as section 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) 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 
        teaching or careers in information technology, or other fields 
        of study determined by the State to be critical to the State's 
        workforce needs;
            ``(4) carrying out early intervention programs, mentoring 
        programs, and career education programs for eligible students 
        who demonstrate financial need; and
            ``(5) awarding merit or academic scholarships to eligible 
        students who demonstrate financial need.
    ``(c) 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 
(b) 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. The Secretary may 
waive this subsection for good cause, as determined by the Secretary.
    ``(d) Federal Share.--The Federal share of the cost of the 
authorized activities described in subsection (b) for any fiscal year 
shall be 25 percent.''.
    (c) Technical and Conforming Amendments.--
            (1) Purpose.--Subsection (a) of section 415A of the Higher 
        Education Act of 1965 (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) of the Higher Education 
        Act of 1965 (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 its project, to the extent 
feasible, with other local, State, and Federal programs to maximize the 
resources available for migrant students, and''.
    (b) Extension of Authority.--Section 418A(g) is amended by striking 
``1993'' each place it appears and inserting ``1999''.
    (c) Data Collection.--Section 418A is amended by adding at the end 
the following new subsection:
    ``(h) Data Collection.--The National Center for Education 
Statistics shall collect postsecondary education data on migrant 
students.''.
    (d) Technical Amendments.--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. BYRD SCHOLARSHIPS.

    (a) Eligibility.--Section 419G (20 U.S.C. 1070d-37) is amended by 
adding at the end the following new subsection:
    ``(e) Termination of Eligibility.--The eligibility of students from 
the Federated States of Micronesia, the Republic of the Marshall 
Islands, and Palau shall expire on the earlier of the date of enactment 
of the Higher Education Amendments of 1998 or October 1, 1998.''.
    (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 ``$40,000,000 for fiscal year 1999''.

             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)(6)(B)(i), by striking ``handle 
        written'' and inserting ``handle written, electronic,'';
            (3) in subsection (c)(7)
                    (A) by striking ``to a guaranty agency--'' and 
                everything that follows through ``(B) if the 
                Secretary'' and inserting ``to a guaranty agency, if 
                the Secretary'';
                    (B) by striking ``428(c)(10)(F)(v)'' and inserting 
                ``428(c)(9)(F)(v)'';
                    (C) by inserting ``and'' after ``cash needs,''; and
                    (D) by striking ``or ensure'' and everything that 
                follows and inserting a period; and
            (4) 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.

SEC. 412A. GUARANTY AGENCY REFORMS.

    The Secretary shall conduct a study to investigate to what extent 
the actions of the lenders and the guarantors impact upon the default 
rates of student borrowers as it relates to the servicing of the loans 
or the due diligence of the loan.

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 of this part 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 maintained in 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.
    ``(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 with respect to the 
        defaulted loan pursuant to sections 428(c)(6)(A) and 
        428F(a)(1)(B); and
            ``(3) insurance premiums collected from borrowers pursuant 
        to sections 428(b)(1)(H) and 428H(h).
    ``(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 section 
        428(b)(1)(G), section 428(j), section 437, and section 439(q); 
        and
            ``(2) to pay into the Agency Operating Fund established 
        pursuant to section 422B a default prevention fee in accordance 
        with section 428(l).
    ``(e) Ownership of Federal Fund.--
            ``(1) In general.--The Federal Fund of the guaranty agency, 
        and any assets purchased or developed with funds from the 
        Federal Fund or any other funds considered reserve funds on the 
        date of enactment of this section, regardless of who holds or 
        controls the reserves or assets, shall be considered to be the 
        property of the United States to be used in the operation of 
        the program authorized by this part, as provided in subsection 
        (d) of this section.
            ``(2) Nonliquid reserve fund and other assets.--
        Notwithstanding any other provision of law, nonliquid reserve 
        fund assets, such as buildings and equipment purchased or 
        developed by the guaranty agency with funds from the Federal 
        Fund, or any other funds considered reserve funds on the date 
        of enactment of this section shall--
                    ``(A) remain the property of the United States;
                    ``(B) be used only for such purposes as the 
                Secretary determines are appropriate; and
                    ``(C) be subject to such restrictions on the 
                disposition of such assets (which may include a 
                requirement that any sale of such assets be at not less 
                than fair market value) as the Secretary determines are 
                appropriate.
    ``(f) Transition.--
            ``(1) In general.--In order to establish the Agency 
        Operating Fund authorized by section 422B, each guaranty agency 
        may transfer up to 180 days cash expenses for normal operating 
        expenses, 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 Agency Operating 
        Fund for use in the performance of its duties under this part. 
        Such transfers may occur during the first three years following 
        the establishment of the Operating Fund. However, no agency may 
        transfer in excess of 50 percent of the Federal Fund balance to 
        its Operating Fund during any fiscal year. In determining the 
        transfer amount, the agency shall insure 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 the Balanced Budget Act of 1997.
            ``(2) Repayment provisions.--Each guaranty agency shall 
        begin repayment of sums transferred pursuant to this subsection 
        no later than the start of the fourth year after the 
        establishment of the Agency Operating Fund, and shall repay all 
        amounts transferred no later than 5 years from the date of the 
        establishment of the Agency Operating Fund. Each guaranty 
        agency shall provide to the Secretary, on an annual basis, a 
        financial analysis demonstrating its ability to repay all 
        outstanding amounts while any transferred amounts are owned to 
        the Federal Fund.
            ``(3) Special rule.--In applying the minimum reserve level 
        required by section 428(c)(9)(A), the Secretary shall include 
        all amounts owed to the Federal Fund by the agency due to 
        transfers allowed under paragraph (1) 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 Agency Operating Fund (hereinafter referred to 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) the portfolio maintenance fee paid by the Secretary 
        pursuant to section 458;
            ``(3) the default prevention fee paid in accordance with 
        section 428(l);
            ``(4) amounts retained by the guaranty agency 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
            ``(5) interest earned on the Federal Fund during the first 
        3 years after the date of enactment of this section by a 
        limited number of guaranty agencies (not to exceed 10) that 
        demonstrate to the Secretary the potential for a negative cash 
        flow in the Operating Fund during the restructuring of their 
        operations in accordance with the requirements of this section 
        and section 422A.
    ``(d) Uses of Funds.--
            ``(1) In general.--Funds in the Operating Fund shall be 
        used for activities related to student financial aid, including 
        application processing, loan disbursement, enrollment and 
        repayment status management, default prevention activities, 
        default collection activities, school and lender training, 
        financial awareness and outreach activities, compliance 
        monitoring, other loan program related activities in support of 
        postsecondary education and other student financial aid related 
        activities as determined by the guaranty agency.
            ``(2) Special rule.--The guaranty agency may, in its 
        discretion, transfer funds from the Operating Fund to the 
        Federal Student Loan Reserve Fund for use in accordance with 
        section 422A. Such transfer shall be irrevocable, and any funds 
        so transferred shall become the property of the United States.
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) The term `default collection activities' 
                means activities of a guaranty agency which 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) The term `default prevention activities' 
                means activities of a guaranty agency which 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) The term `enrollment and repayment status 
                management' means activities of a guaranty agency which 
                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 of Operating Fund.--The Operating Fund of the 
guaranty agency shall be considered to be the property of the guaranty 
agency. The Secretary may regulate the uses or expenditure of moneys in 
the Operating Fund with respect to activities required under guaranty 
agency agreements under subsections (b) and (c) of section 428 until 
such time as a guaranty agency has repaid to the Federal Fund all 
reserve funds transferred under section 422A(f). During any period in 
which funds are owed to the Federal Fund as a result of a transfer 
under 422A(f), moneys in the Operating Fund may only be used for 
expenses related to the student loan programs authorized under this 
part. The Secretary may require such necessary reports and audits as 
provided in section 428(b)(2).''.
    (c) Additional Recall of Reserves.--Section 422 (as amended by 
section 412) is further amended by adding at the end the following new 
subsection:
    ``(i) Additional Recall of Reserves.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Secretary shall recall $43,000,000 for each of the 
        fiscal years 1999, 2000, 2001, 2002, and 2003 from the reserve 
        funds held by guaranty agencies.
            ``(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 annually reserve funds under 
        paragraph (1) based on one-fifth of the agency's required 
        share. For purposes of this paragraph, a guaranty agency's 
        required share shall be determined as follows:
                    ``(A) The Secretary shall impose on each guaranty 
                agency an equal percentage reduction in the amount of 
                the agency's reserve funds held as of September 30, 
                1996.
                    ``(B) The equal percentage reduction shall be the 
                percentage obtained by dividing--
                            ``(i) $215,000,000 by
                            ``(ii) the total amount of all such 
                        agencies' reserve funds held as of September 
                        30, 1996.
            ``(4) Offset of required shares.--If any guaranty agency 
        returns to the Secretary any reserves 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 additional reserve return.
            ``(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 building, equipment, or 
                other nonliquid assets.''.
    (d) Conforming Amendments.--
            (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''; 
                        and
                            (iii) in subparagraph (B)(ii), by striking 
                        ``78 percent'' and inserting ``75 percent'';
                            (iv) in subparagraph (E)--
                                    (I) by striking ``for `98 
                                percent';'' and inserting ``for `95 
                                percent';'';
                                    (II) by striking ``for `88 
                                percent';'' and inserting ``for `85 
                                percent';''; and
                                    (III) by striking ``for `78 
                                percent'.'' and inserting ``for `75 
                                percent'.'';
                            (v) in subparagraph (F)--
                                    (I) by striking ``for `98 
                                percent';'' and inserting ``for `95 
                                percent';'';
                                    (II) by striking ``for `88 
                                percent';'' and inserting ``for `85 
                                percent';''; and
                                    (III) by striking ``for `78 
                                percent'.'' and inserting ``for `75 
                                percent'.'';
                            (vi) by striking subparagraph (D) and 
                        redesignating subparagraphs (E) and (F) as 
                        subparagraphs (D) and (E), respectively.
                    (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) Equitable share.--Section 428(c)(6) is amended--
                    (A) in subparagraph (A)--
                            (i) by striking ``(A) For the purpose'' and 
                        inserting ``For the purpose''; and
                            (ii) by striking clause (ii) and inserting 
                        the following:
                    ``(ii) an amount equal to 24 percent of such 
                payments for use in accordance with section 422B.'';
                    (B) by striking subparagraphs (B) and (C); and
                    (C) by redesignating clauses (i) and (ii) as 
                subparagraphs (A) and (B).
            (3) Guaranty agency reserve level.--Section 428(c)(9) is 
        amended--
                    (A) in subparagraph (A), by striking ``.5 percent'' 
                and inserting ``0.25 percent''; and
                    (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) of this 
                        subsection''; and
                            (ii) by striking ``30 working days'' and 
                        inserting ``45 working days''.
            (4) Payment of certain costs.--Section 428(f) is amended--
                    (A) by striking paragraph (1)(A) and inserting the 
                following:
            ``(1) Payment for certain activities.--(A) The Secretary 
        shall, in accordance with the provisions of this paragraph, pay 
        to each guaranty agency for each fiscal year 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
                    (B) in paragraph (1)(B), by striking the first 
                sentence and inserting the following: ``The payment 
                required by subparagraph (A) shall be paid on a 
                quarterly basis.''.
            (5) Default aversion assistance.--Section 428(l) is amended 
        to read as follows:
    ``(l) Default Aversion Assistance.--
            ``(1) Assistance required.--Upon receipt of a proper 
        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) of this section shall engage in 
        default aversion activities designed to prevent the default by 
        a borrower on a loan covered by such agreement.
            ``(2) Reimbursement.--(A) guaranty agency may, in 
        accordance with the provisions of this paragraph, transfer from 
        the Federal Student Loan Reserve Account to the Operating 
        Account 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 on or 
        before the 210th day after the loan becomes 60 days delinquent.
            ``(B) 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. Such fee 
        shall not be paid more than once on any loan for which the 
        guaranty agency averts the default unless at least 12 months 
        has elapsed between the date the borrower became current in his 
        or her payments and the date the lender filed a subsequent 
        default aversion assistance request. A guaranty agency may 
        transfer such fees earned under this subsection no more 
        frequently than monthly.
            ``(C) 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.''.

SEC. 414. SCOPE AND DURATION OF 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 
        to read as follows:

``SEC. 427A. APPLICABLE INTEREST RATES.

    ``(a) Interest Rates for New Loans On or After July 1, 1998.--
            ``(1) In general.--Subject to paragraph (2), 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 July 1, 1998, 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.--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 July 1, 1998, 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 
                428(b)(1)(M) or 427(a)(2)(C),
        shall be determined under paragraph (1) by substituting `1.7 
        percent' for `2.3 percent'.
            ``(3) PLUS loans.--With respect to any loan under section 
        428B for which the first disbursement is made on or after July 
        1, 1998, 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 the lesser 
        of--
                    ``(A)(i) the bond equivalent rate of 91-day 
                Treasury bills auctioned at the final auction held 
                prior to such June 1; plus
                    ``(ii) 3.1 percent; or
                    ``(B) 9.0 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, 
        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 one percent; or
                    ``(B) 8.25 percent.
    ``(b) Lesser Rates Permitted.--Nothing in this section or section 
428C shall be construed to prohibit a lender from charging a borrower 
interest at a rate less than the rate which is applicable under this 
part.
    ``(c) Consultation.--The Secretary shall determine the applicable 
rate of interest under this section 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(a)(3)''.
    (b) Special Allowances.--
            (1) Amendment.--Section 438(b)(2)(F) (20 U.S.C. 1087-
        1(b)(2)(F)) is amended to read as follows:
            ``(F) Loans disbursed after july 1, 1998.--
                    ``(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 July 
                1, 1998, 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 July 1, 1998, and for which the applicable rate 
                of interest is described in section 427A(a)(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 July 
                1, 1998, and for which the applicable rate of interest 
                is described in section 427A(a)(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 for which the applicable interest rate is 
                determined under section 427A(a)(4), 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.
                    ``(v) Limitation on special allowances for PLUS and 
                consolidation loans.--In the case of PLUS loans made 
                under section 428B and disbursed on or after July 1, 
                1998, for which the interest rate is determined under 
                427A(a)(3), a special allowance shall not be paid for 
                such loan unless the rate determined under subparagraph 
                (A) of such section (without regard to subparagraph (B) 
                of such section) exceeds 9.0 percent. In the case of 
                consolidation loans made under section 428C for which 
                the application is received by an eligible lender on or 
                after October 1, 1998, and for which the applicable 
                interest rate is determined under section 427A(a)(4), a 
                special allowance shall not be paid for such loan 
                unless the rate determined under subparagraph (A) of 
                such section (without regard to subparagraph (B) of 
                such section) exceeds 8.25 percent.''.
            (2) Consolidation loans.--Section 428C(c)(1) (20 U.S.C. 
        1078-3) is amended--
                    (A) by striking everything preceding subparagraph 
                (D) and inserting the following:
            ``(1) Interest rate.--(A) Except as provided in 
        subparagraph (B), 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, the applicable interest 
        rate shall be determined under section 427A(a)(4).''; and
                    (B) by redesignating subparagraph (D) as 
                subparagraph (B).
            (3) Conforming amendment.--Section 438(b)(2)(C)(ii) is 
        amended by striking ``In the case'' and inserting ``Subject to 
        subparagraph (F), in the case''.
    (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 July 1, 1998.

SEC. 417. FEDERALLY GUARANTEED STUDENT LOANS.

    (a) Requirements for Federal Interest Subsidies.--Section 428(a)(2) 
(20 U.S.C. 1078(a)(2)) is amended by striking everything preceding 
subparagraph (D) and inserting the following:
            ``(2) Additional requirements to receive subsidy.--(A) Each 
        student qualifying for a portion of an interest payment under 
        paragraph (1) shall provide to the lender a statement from the 
        eligible institution, at which the student has been accepted 
        for enrollment, or at which the student is in attendance, which 
        certifies the eligibility of the student to receive a loan 
        under this part and the amount of the loan for which such 
        student is eligible.
            ``(B) A student shall qualify for a portion of an interest 
        payment under paragraph (1) if the eligible institution has 
        provided the lender with a statement that sets forth a schedule 
        for disbursement of the proceeds of the loan in installments, 
        consistent with the requirements of section 428G.
            ``(C) For the purpose of subparagraph (B), a student shall 
        qualify for a portion of an interest payment under paragraph 
        (1) if the eligible institution has provided the lender with a 
        statement evidencing a determination of need for a loan (as 
        determined under part F of this title) and the amount of such 
        need, subject to the provisions of subparagraph (D).''.
    (b) Duration of Authority.--Section 428(a)(5) is amended--
            (1) by striking ``September 30, 2002'' and inserting 
        ``September 30, 2004''; and
            (2) by striking ``September 30, 2006'' and inserting 
        ``September 30, 2008''.
    (c) Annual Loan Limits.--Section 428(b)(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).
    (d) Selection of Repayment Plans.--Section 428(b)(1)(D) is amended 
by striking ``and (iii)'' and inserting the following: ``(iii) the 
student borrower may annually change the selection of a repayment plan 
under this part, and (iv)''.
    (e) Coinsurance.--Section 428(b)(1)(G) is amended by striking ``not 
less than''.
    (f) Deferments.--Section 428(b)(1)(M) is amended--
            (1) 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
            (2) in clause (ii), by inserting before the semicolon the 
        following: ``, except that no borrower who qualifies for 
        unemployment benefits shall be required to provide any 
        additional paperwork for a deferment under this clause''.
    (g) Limitation, Suspension, and Termination.--Section 428(b)(1)(U) 
is amended--
            (1) by striking ``emergency action,,'' each place it 
        appears and inserting ``emergency action,''; and
            (2) by striking ``a compliance audit of each lender'' and 
        inserting the following: ``in the case of any lender that 
        originates or holds more than $5,000,000 in loans made under 
        this title during an annual audit period, a compliance audit of 
        such lender''.
    (h) Additional Insurance Program Requirements.--Section 428(b)(1) 
is further amended--
            (1) by striking ``and'' at the end of subparagraph (W);
            (2) in subparagraph (X)--
                    (A) by striking ``428(c)(10)'' and inserting 
                ``428(c)(9)''; and
                    (B) by striking the period at the end and inserting 
                ``; and'';
            (3) by adding at the end the following new subparagraph:
                    ``(Y) provides that 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, (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.''.
    (i) Restrictions on Inducements.--Section 428(b)(3) is amended--
            (1) 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 students who have previously received loans 
                guaranteed under this part by the guaranty agency; 
                or''; and
            (2) 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.''.
    (j) Delay in Commencement of Repayment Period.--Section 428(b)(7) 
is amended by inserting after subparagraph (C) the following new 
subparagraph:
            ``(D) There shall be excluded from the 6 months determined 
        under subparagraph (A)(i) any period during which the student 
        was called or ordered to active duty in a reserve component of 
        the Armed Forces of the United States.''.
    (k) 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''.
    (l) Forbearance.--Section 428(c)(3) is amended--
            (1) in subparagraph (A)(i), by striking ``written'';
            (2) in subparagraph (B), by inserting before the semicolon 
        the following: ``, including forbearance granted after 
        consideration of a borrower's total debt burden''; and
            (3) in the last sentence--
                    (A) by striking ``and (ii)'' and inserting 
                ``(ii)''; and
                    (B) by inserting before the period at the end the 
                following: ``, and (iii) forbearance for periods not to 
                exceed 60 days if the lender reasonably determines that 
                such suspensions are necessary to research or process 
                information relative to such loan or to collect 
                appropriate documentation relating to the borrower's 
                request for a deferment or forbearance''.
    (m) Assignment.--Section 428(c)(8) is amended--
            (1) by striking ``(A)''; and
            (2) by striking subparagraph (B).
    (n) Agency Termination.--Section 428(c)(9) is amended--
            (1) in subparagraph (E)--
                    (A) by inserting ``or'' at the end of clause (iv);
                    (B) by striking ``; or'' at the end of clause (v) 
                and inserting a period; and
                    (C) by striking clause (vi);
            (2) in subparagraph (F)(vii), by striking ``to avoid 
        disruption'' and everything that follows and inserting ``and to 
        avoid disruption of the student loan program.'';
            (3) in subparagraph (I), by inserting ``on the record'' 
        after ``for a hearing''; and
            (4) in subparagraph (K)--
                    (A) by striking ``and Labor'' and inserting ``and 
                the Workforce''; and
                    (B) by striking everything after ``guaranty agency 
                system'' and inserting a period.
    (o) Lender Referral.--Section 428(e) is amended--
            (1) in paragraph (1)(B)(ii), by striking ``during the 
        transition'' and everything that follows through ``part D of 
        this title''; and
            (2) in paragraph (3), by striking ``for costs of 
        transition''.
    (p) Action on Agreements.--Section 428(g) is amended by striking 
``and Labor'' and inserting ``and the Workforce''.
    (q) Lenders-of-Last-Resort.--Section 428(j)(3) is amended--
            (1) in subparagraph (A)--
                    (A) in the heading thereof, by striking ``during 
                transition to direct lending'';
                    (B) by striking out ``during the transition from 
                the Federal Family Education Loan Program under this 
                part ot the Federal Direct Student Loan Program under 
                part D of this title,'' and inserting a comma;
                    (C) by inserting ``designated for a State'' 
                immediately after ``a guaranty agency''; and
                    (D) by inserting ``subparagraph (C) and'' 
                immediately before ``section 422(c)(7),''; and
            (2) by adding at the end thereof the following new 
        subparagraph:
            ``(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 its 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 that 
        guaranty agency. If the Secretary determines that 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.''.
    (r) Income Contingent Repayment.--Section 428(m) is amended by 
striking ``shall require at least 10 percent of the borrowers'' and 
inserting ``may require borrowers''.
    (s) State Share of Default Costs.--Subsection (n) of section 428 is 
repealed.
    (t) Blanket Certificate of Guaranty.--Section 428 of the Act is 
amended by adding at the end the following new subsection:
    ``(n) Blanket Certificate of Loan Guaranty.--
            ``(1) In general.--Any guaranty agency that has 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 blanket certificates of loan 
                guaranty that permit 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, such 
                reporting to occur at reasonable, mutually acceptable 
                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 and eligible lender may establish 
        by mutual agreement limitations or restrictions on the number 
        or volume of loans issued by a lender under the blanket 
        certificate of guaranty.''.
    (u) Notice of Availability of Income-Sensitive Repayment Option.--
            (1) Amendment.--Section 428 is further amended by adding at 
        the end the following new subsection:
    ``(o) 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 subsection, the lender shall provided 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 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.''.
            (2) Conforming amendments.--
                    (A) Section 428(b)(1)(E)(i) is amended by inserting 
                before the semicolon the following: ``or of repaying 
                the loan in accordance with an income-sensitive 
                repayment schedule offered pursuant to section 428C''.
                    (B) Section 485(b)(1)(A) is amended--
                            (i) by striking ``and'' at the end of 
                        clause (i);
                            (ii) by striking the period at the end of 
                        clause (ii) and inserting ``; and''; and
                            (iii) by adding at the end the following 
                        new clause:
            ``(iii) the information required to be disclosed by lenders 
        pursuant to section 428(o).''.
    (v) Notice to Institutions of Defaults.--
            (1) Administrative and fiscal procedures.--Section 
        428(c)(2)(A) is amended by striking ``proof that reasonable 
        attempts were made'' and inserting ``proof that the institution 
        was contacted and other reasonable attempts were made''.
            (2) Reimbursement.--Section 428(c)(2)(G) (20 U.S.C. 
        1078(c)(2)(G)) is amended by striking ``certifies to the 
        Secretary that diligent attempts have been made'' and inserting 
        ``demonstrates to the Secretary that diligent attempts, 
        including direct contact with the institution, have been 
        made.''.
            (3) 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. 418. VOLUNTARY AGREEMENTS WITH GUARANTY AGENCIES.

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

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

    ``(a) Voluntary Agreements.--
            ``(1) Authority.--Notwithstanding any other provision of 
        law, the Secretary may enter into a voluntary, flexible 
        agreement with not more than 6 guaranty agencies under this 
        section, in lieu of agreements with a guaranty agency under 
        subsections (b) and (c) of section 428, under which the 
        Secretary may waive or modify any requirement under this title 
        applicable to the responsibilities of the Secretary and a 
        guaranty agency.
            ``(2) Eligibility.--Any guaranty agency that had one or 
        more agreements with the Secretary under subsections (b) and 
        (c) of section 428 as of the day before the date of enactment 
        of this section may enter into an agreement with the Secretary 
        under this subsection.
    ``(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;
            ``(2) shall be for a period not to exceed five years, and 
        may be renewed upon the agreement of the parties;
            ``(3) may include provisions--
                    ``(A) specifying the responsibilities of the 
                guaranty agency under the agreement, such as--
                            ``(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 prevention 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 on a timely, 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) the performance of other program 
                        functions by the guaranty agency.
                    ``(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 its 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 its 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; and
            ``(4) shall provide for uniform lender participation with 
        the guaranty agency under the terms of the agreement.
    ``(c) 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, 
including the guaranty agency's compliance with reserve requirements 
under sections 422 and 428.''.

SEC. 419. FEDERAL CONSOLIDATION LOANS.

    (a) Agreements With Lenders.--Section 428C(a) (20 U.S.C. 1078-3(a)) 
is amended--
            (1) by striking subclause (II) of paragraph (3)(B)(i) and 
        inserting the following:
                    ``(II) that loans received during the 180-day 
                period following the making of the consolidation loan 
                may be added to the consolidation loan.''; and
            (2) by striking subparagraph (C) of paragraph (4) and 
        inserting the following:
                    ``(C) made under part D of this title;''.
    (b) Contents of Agreements.--Section 428C(b) is amended--
            (1) in paragraph (1)(A), by striking ``under this section 
        and (i)'' and everything that follows and inserting ``under 
        this section;'';
            (2) in paragraph (4)(C)(ii)--
                    (A) by redesignating subclause (III) as subclause 
                (IV);
                    (B) by inserting after subclause (II) the following 
                new clause:
                            ``(III) by the Secretary, in the case of a 
                        consolidation loan for which the application is 
                        received by an eligible lender on or after 
                        October 1, 1998, except that the Secretary 
                        shall pay such interest only on that portion of 
                        the loan that repays Federal Stafford Loans for 
                        which the student borrower received an interest 
                        subsidy under section 428 or Federal Direct 
                        Stafford Loans for which the borrower received 
                        an interest subsidy under section 455; or''; 
                        and
                    (C) in subclause (IV) (as redesignated), by 
                striking ``subclause (I) or (II)'' and inserting 
                ``subclause (I), (II), or (III)''; and
            (3) in paragraph (6)(A), by inserting before the semicolon 
        at the end the following: ``except that (i) a lender is not 
        required to consolidate loans described in subparagraph (D) or 
        (E) of subsection (a)(4); and (ii) a lender is not prohibited 
        from establishing a minimum loan balance for which it will 
        process a consolidation loan application''.
    (c) Extension of Authority.--Section 428C(e) is amended by striking 
``September 30, 2002'' and inserting ``September 30, 2004''.

SEC. 420. DISBURSEMENT.

    (a) Requirements.--Section 428G(a)(1) (20 U.S.C. 1078-7(a)(1)) is 
amended by inserting ``greater than one semester, one trimester, one 
quarter, or four months'' after ``period of enrollment''.
    (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(a)) 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) Withholding of Second Disbursement.--Section 428G(d)(2) is 
amended by inserting ``by more than $300'' after ``under this title''.

SEC. 421. UNSUBSIDIZED STAFFORD LOANS.

    (a) Eligible Borrowers.--Section 428H(b) (20 U.S.C. 1078-8(b)) is 
amended by striking ``which--'' and everything that follows and 
inserting the following:
``which certifies the eligibility of the student to receive a loan 
under this part and the amount of the loan for which such student is 
eligible. A student shall qualify for a loan if the eligible 
institution has provided the lender with a statement that sets 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)(2)(A) is amended--
            (1) by inserting ``and'' after the semicolon at the end of 
        clause (i); and
            (2) 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) Capitalization of Interest.--Section 428H(e)(2) is amended to 
read as follows:
            ``(2) Capitalization of interest.--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--
                    ``(A) be paid monthly or quarterly; or
                    ``(B) 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; and
                            ``(iv) when the borrower defaults.
                Such capitalization of interest shall not be deemed to 
                exceed the annual insurable limit on account of the 
                student.''.
    (d) Qualification.--Section 428H(e) is amended by adding at the end 
the following new paragraph:
            ``(7) Qualification for forbearance, deferment, and income-
        sensitive repayment.--A borrower of a loan made under this 
        section may qualify for a forbearance or deferment, or an 
        income-sensitive repayment plan for which the borrower is 
        eligible, immediately upon receipt by the lender or holder of a 
        request from the borrower. Any necessary supporting 
        documentation shall be secured by the lender or holder within 
        30 days of the request in order to continue the forbearance, 
        deferment, or income-sensitive repayment plan.''.
    (e) Repeal.--Section 428H(f) is repealed.

SEC. 422. REPEAL OF LOAN FORGIVENESS.

    Section 428J (20 U.S.C. 1078-10) is repealed.

SEC. 423. LEGAL POWERS AND RESPONSIBILITIES.

    (a) General Powers.--Section 432(a)(2) (20 U.S.C. 1082(a)(2)) is 
amended by inserting ``except that this section shall not be deemed to 
limit court review under chapter 7 of title 5, United States Code'' 
after ``Secretary's control''.
    (b) 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).
    (c) Program of Assistance.--Section 432(k)(3) is amended by 
striking ``Within 1 year'' and everything that follows through ``1992, 
the'' and inserting ``The''.
    (d) Common Forms and Formats.--Section 432(m) is amended--
            (1) in paragraph (1)(A), by striking ``The Secretary'' and 
        inserting ``Subject to paragraph (2), the Secretary'';
            (2) by striking subparagraph (C) of paragraph (1);
            (3) in subparagraph (D), by striking ``Nothing'' and 
        inserting ``Subject to paragraph (2), nothing'';
            (4) by redesignating subparagraph (D) of such paragraph as 
        subparagraph (C);
            (5) by redesignating paragraphs (2) and (3) as paragraphs 
        (3) and (4), respectively;
            (6) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Free application for federal student aid.--For 
        academic year 1999-2000 and thereafter, the Secretary shall 
        prescribe the Free Application for Federal Student Aid as the 
        application form under this part (other than sections 428B and 
        428C).''; and
            (7) by adding at the end the following new paragraph:
            ``(5) Master promissory note.--
                    ``(A) Development and approval.--Within 180 days of 
                enactment of this Act, the Secretary, in cooperation 
                with representatives of guaranty agencies, eligible 
                lenders, institutions, students, and organizations 
                involved in student financial assistance, shall develop 
                and approve a master promissory note that will allow 
                for a multiyear line of credit. Such note shall address 
                the needs of participants in the programs under this 
                part. The Secretary shall also develop and approve a 
                corresponding master promissory note for use under part 
                D of this title that addresses the needs of 
                participants in the programs under such part.
                    ``(B) Sale and assignment; enforcement.--
                Notwithstanding the preceding provisions of this 
                section, each loan made under a master promissory note 
                providing for a line of credit may be sold and assigned 
                independently of any other loan made under the same 
                promissory note, and each such loan shall be separately 
                enforceable in all State and Federal courts on the 
                basis of an original or copy of the master promissory 
                note in accordance with its terms.''.
    (e) 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''.
    (f) Reporting Requirement.--Section 432(p) is amended by striking 
``State postsecondary reviewing entities designated under subpart 1 of 
part H,''.

SEC. 424. STUDENT LOAN INFORMATION.

    Section 433 (20 U.S.C. 1083) is amended--
            (1) in the first sentence of subsection (a), by inserting 
        ``in simple and understandable terms'' after ``to the 
        borrower''; and
            (2) in the first sentence of subsection (b), by inserting 
        ``in simple and understandable terms'' after ``under this 
        subsection''.

SEC. 425. DEFINITIONS.

    (a) Cohort Default Rate.--Section 435(a) (20 U.S.C. 1085(a)) is 
amended--
            (1) in subparagraph (A) of paragraph (2)--
                    (A) by striking ``or'' at the end of clause (i); 
                and
                    (B) 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.'';
            (2) in subparagraph (C) of paragraph (2), by striking 
        ``July 1, 1998,'' and inserting ``July 1, 1999,'';
            (3) in paragraph (3), by inserting ``or, at the request of 
        the institution, a complete copy of the records for loans made 
        under this part or of the direct loan servicer for loans made 
        under part D'' after ``and loan servicers''; and
            (4) by adding at the end the following new paragraphs:
            ``(4) Definition of mitigating circumstances.--For purposes 
        of paragraph (2), an institution shall be treated as having 
        exceptional mitigating circumstances that make application of 
        that paragraph inequitable if such institution is certified by 
        a certified public accountant to meet each of the following 
        criteria:
                    ``(A) 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 the student would be eligible based on 
                        his or her enrollment status; or
                            ``(ii) have an adjusted gross income of the 
                        student, and his or her parents (unless the 
                        student is an independent student), of less 
                        than the poverty level, as determined under 
                        criteria established by the Department of 
                        Health and Human Services;
                    ``(B) at least two-thirds of the students enrolled 
                on a full-time basis at the institution in any 12-month 
                period ending not more than six months prior to the 
                date the institution submits its appeal, and who remain 
                enrolled beyond the point at which the student would be 
                entitled to a tuition refund of 100 percent--
                            ``(i) complete the educational program in 
                        which they are enrolled within the time 
                        normally required to complete that program, as 
                        specified in the institution's enrollment 
                        contract, catalog, or other materials; or
                            ``(ii) continue to be enrolled and are 
                        making satisfactory academic progress toward 
                        completion of their program; or
                            ``(iii) have entered active duty in the 
                        armed forces of the United States; and
                    ``(C) at least two-thirds of the students enrolled 
                on a full-time basis at the institution who complete 
                the educational program in which they are enrolled 
                within any 12-month period ending not more than six 
                months prior to the date the institution submits its 
                appeal are placed for at least 13 weeks in an 
                employment position for which they have been trained, 
                or are enrolled for at least 13 weeks in higher level 
                education program for which the educational program of 
                the institution provided substantial preparation, or 
                have entered active duty in the armed forces of the 
                United States.
            ``(5) Reduction of default rates at certain minority 
        institutions.--
                    ``(A) Beneficiaries of exception required to 
                establish management plan.--After July 1, 1998, 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 paragraph (2)(C) of this 
                subsection to continue to be an eligible institution 
                shall--
                            ``(i) submit to the Secretary a default 
                        management plan which the Secretary, in his 
                        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, 2001, 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 
                        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 
                his discretion, continue to treat an institution 
                described in subparagraph (A) of this paragraph as an 
                eligible institution for each of the one-year periods 
                beginning on July 1, 1999, and July 1, 2000, 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 one-year periods, in its cohort 
                        default rate.
            ``(6) Special rule based on participation rate indices.--
        (A) An institution that demonstrates to the Secretary that its 
        participation rate index (as defined in regulations in effect 
        on July 1, 1996) is equal to or less than .0375 for any of the 
        three most recent fiscal years for which data are available 
        shall not be subject to paragraph (2).
            ``(B) An institution shall provide the Secretary with 
        sufficient data to determine its participation rate index 
        within 30 days after receiving an initial notification of its 
        draft cohort default rate.
            ``(C) Prior to publication of a final cohort default rate 
        for an institution that provides the data under subparagraph 
        (B), the Secretary shall notify the institution of its 
        compliance or noncompliance with subparagraph (A).
            ``(7) Authority of the Secretary to Assist Distressed 
        Institutions.--The Secretary is authorized pursuant to section 
        326(c)(7) to provide administrative, fiscal, management, 
        strategic planning, and technical assistance through a 
        qualified third-party consultant identified by the institution 
        or an organization representing such institutions. Institutions 
        eligible for such assistance include those institutions which 
        qualify for the exemption in paragraph (2)(C)(i), (ii), and 
        (iii) of this subsection, or which have submitted a default 
        management plan under paragraph (5) which has been accepted by 
        the Secretary.''.
    (b) Eligible Lender.--Section 435(d) is amended--
            (1) in paragraph (1)(A)(ii)--
                    (A) by striking ``or'' at the end of subclause (I); 
                and
                    (B) by inserting before the semicolon at the end of 
                subclause (II) the following: ``, or (III) it is a bank 
                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(a) of such Code 
                and has been participating in the program authorized by 
                this part for three years as of the date of enactment 
                of the Higher Education Amendments of 1998 and only 
                makes loans to undergraduate students who are 22 years 
                of age or younger and has a portfolio of not more than 
                $10,000,000; and in determining whether the making or 
                holding of loans to students and parents under this 
                part is the primary consumer credit function of the 
                eligible lender, all loans (including student loans and 
                other consumer loans) made or held as trustee or in a 
                trust capacity for the benefit of a third party shall 
                be considered'';
            (2) in paragraph (1)--
                    (A) by striking ``and'' at the end of subparagraph 
                (I);
                    (B) by striking the period at the end of 
                subparagraph (J) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(K) a wholly owned subsidiary of a publicly held 
                holding company which, for the three years preceding 
                the date of enactment of this subparagraph, through one 
                or more subsidiaries (i) acts as a finance company, and 
                (ii) participates in the program authorized by this 
                part pursuant to subparagraph (C).''; and
            (3) 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) Line of Credit.--Section 435(e) is amended to read as follows:
    ``(e) Line of Credit.--The term `line of credit' means an agreement 
between the lender and the borrower pursuant to a master promissory 
note under which the lender may make and disburse, in addition to the 
initial loan, additional loans in subsequent years.''.
    (d) 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.
    (e) Cohort Default Rate: Rehabilitation.--Section 435(m)(2)(C) is 
amended by adding at the end the following new sentences: ``Within 2 
years after the date of enactment of the Higher Education Amendments of 
1998, the Secretary shall, by regulation, 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). Upon a determination by the 
Secretary that such data is available, the Secretary shall, by 
regulation, prescribe the extent to which any such defaulted loan may 
be excluded from the calculation of the cohort default rate under this 
subsection.''.

SEC. 426. DISCHARGE.

    Section 437(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 it 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. 427. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

    Section 437 is further amended--
            (1) in the section heading, by striking out the period at 
        the end thereof and inserting in lieu thereof a semicolon and 
        ``loan forgiveness for teaching.'';
            (2) by amending the heading for subsection (c) to read as 
        follows: ``Discharge Related to School Closure or False 
        Certification.--''; and
            (3) by adding at the end thereof the following new 
        subsection:
    ``(e) Cancellation of Loans for Teaching.--
            ``(1) Functions of secretary.--The Secretary shall 
        discharge the liability of a borrower of a qualifying loan by 
        repaying the amount owed on the loan, to the extent specified 
        in paragraph (4), for service described in paragraph (3).
            ``(2) Qualifying loans.--
                    ``(A) In general.--For purposes of this subsection, 
                a loan is a qualifying loan if--
                            ``(i) the loan was made under section 428 
                        on or after the date of enactment of the Higher 
                        Education Amendments of 1998 to a borrower who, 
                        on the date of entering into the note or other 
                        written evidence of the loan, had no 
                        outstanding balance of principal or interest on 
                        any loan made before such date; and
                            ``(ii) the loan was obtained to cover the 
                        cost of instruction for an academic year after 
                        the first and second year of undergraduate 
                        education.
                    ``(B) Limitation.--The Secretary may not repay 
                loans described in subparagraph (A) to cover the costs 
                of instruction for more than two academic years, or 
                three academic years in the case of a program of 
                instruction normally requiring five years.
                    ``(C) Treatment of consolidation loans.--A loan 
                made under section 428C may be a qualifying loan for 
                the purposes of this subsection only to the extent that 
                such loan was used to repay a loan or loans that meet 
                the requirements of subparagraphs (A) and (B), as 
                determined in accordance with regulations prescribed by 
                the Secretary.
            ``(3) Qualifying service.--A loan shall be discharged under 
        paragraph (1) for service by the borrower as a full-time 
        teacher for each complete academic year of service, after 
        completion of the second academic year of service, in a public 
        or other nonprofit private elementary or secondary school--
                    ``(A) which is in the school district of a local 
                educational agency which is eligible in such year for 
                assistance pursuant to title I of the Elementary and 
                Secondary Education Act of 1965; and
                    ``(B) which for the purpose of this paragraph and 
                for that year has been determined by the State 
                educational agency of the State in which the school is 
                located to be a school in which the enrollment of 
                children counted under section 1124(c) of the 
                Elementary and Secondary Education Act of 1965 exceeds 
                30 percent of the total enrollment of that school.
            ``(4) Rate of discharge.--(A) Loans shall be discharged 
        under this subsection at the rate of--
                    ``(i) 30 percent for the first or second complete 
                academic year of qualifying service as described in 
                paragraph (3) (after completion of two years of 
                service); and
                    ``(ii) 40 percent for the third complete year of 
                such qualifying service.
            ``(B) The total amount that may be discharged under this 
        subsection for any borrower shall not exceed $17,750.
            ``(C) If a portion of a loan is discharged under 
        subparagraph (A) for any year, the entire amount of interest on 
        that loan that accrues for that year shall also be discharged 
        by the Secretary.
            ``(D) Nothing in this section shall be construed to 
        authorize refunding of any repayment of a loan.
            ``(5) Limitation on teacher eligibility.--
                    ``(A) Secondary school teachers.--A borrower may 
                not receive assistance under this subsection by virtue 
                of teaching in a secondary school unless such borrower 
                majored in the subject area in which they are teaching.
                    ``(B) Elementary school teachers.--A borrower may 
                not receive assistance under this subsection by virtue 
                of teaching in a elementary school unless such borrower 
                demonstrates, in accordance with State teacher 
                certification or licensing requirements, subject matter 
                knowledge and teaching skills in reading, writing, 
                mathematics, and other subjects taught in elementary 
                schools.
            ``(6) 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.).
            ``(7) Method of payment.--The Secretary shall specify in 
        regulations the manner in which lenders shall be reimbursed for 
        loans made under this part, or portions thereof, that are 
        discharged under this subsection.
            ``(8) List.--If the list of schools in which a teacher may 
        perform service pursuant to paragraph (3) 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.
            ``(9) Continuing eligibility.--Any teacher who performs 
        service in a school which--
                    ``(A) meets the requirements of paragraph (3) 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 this subsection with respect to 
        such subsequent years.''.

SEC. 428. DEBT MANAGEMENT OPTIONS.

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

SEC. 429. SPECIAL ALLOWANCES.

    (a) Computation.--Section 438(b)(2) (20 U.S.C. 1087-1(b)(2)) is 
amended--
            (1) in subparagraph (A), by striking ``(E), and (F)'' and 
        inserting ``and (E)''; and
            (2) in subparagraph (B)(iv), by striking ``, (E), or (F)'' 
        and inserting ``or (E)''.
    (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 is not authorized to assess an origination fee 
                under this paragraph unless the lender assesses 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) Lending From Proceeds of Tax Exempt Obligations.--Section 438 
is amended--
            (1) by striking subsection (e); and
            (2) by redesignating subsection (f) as subsection (e).
    (d) Study.--Section 438 is amended by adding at the end the 
following new subsection:
    ``(f) Study.--The Comptroller General shall conduct a statistical 
analysis of the subsidized and unsubsidized student loan programs under 
part B to gather data on lenders' policies on charging origination fees 
and to determine if there are any anomalies that would indicate any 
institutional, programmatic, or socioeconomic discrimination in the 
assessing or waiving of such fees. The Comptroller General shall report 
to the appropriate committees of Congress within two years after the 
date of enactment of the Higher Education Amendments of 1998.''.

SEC. 430. 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) Loan Forgiveness for Child Care Providers.--Part B (20 U.S.C. 
1071 et seq.) is amended by inserting after section 428J (as added by 
section 432) (20 U.S.C. 1078-10) the following:

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

    ``(a) 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.
    ``(b) Demonstration Program.--
            ``(1) In general.--The Secretary may carry out a 
        demonstration program of assuming the obligation to repay, 
        pursuant to subsection (c), a loan made, insured or guaranteed 
        under this part or part D (excluding loans made under sections 
        428B and 428C) 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; and
                    ``(B) obtains employment in a child care facility.
            ``(2) 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.
            ``(3) Regulations.--The Secretary is authorized to 
        prescribe such regulations as may be necessary to carry out the 
        provisions of this section.
    ``(c) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay--
                    ``(A) after the second year of employment described 
                in subparagraphs (B) and (C) of subsection (b)(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 year of such employment, 20 
                percent of the total amount of all such loans; and
                    ``(C) after each of the fourth and fifth 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.).
    ``(d) 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.
    ``(e) 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.
    ``(f) 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 (a) 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.
    ``(g) 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.''.

                  PART C--FEDERAL WORK-STUDY PROGRAMS

SEC. 435. AMENDMENTS TO PART C.

    (a) Extension of Authority; Definition.--
            (1) Eligible students.--Section 441(a) (20 U.S.C. 2751(a)) 
        is amended by inserting after ``professional students'' the 
        following: ``, including students participating in an 
        internship or practicum, or as a research assistant, as 
        determined by the Secretary,''.
            (2) Extension of authority.--Section 441(b) is amended by 
        striking ``$800,000,000 for fiscal year 1993'' and inserting 
        ``$1,000,000,000 for fiscal year 1999''.
            (3) Definition of community service.--Section 441(c) is 
        amended by striking ``which are'' and inserting ``that are 
        performed off-campus or on-campus and that are''.
    (b) Allocation of Funds.--Section 442 (42 U.S.C. 2752) is amended--
            (1) by striking subsection (b);
            (2) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (3) in subsection (c)(2)(A)(i), by striking ``subsection 
        (d)'' and inserting ``subsection (c)'';
            (4) in subsection (e)(1), by striking ``subsection (c)'' 
        and inserting ``subsection (b)''; and
            (5) by redesignating subsections (c), (d), (e), and (f) as 
        subsections (b), (c), (d), and (e), respectively.
    (c) Tutoring and Literacy Activities.--
    Section 443 of the Higher Education Act of 1965 (42 U.S.C. 2753) 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 new subparagraph:
                    ``(B) in academic year 1999 and succeeding academic 
                years, an institution shall use at least 2 percent of 
                the total amount of funds granted to such institution 
                under this section for such academic year in accordance 
                with subsection (d); 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 use the 
        amount required to be used in accordance with this subsection 
        to compensate (including compensation for time spent in 
        directly related training and travel) students--
                    ``(A) employed as a reading tutor for children who 
                are in preschool through elementary school; or
                    ``(B) employed in family literacy projects.
            ``(2) Priority for schools.--An institution shall--
                    ``(A) give priority, in using such funds, to the 
                employment of students in the provision of tutoring 
                services in schools that--
                            ``(i) are identified for school improvement 
                        under section 1116(c) of the Elementary and 
                        Secondary Education Act of 1965; or
                            ``(ii) are selected by a local educational 
                        agency under section 15104(a)(2) of such Act; 
                        and
                    ``(B) ensure that any student compensated with such 
                funds who is employed in a school selected under 
                section 15104(a)(2) of the Elementary and Secondary 
                Education Act of 1965 is trained in the instructional 
                practices based on reliable, replicable research on 
                reading used by the school pursuant to such section 
                15104.
            ``(3) Federal share.--The Federal share of the compensation 
        of work study students compensated under this subsection may 
        exceed 75 percent.
            ``(4) Waiver.--The Secretary may waive the requirements of 
        this subsection if the Secretary determines that enforcing such 
        requirements would cause a hardship for students at the 
        institution.
            ``(5) Return of funds.--Any institution that does not use 
        the amount required under this subsection, and that does not 
        request and receive a waiver from the Secretary under paragraph 
        (4), shall return to the Secretary, at such time as the 
        Secretary may require for reallocation under paragraph (6), any 
        balance of such amount that is not used as so required.
            ``(6) Reallocation.--The Secretary shall reallot any 
        amounts returned pursuant to paragraph (5) among institutions 
        that used at least 4 percent of the total amount of funds 
        granted to such institution under this section to compensate 
        students employed in tutoring and literacy activities in the 
        preceding academic year. Such funds shall be reallotted among 
        such institutions on the same basis as excess eligible amounts 
        are allocated to institutions pursuant to section 442(c). Funds 
        received by institutions pursuant to this paragraph shall be 
        used in the same manner as amounts required to be used in 
        accordance with this subsection.''.
    (d) Grant Requirements.--
            (1) Community service.--Section 443(b)(2)(A) (42 U.S.C. 
        2753(b)(2)(A)) is amended--
                    (A) by striking ``in fiscal year 1994 and 
                succeeding fiscal years,''; and
                    (B) by inserting ``(including time spent in travel 
                or training, or both, directly related to such 
                community service)'' after ``community service''.
            (2) Use of funds for independent and less-than-full-time 
        students.--Section 443(b)(3) (42 U.S.C. 2753(b)(3)) 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 of this 
        title, and who 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 less than full time, or (B) independent students, 
        then grant funds shall be made available to such less than 
        full-time and independent students;''.
            (3) Availability of employment.--Section 443(b)(6) is 
        amended by striking everything after ``in need thereof'' and 
        inserting a semicolon.
            (4) Academic relevance.--Section 443(c)(4) is amended by 
        inserting before the semicolon at the end the following: ``, to 
        the maximum extent practicable''.
    (e) Flexible Use of Funds.--Section 445(b) (42 U.S.C. 2755(b)) is 
amended by adding at the end the following new paragraph:
    ``(3) An eligible institution may, with the permission 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 (A) tuition and fees, (B) in the case of institutionally owned 
housing, room and board, and (C) other institutionally provided goods 
and services.''.
    (f) Job Location and Development Programs.--Section 446 (42 U.S.C. 
2756) is amended--
            (1) in subsection (a)(1)--
                    (A) by striking ``$50,000'' and inserting 
                ``$60,000''; and
                    (B) by striking ``community service jobs, for 
                currently enrolled students'' and inserting ``community 
                service jobs and cooperative education jobs, for 
                currently enrolled students, including students 
                participating in work-study programs under this part''; 
                and
            (2) in subsection (b)--
                    (A) by redesignating paragraphs (4) through (6) as 
                paragraphs (5) through (7); and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) provide that the institution will notify the 
        Secretary if the institution will use funds under this section 
        to develop cooperative education jobs and will provide 
        assurances that--
                    ``(A) the funds provided under this paragraph will 
                supplement and not supplant any cooperative education 
                funds available to the institution;
                    ``(B) in the case of 2-year programs, funds will be 
                used to develop and expand cooperative education, jobs 
                for associate degree or certificate students only;
                    ``(C) the work portion of a cooperative education 
                job developed or expanded under this paragraph will be 
                related to a student's academic program; and
                    ``(D) the institution will furnish the Secretary a 
                report on cooperative education jobs expanded and 
                developed under this paragraph, including--
                            ``(i) how the funds were used;
                            ``(ii) a list of employers and whether the 
                        employer is a for-profit or not-for-profit 
                        entity; and
                            ``(iii) the employers' role in the 
                        cooperative education job.''.
    (g) Work Colleges Extension of Authority.--Section 448(f) (42 
U.S.C. 2756b(f)) is amended by striking ``1993'' and inserting 
``1999''.

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

SEC. 436. 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''<plus-minus><plus-minus>;
                    (B) by striking ``For academic year 1994-1995, the 
                Secretary'' and inserting ``The Secretary'';
                    (C) by striking subparagraph (A); and
                    (D) in subparagraph (E), by striking everything 
                after ``deficiencies'' and inserting a semicolon; and
                    (E) by redesignating subparagraphs (B) through (H) 
                as subparagraphs (A) through (G); and
            (2) in paragraph (3)--
                    (A) in the heading, by striking ``after 
                transition''; and
                    (B) by striking ``For academic year 1995-1996 and 
                subsequent academic years, the Secretary'' and 
                inserting ``The Secretary''.

SEC. 437. TERMS AND CONDITIONS.

    (a) Interest Rates.--
            (1) Amendment.--Section 455(b) (20 U.S.C. 1087e(b)) is 
        amended to read as follows:
    ``(b) Interest Rate.--
            ``(1) Rates for fdsl and fdusl.--For Federal Direct 
        Stafford Loans and Federal Direct Unsubsidized Stafford Loans 
        for which the first disbursement is made on or after July 1, 
        1998, 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.--With respect to 
        any Federal Direct Stafford Loan or Federal Direct Unsubsidized 
        Stafford Loan for which the first disbursement is made on or 
        after July 1, 1995, 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 
                428(b)(1)(M) or 427(a)(2)(C),
        shall be determined under paragraph (1) by substituting `1.7 
        percent' for `2.3 percent'.
            ``(3) PLUS loans.--With respect to Federal Direct PLUS Loan 
        for which the first disbursement is made on or after July 1, 
        1998, 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.--Any Federal Direct 
        Consolidation loan for which the application is received on or 
        after October 1, 1998, 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.
            ``(5) Repayment incentives.--Notwithstanding any other 
        provision of this part, the Secretary is authorized to 
        prescribe in 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. Such reductions may be offered only if the Secretary 
        determines they are both cost neutral and in the best financial 
        interest of the Federal Government. Any increase in subsidy 
        costs resulting from such reductions must be completely offset 
        by corresponding savings in funds available for the Direct Loan 
        Program in that fiscal year from section 458 and other 
        administrative accounts.
            ``(6) Publication.--The Secretary shall determine the 
        applicable rates 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) Effective date.--Except as otherwise provided therein, 
        the amendments made by this section 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 July 1, 1998.
    (b) Consolidation Loans.--The first sentence of section 455(g) is 
amended by striking everything after ``section 428C(a)(4)'' and 
inserting a period.

SEC. 438. CONTRACTS.

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

SEC. 439. FUNDS FOR ADMINISTRATIVE EXPENSES.

    Section 458 (20 U.S.C. 1087h) is amended--
            (1) in subsection (a)(1), by striking subparagraph (B) and 
        everything that follows and inserting the following:
                    ``(B) account maintenance fees payable to guaranty 
                agencies under part B and calculated in accordance with 
                paragraph (2),
        not to exceed (from such funds not otherwise appropriated) 
        $626,000,000 in fiscal year 1999, $726,000,000 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. Account 
        maintenance fees under subparagraph (B) of this paragraph shall 
        be paid quarterly and deposited in the Operating Fund 
        established under 422B. The Secretary may carry over funds 
        available under this section to a subsequent fiscal year.'';
            (2) by striking paragraph (2) of subsection (a) and 
        inserting the following:
            ``(2) Calculation basis.--Account maintenance fees payable 
        to guaranty agencies under paragraph (1)(B) shall be calculated 
        for fiscal year 1999 and fiscal year 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 for fiscal 
        years 2001 and succeeding fiscal years, shall be calculated on 
        the basis of 0.10 percent of the original principal amount of 
        outstanding loans on which insurance was issued under part 
        B.''; and
            (3) by striking subsection (d).

SEC. 440. 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 new section:

``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. Such reductions may be offered only if the Secretary 
determines they are in the best financial interests of the Federal 
Government.''.

SEC. 441. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

    Part D of title IV is amended by inserting after section 459, as 
added by section 440, the following new section:

``SEC. 459A. CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE.

    ``(a) Cancellation of Percentage of Debt Based on Years of 
Qualifying Service.--
            ``(1) Functions of secretary.--The percent specified in 
        paragraph (4) of the total amount of any qualifying loan shall 
        be canceled for each complete year of service by the borrower 
        described in paragraph (3).
            ``(2) Qualifying loans.--
                    ``(A) In general.--For purposes of this subsection, 
                a loan is a qualifying loan if--
                            ``(i) the loan was a Federal Direct 
                        Stafford Loan made on or after the date of 
                        enactment of the Higher Education Amendments of 
                        1998 to a borrower who, on the date of entering 
                        into the note or other written evidence of the 
                        loan, had no outstanding balance of principal 
                        or interest on any loan made before such date; 
                        and
                            ``(ii) the loan was obtained to cover the 
                        cost of instruction for an academic year after 
                        the first and second year of undergraduate 
                        education.
                    ``(B) Limitation.--The Secretary may not repay 
                loans described in subparagraph (A) to cover the costs 
                of instruction for more than two academic years, or 
                three academic years in the case of a program of 
                instruction normally requiring five years.
                    ``(C) Treatment of consolidation loans.--A Federal 
                Direct Consolidation Loan may be a qualifying loan for 
                the purposes of this subsection only to the extent that 
                such loan was used to repay a loan or loans that meet 
                the requirements of subparagraphs (A) and (B), as 
                determined in accordance with regulations prescribed by 
                the Secretary.
            ``(3) Qualifying service.--A loan shall be cancelled under 
        paragraph (1) for service by the borrower as a full-time 
        teacher for each complete academic year of service, after 
        completion of the second academic year of service, in a public 
        or other nonprofit private elementary or secondary school--
                    ``(A) which is in the school district of a local 
                educational agency which is eligible in such year for 
                assistance pursuant to title I of the Elementary and 
                Secondary Education Act of 1965; and
                    ``(B) which for the purpose of this paragraph and 
                for that year has been determined by the State 
                educational agency of the State in which the school is 
                located to be a school in which the enrollment of 
                children counted under section 1124(c) of the 
                Elementary and Secondary Education Act of 1965 exceeds 
                30 percent of the total enrollment of that school.
            ``(4) Percentage of cancellation.--(A) The percent of a 
        loan which shall be canceled under paragraph (1) of this 
        subsection is at the rate of--
                    ``(i) 30 percent for the first or second complete 
                academic year of qualifying service as described in 
                paragraph (3) (after completion of two years of 
                service); and
                    ``(ii) 40 percent for the third complete year of 
                such qualifying service.
            ``(B) The total amount that may be canceled under this 
        subsection for any borrower shall not exceed $17,750.
            ``(C) If a portion of a loan is canceled under this 
        subsection for any year, the entire amount of interest on such 
        loan which accrues for such year shall be canceled.
            ``(D) Nothing in this section shall be construed to 
        authorize refunding of any repayment of a loan.
            ``(5) Limitation on teacher eligibility.--
                    ``(A) Secondary school teachers.--A borrower may 
                not receive assistance under this subsection by virtue 
                of teaching in a secondary school unless such borrower 
                majored in the subject area in which they are teaching.
                    ``(B) Elementary school teachers.--A borrower may 
                not receive assistance under this subsection by virtue 
                of teaching in a elementary school unless such borrower 
                demonstrates, in accordance with State teacher 
                certification or licensing requirements, subject matter 
                knowledge and teaching skills in reading, writing, 
                mathematics, and other subjects taught in elementary 
                schools.
            ``(6) 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.
            ``(7) 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.).
    ``(b)  Special Rules.--
            ``(1) List.--If the list of schools in which a teacher may 
        perform service pursuant to subsection (a)(3) 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.
            ``(2) Continuing eligibility.--Any teacher who performs 
        service in a school which--
                    ``(A) meets the requirements of subsection (a)(3) 
                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 (a)(1) with respect to 
        such subsequent years.''.

                     PART E--FEDERAL PERKINS LOANS

SEC. 445. AMENDMENTS TO PART E.

    (a) Extension of Authority.--Section 461(b) (20 U.S.C. 1087aa(b)) 
is amended--
            (1) in paragraph (1), by striking ``1993'' and inserting 
        ``1999''; and
            (2) in paragraph (2), by striking ``1997'' each place it 
        appears and inserting ``2003''.
    (b) Allocation of Funds.--Section 462 (20 U.S.C. 1087bb) is 
amended--
            (1) by striking subsection (b);
            (2) in subsection (c)(1), by striking ``three-quarters of 
        the remainder'' and inserting ``the remainder'';
            (3) in subsection (c)(2), by striking ``subsection (g)'' 
        and inserting ``subsection (f)'';
            (4) in subsection (c)(3)--
                    (A) by striking ``subsection (d)'' and inserting 
                ``subsection (c)'';
                    (B) by striking ``subsection (f)'' and inserting 
                ``subsection (e)''; and
                    (C) by striking ``subsection (g)'' and inserting 
                ``subsection (f)'';
            (5) in subsection (f)(1), by striking ``subsection (g)'' 
        and inserting ``subsection (f)'';
            (6) in subsection (j)(2)--
                    (A) by striking ``subsection (c)'' and inserting 
                ``subsection (b)''; and
                    (B) by striking ``subsection (c) of section 462'' 
                and inserting ``subsection (b)''; and
            (7) by redesignating subsections (c) through (j) as 
        subsections (b) through (i), respectively.
    (c) Default Reduction Penalties.--Section 462(e)(2)(A) (as 
redesignated by subsection (b)(7) of this section) is amended by 
inserting before the semicolon at the end the following: ``, except 
that a plan shall not be required with respect to any such institution 
that has a default rate of less than 20 percent and has less than 100 
students who have loans under this part in any academic year''.
    (d) Definitions for Default Rate Calculations.--Section 462(g) (as 
redesignated by subsection (b)(7) of this section) is amended by adding 
at the end the following new paragraph:
    ``(5) For the purpose of this subsection, the term `satisfactory 
arrangements to resume payment' includes--
            ``(A) receipt of voluntary monthly payments for three 
        consecutive months after the time periods specified in 
        paragraph (4);
            ``(B) receipt of voluntary payments sufficient to bring the 
        loan current prior to the calculation being made for any award 
        year under paragraph (3);
            ``(C) obtaining any deferment, postponement, 
        rehabilitation, forbearance, or cancellation of the loan after 
        the time periods specified in paragraph (4), but prior to the 
        calculation being made for any award year under paragraph (3);
            ``(D) receipt of the full amount due on the loan after the 
        time periods specified in paragraph (4), but prior to the 
        calculation being made for any award year under paragraph (3); 
        or
            ``(E) any other arrangements to resume payment which the 
        Secretary determines to be satisfactory.''.
    (e) Reports to Credit Bureaus of Payment Resumptions.--Section 
463(c) (20 U.S.C. 1087cc(c)) is amended by adding at the end the 
following new paragraph:
    ``(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 
12 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.''.
    (f) Incentive Repayment Programs.--Section 463 is amended by adding 
at the end the following new subsection:
    ``(f) Incentive Repayment Programs.--
            ``(1) Program authorized.--Any institution of higher 
        education participating in the program under this part may 
        establish, with the approval of the Secretary, an incentive 
        repayment program designed to reduce defaults on loans under 
        this part and to assist in replenishing the student loan fund 
        established under this part.
            ``(2) Contents of program.--An incentive repayment program 
        under this part may contain provisions that--
                    ``(A) offer a reduction in the interest rate on a 
                loan on which the borrower has made 48 consecutive 
                monthly payments, but in no event may the interest rate 
                be reduced by more than one 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 shall such 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, with the 
                approval of the Secretary, will carry out the 
                objectives of this subsection.
            ``(3) No net cost to the government.--No incentive option 
        contained in a program authorized by this subsection may be 
        charged to the Federal Government.''.
    (g) Terms of Loans.--
            (1) Aggregate amount.--Section 464(a)(2)(B) (20 U.S.C. 
        1087dd(a)(2)(B)) is amended by striking ``the aggregate of the 
        loans for all years'' and inserting ``the aggregate unpaid 
        principal amount for all loans''.
            (2) Allocation to less-than-full-time students.--Section 
        464(b) is amended--
            (A) by striking ``(1)''; and
            (B) by striking paragraph (2).
            (3) Qualification for deferments.--Section 464(c)(2) is 
        amended by adding at the end the following new subparagraph:
    ``(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.''.
            (4) Clerical amendment.--The matter following clause (iv) 
        of section 464(c)(2)(A) is amended by striking ``subparagraph 
        (B)'' and inserting ``subparagraph (A) of paragraph (1)''.
    (h) Rehabilitation and Discharge of Loans.--Section 464 is further 
amended by adding at the end the following new subsections:
    ``(g) Rehabilitation of Loans.--(1)(A) If the borrower of a loan 
made under this part who has defaulted on the loan makes 12 on-time, 
consecutive, monthly payments of amounts owed on the loan, the loan 
shall be considered rehabilitated, and the institution that made the 
loan (or the Secretary, in the case of a loan held by the Secretary) 
shall instruct any credit reporting organization to which the default 
was reported to remove the default from the borrower's credit history.
    ``(B) 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) 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 he or she is otherwise eligible) 
on the basis of defaulting on the loan prior to such rehabilitation.
    ``(D) A borrower may obtain the benefit of this paragraph with 
respect to rehabilitating the loan only once.
    ``(2) If the borrower of loan made under this part who has 
defaulted on that loan makes 6 on-time, 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. A borrower 
may obtain the benefit of this paragraph with respect to restored 
eligibility only once.
    ``(h) 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 interest and collection fees) by repaying the amount 
        owed on the loan and shall subsequently pursue any claim 
        available to such borrower against the institution and its 
        affiliates and principals, or settle the loan obligation.
            ``(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 up to 
        the amount discharged against the institution and its 
        affiliates and principals.
            ``(3) Eligibility for additional assistance.--The period of 
        a student's assistance at an institution at which the 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 the same as loans under section 
        465(a)(5).
            ``(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.''.
    (i) Cancellation.--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) by striking subparagraph (H) of paragraph (2) 
                and inserting the following:
            ``(H) as a full-time nurse or medical technician providing 
        health care services;'';
                    (C) by striking the period at the end of 
                subparagraph (I) of such paragraph and inserting a 
                semicolon;
                    (D) by adding at the end of such paragraph the 
                following new subparagraphs:
            ``(J) as a member of the Commissioned Corps of the Public 
        Health Service of the United States; or
            ``(K) as a non-physician mental health professional 
        providing health care services in a health professional 
        shortage area designated under section 332 of the Public Health 
        Service Act.'';
                    (E) in the last sentence of paragraph (2), by 
                striking ``section 602(a)(1)'' and inserting ``section 
                602(3)'';
                    (F) in paragraph (3)(A)(i), by striking ``(H), or 
                (I)'' and inserting ``(H), (I), (J), or (K)''; and
                    (G) by adding at the end the following new 
                paragraph:
    ``(7) An individual with an outstanding loan obligation 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 no later than three months after the institution 
        files an institutional application for campus-based funds.''.
    (j) Distribution of Assets.--Section 466 (20 U.S.C. 1087ff) is 
amended--
            (1) by striking ``1996'' each place it appears and 
        inserting ``2003''; and
            (2) by striking ``1997'' each place it appears and 
        inserting ``2004''.
    (k) Collection of Defaulted Loans.--
            (1) Repeal.--Subsection (c) of section 467 (20 U.S.C. 
        1087gg(c)) is repealed.
            (2) Deposit.--Any funds in the Perkins Revolving Loan Fund 
        on the date of enactment of this Act shall be deposited in the 
        general fund of the Treasury.
    (l) Status Confirmation Reports.--Section 468 (20 U.S.C. 1087hh) is 
amended--
            (1) by inserting ``(a) In General.--'' before ``In carrying 
        out''; and
            (2) by adding at the end the following new subsection:
    ``(b) Student Status Confirmation Reports.--The Secretary shall 
ensure that borrowers under this part are included in the student 
status confirmation report required by the Secretary in the same manner 
as borrowers under parts B and D of this title.''.

                         PART F--NEED ANALYSIS

SEC. 446. 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 rental or purchase of a personal computer,''; and
            (2) in paragraph (10), by striking everything after 
        ``determining costs'' and inserting a semicolon.

SEC. 447. 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. 448. 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 the family 
members''.
    (b) Family Contribution From Assets.--Section 475 is amended--
            (1) in subsection (b)(1)(B), by striking ``parents' 
        contribution'' and inserting ``family contribution'';
            (2) in the heading of subsection (d), by striking 
        ``Parents' Contribution'' and inserting ``Family 
        Contribution'';
            (3) in subsection (d)(1)--
                    (A) by striking ``parents' contribution'' and 
                inserting ``family contribution''; and
                    (B) by striking ``parental net worth'' in 
                subparagraph (A) and inserting ``family net worth'';
            (4) in subsection (d)(2)--
                    (A) by striking ``Parental'' in the heading and 
                inserting ``Family'';
                    (B) by striking ``parental net worth'' and 
                inserting ``family net worth''; and
                    (C) by inserting ``, for both the parents and the 
                dependent student'' after ``by adding'';
            (5) by striking subsection (h); and
            (6) by redesignating subsection (i) as subsection (h).
    (c) 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 ``$3,000, 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 adjusted available 
        income.--The allowance for parents' negative adjusted available 
        income is the amount, if any, by which the sum of the amounts 
        deducted under subparagraphs (A) through (F) of paragraph (2) 
        exceeds the sum of the parents' total income (as defined in 
        section 480) and the family contribution from assets (as 
        determined in accordance with subsection (c).''.
    (e) Adjustments to Students Contribution for Enrollment Periods 
Other Than Nine Months.--Section 475 is amended by adding at the end 
the following new subsection:
    ``(i) Adjustments to Students Contribution for Enrollment Periods 
of Less Than Nine Months.--For periods of enrollment of less than nine 
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 amount determined under such 
subsection by nine, and multiplying the result by the number of months 
in the period of enrollment.''.

SEC. 449. FAMILY CONTRIBUTION FOR INDEPENDENT STUDENTS WITHOUT 
              DEPENDENTS OTHER THAN A SPOUSE.

    (a) Adjustments for Enrollment Periods Other 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 other than 9 months, for 
        purposes other than subpart 2 of part A--
                    ``(A) dividing the quotient resulting under 
                paragraph (2) by nine; 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) by striking ``$3,000'' each place it appears in 
        subclauses (I) and (II) and inserting ``$5,500''; and
            (3) by striking ``$6,000'' in subclause (III) and inserting 
        ``$8,500''.

SEC. 450. 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 other than 9 months, for 
        purposes other than subpart 2 of part A--
                    ``(A) dividing the quotient resulting under 
                paragraph (3) by nine; and
                    ``(B) multiplying the result by the number of 
                months in the period of enrollment;''.

SEC. 451. 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 1999-2000, 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 1998 
        and the December next preceding the beginning of such academic 
        year, and rounding the result to the nearest $10.''.

SEC. 452. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CONTRIBUTION.

    Section 479 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 they 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. 453. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

    (a) Special Circumstances.--Section 479A(a) (20 U.S.C. 1087tt(a)) 
is amended--
            (1) in the first sentence, by inserting after ``(or both)'' 
        the following: ``or, in extraordinary circumstances, the amount 
        of the expected family contribution,''; and
            (2) by inserting after the second sentence the following 
        new sentence: ``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, or other 
        changes in a family's income or assets or a student's status. 
        Extraordinary circumstances shall be defined by the Secretary 
        by regulation.''.
    (b) Refusal or Adjustment of Loan Certifications.--Section 479A is 
amended by striking subsection (c) and inserting the following:
    ``(c) Refusal or Adjustment of Loan Certifications.--On a case-by-
case basis, an eligible institution may refuse to certify a statement 
which permits a student to receive a loan under part B, or refuse to 
make a loan under part 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 and the student is afforded an 
opportunity to appeal the action in a timely fashion. 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 handicapped status.''.

SEC. 454. TREATMENT OF OTHER FINANCIAL ASSISTANCE.

    Section 480(j)(3) (20 U.S.C. 1087vv(j)(3)) is amended by inserting 
after ``paragraph (1),'' the following: ``a post-service benefit under 
chapter 30 of title 38, United States Code, or''.

                       PART G--GENERAL PROVISIONS

SEC. 461. DEFINITIONS.

    Section 481 (20 U.S.C. 1088), as amended by section 102(b), is 
further amended by adding at the end the following new subsection:
    ``(d) Distance Learning.--For the purpose of any program under this 
title, the term `distance learning' means an educational process that 
is characterized by the separation, in time or place, between 
instructor and student. Distance learning 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. 462. MASTER CALENDAR.

    (a) Required Schedule.--Section 482(a) (20 U.S.C. 1089(a)) is 
amended by adding at the end the following new paragraphs:
            ``(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 such award 
        year in order to ensure that all participants are informed of 
        all administrative requirements.''.
    (b) Delay of Effective Date.--Section 482(c) is amended by striking 
the second sentence and inserting the following: ``The Secretary shall 
provide a period for public comment of not less than 60 days after 
publication of any notice of proposed rulemaking affecting programs 
under this title.''.

SEC. 463. FORMS AND REGULATIONS.

    (a) Common Financial Aid Form.--Section 483(a) (20 U.S.C. 1090(a)) 
is amended--
            (1) 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, 
                selected in consultation with States to assist in the 
                awarding of State financial assistance, except that 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 and inserting the 
                following: ``The Secretary shall include, on the first 
                page of the form, a prominently displayed notice to 
                students and parents advising them to check with the 
                college financial aid office in the event that they 
                have unusual circumstances which may affect their 
                eligibility for financial aid.'';
            (2) in paragraph (2)--
                    (A) by striking ``A, C, D, and E'' each place it 
                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'';
            (3) in the first sentence of paragraph (3), by inserting 
        ``processing loan applications and'' after ``for the purposes 
        of''; and
            (4) by adding at the end the following new paragraphs:
            ``(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). Such an electronic version 
        shall not require a signature to be collected at the time such 
        version is submitted, as permitted by the Secretary. The 
        Secretary shall prescribe such version no later than 120 days 
        after the date of enactment of the Higher Education Amendments 
        of 1998.
            ``(B) Nothing in this section shall prohibit the use of the 
        version 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 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 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 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) Support to third party servicers and private software 
        providers.--The Secretary shall support private organizations 
        and consortia thereof in the development of software used by 
        eligible institutions for the administration of funds under 
        this title. The Secretary shall provide in a timely manner to 
        such organizations and consortia all necessary specifications 
        that data and software developed, produced, and distributed 
        (including any diskette, modem, or network communications) must 
        meet. These specifications shall contain record layouts for 
        required data and test cases that such organizations or 
        consortia may use to test the accuracy of its software. The 
        Secretary shall develop in advance of each processing cycle an 
        annual schedule for providing such specifications. The 
        Secretary shall, to the extent practicable, use means of 
        providing such support, including conferences and other 
        meetings, outreach, and technical support mechanisms (including 
        telephone support, 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.''.
    (b) Streamlined Reapplication Process.--Section 483(b)(1) is 
amended by striking ``, within 240 days'' and everything 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. 464. STUDENT ELIGIBILITY.

    (a) In General.--Section 484(a) (20 U.S.C. 1091(a))--
            (1) in paragraph (4), by striking ``the institution'' and 
        everything that follows through ``lender), a document'' and 
        inserting ``the Federal Government, as part of the original 
        financial aid application process, a certification'';
            (2) in paragraph (4)(B), by inserting after ``social 
        security number,'' the following: ``and if a dependent student, 
        the social security number of any parent of such student whose 
        income information is required to be included on the form,''; 
        and
            (3) in paragraph (5), by striking ``Trust Territory of the 
        Pacific Islands'' and inserting ``the Federated States of 
        Micronesia, the Republic of the Marshall Islands, or the 
        Republic of Palau''.
    (b) 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, 2001, if otherwise qualified, for assistance under 
subparts 1 and 3 of part A, and part C, of this title, if the student 
is otherwise qualified and--
            ``(1) is a citizen of the Federated States of Micronesia, 
        the Republic of the Marshall Islands, or the Republic of Palau, 
        and attends an institution of higher education in Guam or a 
        public or nonprofit private institution of higher education in 
        the Federated States of Micronesia, the Republic of the 
        Marshall Islands, or the Republic of Palau; or
            ``(2) meets the requirements of subsection (a)(5) and 
        attends a public or nonprofit private institution of higher 
        education in the Federated States of Micronesia, the Republic 
        of the Marshall Islands, or the Republic of Palau.''.
    (c) Verification of Income Data.--Section 484 is amended by adding 
at the end the following new subsection:
    ``(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.''.
    (d) Suspension of Eligibility for Drug-Related Offenses.--
            (1) Amendment.--Section 484 is further amended by adding at 
        the end thereof the following new subsection:
    ``(r) Suspension of Eligibility for Drug-Related Offenses.--
            ``(1) In general.--An individual 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 controlled  Ineligibility period is:            
     substance:                                                         
      First offense...............      1 year                          
      Second offense..............      2 years                         
      Third offense...............      indefinite                      
                                                                        
    The sale of a controlled                                            
     substance:                                                         
      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 period determined under such paragraph if the 
        student satisfactorily completes a drug rehabilitation program 
        that complies with such criteria as the Secretary shall 
        prescribe for purposes of this paragraph and that includes two 
        unannounced drug tests.
            ``(3) Definitions.--As used in this subsection, the term 
        `controlled substance' has the meaning given in section 102(6) 
        of the Controlled Substances Act (21 U.S.C. 802(6)).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        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. 465. STATE COURT JUDGMENTS.

    Section 484A (20 U.S.C. 1091a) is amended by adding at the end the 
following new subsection:
    ``(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 by filing a 
certified copy of the judgment and the assignment or other transfer to 
the Secretary. 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. 466. INFORMATION FOR STUDENTS.

    (a) Information Dissemination.--Section 485(a) (20 U.S.C. 1092(a)) 
is amended--
            (1) in paragraph (1), by striking the second sentence and 
        inserting the following: ``The information required by this 
        section shall be produced and be made readily available upon 
        request, through appropriate publications, mailings, and 
        electronic media to all current students and to any prospective 
        student. 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 
        Act 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.'';
            (2) in paragraph (3)--
                    (A) in the first sentence, by striking ``, or 
                enrolled in any program of an eligible institution for 
                which the prior program provides substantial 
                preparation''; and
                    (B) by striking subparagraph (A) and inserting the 
                following:
            ``(A) shall be made available by July 1 each year to 
        current and prospective students prior to enrolling or entering 
        into any financial obligation; and''; and
            (3) by adding at the end the following new paragraph:
    ``(6) Each institution may, but is not required to, provide 
supplemental information to enrolled and prospective students showing 
the completion or graduation rate for students transferring into the 
institution or information showing the rate at which students transfer 
out of the institution.''.
    (b) 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 it appears; and
            (4) by adding at the end the following new paragraphs:
    ``(2) The Secretary shall, to the extent such information is 
available, compile information describing State prepaid tuition 
programs and disseminate such information to States, eligible 
institutions, students, and parents in departmental publications.
    ``(3) The Secretary shall, to the extent practicable, update the 
Department's Internet site to include direct links to databases which 
contain information on public and private financial assistance 
programs. The Secretary shall only provide direct links to databases 
which can be accessed without charge and shall verify with appropriate 
parties that the databases included in the direct link are not in any 
way providing fraudulent information. The Secretary shall prominently 
display adjacent to the direct link a disclaimer indicating that a 
direct link to a database does not constitute an endorsement or 
recommendation of the database or its provider 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.''.
    (c) 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 new 
                sentence: ``If the institution is a member of a 
                national collegiate athletic association that compiles 
                graduation rate data on behalf of its 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.'';
            (2) in paragraph (4), by striking ``when such completion or 
        graduation rate includes students transferring into and out of 
        such institution'' and inserting ``for students transferring 
        into the institution or information showing the rate at which 
        students transfer out of the institution''; and
            (3) by striking paragraph (9) and inserting the following:
    ``(9) The reports required by this subsection shall be due on each 
July 1 and shall cover the 1-year period ending August 31 of the 
preceding year.''.
    (d) Campus Crime Reporting and Disclosure.--Section 485(f) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking subparagraph (F) and inserting the 
                following:
            ``(F) Statistics concerning the occurrence on campus, 
        during the most recent calendar year, and during the 2 
        preceding calendar years, of the following criminal offenses or 
        arrests reported to campus security authorities, campus 
        officials who have direct administrative responsibility for 
        student or campus activities, disciplinary officers and other 
        officials responsible for resolving student disciplinary 
        matters, athletic department officials, or local police 
        agencies (including offenses handled through the campus 
        disciplinary system):
                    ``(i) murder;
                    ``(ii) sex offenses, forcible or nonforcible;
                    ``(iii) robbery;
                    ``(iv) aggravated assault;
                    ``(v) burglary;
                    ``(vi) motor vehicle theft;
                    ``(vii) manslaughter;
                    ``(viii) larceny;
                    ``(ix) arson; and
                    ``(x) arrests or persons referred for campus 
                disciplinary action for liquor law violations, drug-
                related violations, and weapons possession.'';
                    (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 new subparagraph:
            ``(B) make copies of the statistics submitted to the 
        Secretary available to the public; and'';
            (3) 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 new 
                sentence: ``Such statistics shall not identify victims 
                of crimes or persons accused of crimes.''; and
            (4) by adding at the end the following new paragraphs:
    ``(8)(A) Each institution participating in any program under this 
title that maintains either 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 in chronological order all crimes 
reported to such police or security department, including the nature, 
date, time, and general location of each crime and the disposition of 
the complaint, if known.
    ``(B) All entries that are required by this paragraph shall be open 
to public inspection during normal business hours within two business 
days of the initial report being made to the department, unless--
            ``(i) disclosure of such information is prohibited by law; 
        or
            ``(ii) the release of such information is likely to 
        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.
Any information withheld under clause (ii) shall be open to public 
inspection as soon as the damage that is the basis for such withholding 
is no longer likely to occur.
    ``(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 require the reporting or 
disclosure of privileged information.''.
    (e) Data Required.--Section 485(g) is amended--
            (1) in paragraph (1), by adding at the end the following 
        new subparagraphs:
                    ``(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 its 
                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 its 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.
                    ``(K) A statement of any reduction that may or is 
                likely to occur during the ensuing 4 academic years in 
                the number of athletes that will be permitted to 
                participate in any collegiate sport, or in the 
                financial resources that the institution will make 
                available to any such sport, and the reasons for any 
                such reduction.''; and
            (2) by striking paragraph (5).

SEC. 467. 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: ``no later 
than one year after the date of enactment of the Higher Education 
Amendments of 1997''.

SEC. 468. PROGRAM PARTICIPATION AGREEMENTS.

    (a) Required Content.--Section 487(a) (20 U.S.C. 1094(a)) is 
amended--
            (1) in the first sentence, by striking ``, except with 
        respect to a program under subpart 4 of part A,'';
            (2) in paragraph (3), by striking subparagraph (B) and 
        inserting the following:
                    ``(B) the appropriate State agency;'';
            (3) in paragraph (4), by striking ``subsection (b)'' and 
        inserting ``subsection (c)'';
            (4) in paragraph (15), by striking ``State review entities 
        under subpart 1 of part H'' and inserting ``appropriate State 
        agencies'';
            (5) by striking paragraph (18) and inserting the following:
            ``(18) The institution will meet the requirements 
        established pursuant to section 485(g).'';
            (6) by striking paragraph (21) and inserting the following:
            ``(21) The institution will meet the requirements 
        established by the Secretary, appropriate State agencies, and 
        accrediting agencies, pursuant to part H of this title.''; and
            (7) by adding at the end the following new paragraph:
            ``(23) The institution will distribute to each student, 
        during registration for enrollment in its instructional 
        program, the mail voter registration application form described 
        in section 9(a)(2) of the National Voter Registration Act of 
        1993, unless the student, in writing, declines to receive such 
        form.''.
    (b) Audits; Financial Responsibility.--Section 487(c) is amended--
            (1) in paragraph (1)(A)(i), by striking ``State agencies'' 
        and everything that follows through the semicolon and inserting 
        ``and appropriate State agencies;'';
            (2) in paragraph (2), by striking ``subpart 3'' and 
        inserting ``subpart 2'';
            (3) in paragraph (4), by striking ``, after consultation'' 
        and everything that follows through ``part H,''; and
            (4) in paragraph (5), by striking ``State review'' and 
        everything that follows through ``part H'' and inserting 
        ``appropriate State agencies''.

SEC. 469. QUALITY ASSURANCE AND REGULATORY SIMPLIFICATION.

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

``SEC. 487A. QUALITY ASSURANCE AND REGULATORY SIMPLIFICATION PROGRAM.

    ``(a) In General.--The Secretary is authorized to select 
institutions for voluntary participation in a Regulatory Simplification 
Program that provides participating institutions with the opportunity 
to develop and implement an alternative management program that--
            ``(1) shall allow alternative methods of complying with 
        regulations issued with respect to parts A through E and G of 
        this title;
            ``(2) shall not modify or waive the application of any 
        requirement or other provision of this Act; and
            ``(3) may include a Quality Assurance Program through which 
        individual schools develop and implement their own 
        comprehensive systems to verify student financial aid 
        application data, thereby enhancing program integrity within 
        the student aid delivery system.
    ``(b) Selection Criteria.--The criteria for selecting institutions 
for participation in the Regulatory Simplification Program shall be 
based on criteria that include demonstrated institutional performance, 
as determined by the Secretary, and shall take into consideration 
regulatory simplification goals, as determined by the Secretary. The 
selection criteria shall ensure the participation of representatives of 
institutions of higher education according to size, mission, and 
geographical distribution.
    ``(c) Removal From the Program.--The Secretary is authorized to 
determine--
            ``(1) when an institution that is unable to administer the 
        Regulatory Simplification Program must be removed from such 
        program; and
            ``(2) when institutions desiring to cease participation in 
        such Program will be required to complete the current award 
        year under the requirements of the Program.
    ``(d) Experimental Sites.--The Secretary is authorized to designate 
institutions selected for participation in the Regulatory 
Simplification Program as Experimental Sites.
    ``(e) Definitions.--For purposes of this section, the term `current 
award year' means the award year during which the participating 
institution indicates its intention to cease participation.''.

SEC. 470. DISTANCE EDUCATION DEMONSTRATION PROGRAMS.

    Part G of title IV is amended--
            (1) by redesignating section 487B (20 U.S.C. 1094b) as 
        section 487C; and
            (2) by inserting after section 487A (as amended by section 
        469) the following new section:

``SEC. 487B. 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;
            ``(3) to help determine the most effective means of 
        delivering quality education via distance education course 
        offerings; and
            ``(4) to help determine the appropriate level of Federal 
        assistance for students enrolled in distance education 
        programs.
    ``(b) Demonstration Programs Authorized.--
            ``(1) In general.--The Secretary is authorized to select 
        institutions or a consortia of institutions for voluntary 
        participation in a Distance Education Demonstration Program 
        that provides participating institutions with the ability to 
        offer distance education programs without regard to the current 
        restrictions in part F or G of this title or part A of title I.
            ``(2) Exemptions.--The Secretary is authorized to exempt 
        any institution or consortia participating in a Distance 
        Education Demonstration Program from any of the requirements of 
        parts F or G of this title, or part A of title I, or the 
        regulations prescribed under such parts.
    ``(c) Application.--Each institution or consortia of institutions 
desiring to participate in a demonstration program 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 include--
            ``(1) a description of the institution or consortium's 
        consultation with a recognized accrediting agency or 
        association with respect to quality assurances for the distance 
        education programs to be offered;
            ``(2) a description of the statutory and regulatory 
        requirements described in subsection (b)(2) for which a waiver 
        is sought and the reasons for which the waiver is sought;
            ``(3) a description of the distance education programs to 
        be offered;
            ``(4) a description of the students to whom distance 
        education programs will be offered;
            ``(5) an assurance that the institution or consortium will 
        offer full cooperation with the ongoing evaluations of the 
        demonstration program provided for in this section; and
            ``(6) such other information as the Secretary may require.
    ``(d) Selection.--To the extent feasible, the Secretary shall 
select a representative sample of institutions for participation in the 
demonstration program authorized under this section. In selecting 
institutions for participation, the Secretary shall take into 
consideration the institution's financial and administrative capability 
and the type of program or programs being offered via distance 
education course offerings. The Secretary shall, in the exercise of his 
discretion, determine the number of demonstration programs to be 
allowed based on the number and quality of applications received and 
the Department's capacity to oversee and monitor each demonstration 
program.
    ``(e) Evaluation and Report.--
            ``(1) Evaluation.--The Secretary shall, on an annual basis, 
        evaluate the demonstration programs authorized under this 
        section. Such evaluations shall specifically review--
                    ``(A) the extent to which the institution or 
                consortia of institutions has met the goals set forth 
                in its application to the Secretary, including the 
                measures of program quality assurance;
                    ``(B) issues related to student financial 
                assistance for distance education; and
                    ``(C) effective technologies for delivering 
                distance education course offerings.
            ``(2) Policy analysis.--In addition, the Secretary shall 
        review current policies and identify those policies which 
        present impediments to the development and use of distance 
        learning and other nontraditional methods of expanding access 
        to education.
            ``(3) Report.--The Secretary shall report to the 
        appropriate committees of Congress with respect to--
                    ``(A) the evaluations of the demonstration programs 
                authorized under this section; and
                    ``(B) any proposed legislative changes designed to 
                enhance the use of distance education.''.

SEC. 471. GARNISHMENT REQUIREMENTS.

    (a) Maximum Percentage.--Section 488A(a)(1) (20 U.S.C. 1095a(a)(1)) 
is amended by striking ``10 percent'' and inserting ``15 percent''.
    (b) No Attachment of Student Assistance.--Section 488A is further 
amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following new 
        subsection:
    ``(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. 472. ADMINISTRATIVE SUBPOENA AUTHORITY.

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

``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. 473. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

    Section 491 (20 U.S.C. 1098) is amended--
            (1) in subsection (b)--
                    (A) by inserting ``staffing levels,'' after 
                ``allocations and expenditures,'' the first place it 
                appears; and
                    (B) by striking the fourth and fifth sentences and 
                inserting the following: ``Reports, publications, and 
                other documents, including documents in electronic 
                form, shall not be subject to review by the 
                Secretary.'';
            (2) in subsection (c)(1)--
                    (A) by striking ``11 members'' and inserting ``15 
                members''; and
                    (B) by striking ``3 members'' each place it appears 
                in subparagraphs (A) and (B) and inserting ``5 
                members'';
            (3) in subsection (c)(2), by striking ``7 members'' and 
        inserting ``11 members'';
            (4) in subsection (e)--
                    (A) by striking everything after ``except that,'' 
                in paragraph (1) and inserting the following:
``within 90 days after the date of enactment of the Higher Education 
Amendments of 1998, 2 additional members shall be appointed by the 
President pro tempore of the Senate (one upon the recommendation of the 
Majority Leader and one upon the recommendation of the Minority Leader) 
and 2 additional members shall be appointed by the Speaker of the House 
(one upon the recommendation of the Majority Leader and one upon the 
recommendation of the Minority Leader). Of the additional members--
            ``(A) 2 shall be appointed for a term of 1 year;
            ``(B) 1 shall be appointed for a term of 2 years; and
            ``(C) 1 shall be appointed for a term of 3 years.'';
                    (B) by striking ``Six members'' in paragraph (4) 
                and inserting ``Eight members''; and
                    (C) by adding at the end the following new 
                paragraph:
    ``(6) No officer or full-time employee of the United States shall 
serve as members of the Advisory Committee.'';
            (5) by striking subsection (g) and inserting the following:
    ``(g) Compensation and Expenses.--Members of the Advisory Committee 
may each receive reimbursement for travel expenses incident to 
attending Advisory Committee meetings, including per diem in lieu of 
subsistence, as authorized by section 5703 of title 5, United States 
Code, for persons in the Government service employed intermittently.'';
            (6) in subsection (h)(1), by striking ``may be necessary by 
        the Chairman without regard to'' and inserting ``may be deemed 
        necessary by the Chairman without regard to personnel ceilings 
        or'';
            (7) in subsection (i), by striking ``$750,000'' and 
        inserting ``$850,000'';
            (8) by striking subsection (j) and inserting the following:
    ``(j) Special Analyses and Activities.--The committee shall--
            ``(1) monitor and evaluate the modernization of student 
        financial aid systems and delivery processes;
            ``(2) monitor and evaluate the implementation of a 
        performance-based organization within the Department of 
        Education and report to Congress, on not less than an annual 
        basis, including recommendations for improvements; and
            ``(3) 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 high school 
        students.'';
            (9) in subsection (k), by striking ``1998'' and inserting 
        ``2004''; and
            (10) by striking subsection (l).

SEC. 474. MEETINGS AND NEGOTIATED RULEMAKING.

    Section 492 (20 U.S.C. 1098a) is amended to read as follows:

``SEC. 492. NEGOTIATED RULEMAKING.

    ``(a) In General.--
            ``(1) Regulation development.--In developing regulations 
        and revisions thereof under this title, the Secretary shall 
        obtain the advice and recommendations of individuals and 
        representatives of the groups involved in student financial 
        assistance programs under this title, such as students, legal 
        assistance organizations that represent students, institutions 
        of higher education, guaranty agencies, lenders, secondary 
        markets, loan servicers, guaranty agency servicers, and 
        collection agencies.
            ``(2) Input.--Such advice and recommendations may be 
        obtained through such mechanisms as national meetings and 
        electronic exchanges of information.
    ``(b) Proposed Regulations.--After obtaining such advice and 
recommendations, and prior to publishing any proposed regulations and 
revisions thereof under this title in the Federal Register, the 
Secretary shall prepare draft regulations and submit such regulations 
to a negotiated rulemaking process. In establishing the negotiated 
rulemaking process under this section, the Secretary shall--
            ``(1) follow the procedural requirements used in 
        implementing section 1601(b) of the Elementary and Secondary 
        Education Act of 1965;
            ``(2) select participants in the negotiations process from 
        individuals and groups participating in the exchanges described 
        in subsection (a)(1), including both representatives of such 
        groups from the District of Columbia, and industry 
        participants, and to the extent possible, the Secretary shall 
        select individuals reflecting the diversity in the industry, 
        representing both large and small participants, as well as 
        individuals serving local areas and national markets;
            ``(3) conduct the negotiations process in a timely manner 
        in order that final regulations may be issued by the Secretary 
        within the 240-day period described in section 431(g) of the 
        General Education Provisions Act, and any subsequent revisions 
        to regulations under this title may be issued in accordance 
        with the master calendar provisions of section 482 of this 
        title; and
            ``(4) prepare a transcript of the negotiated rulemaking 
        proceedings that shall be available to the public prior to the 
        issuance of any final regulations.
    ``(c) Federal Advisory Committee Act.--The Federal Advisory 
Committee Act shall not apply to activities carried out under this 
section.''.

                       PART H--PROGRAM INTEGRITY

SEC. 476. STATE POSTSECONDARY REVIEW PROGRAM.

    (a) Amendments.--Part H of title IV is amended--
            (1) in the heading of the part, by striking ``TRIAD'';
            (2) by striking subpart 1 (20 U.S.C. 1099a through 1099a-
        3); and
            (3) by redesignating subparts 2 and 3 as subparts 1 and 2, 
        respectively.
    (b) Conforming Amendments.--Section 496 (20 U.S.C. 1099b) is 
amended by striking ``subpart 3'' each place it appears in subsections 
(j) and (k) and inserting ``subpart 2''.

SEC. 477. ACCREDITING AGENCY RECOGNITION.

    (a) Recognition.--
            (1) The heading of subpart 1 of part H (as redesignated by 
        section 476(a)(3)) is amended by striking ``Approval'' and 
        inserting ``Recognition''.
            (2) The heading of section 496 is amended by striking 
        ``approval'' and inserting ``recognition''.
    (b) Standards.--Section 496(a) is amended--
            (1) by striking ``Standards'' and inserting ``Criteria'';
            (2) by striking ``standards'' each place it appears and 
        inserting ``criteria'';
            (3) in paragraph (5)--
                    (A) by striking ``of accreditation'' and inserting 
                ``for accreditation'';
                    (B) by inserting ``the quality (including the 
                quality of distance learning programs or courses) of'' 
                before ``the institution's'';
                    (C) in subparagraph (G), by striking ``program 
                length and tuition and fees in relation to the subject 
                matters taught'' and inserting ``measures of program 
                length'';
                    (D) by striking subparagraph (J);
                    (E) in subparagraph (L), by inserting ``the most 
                recent student loan default rate data provided by the 
                Secretary and'' after ``including'';
                    (F) by striking ``and'' at the end of subparagraph 
                (K);
                    (G) by inserting ``and'' after the semicolon at the 
                end of subparagraph (L);
                    (H) by redesignating subparagraphs (K) and (L) as 
                subparagraphs (J) and (K), respectively; and
                    (I) by striking ``(J), and (L)'' and inserting 
                ``and (K)'';
            (4) in paragraph (7), by striking ``State postsecondary 
        review entity'' and inserting ``State licensing or authorizing 
        agency''; and
            (5) 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'';
            (2) in paragraph (1), by striking ``(at least'' and 
        everything that follows through ``unannounced),'' and inserting 
        ``(which may include unannounced site visits)''; and
            (3) in paragraph (3), by inserting before the semicolon at 
        the end the following: ``, except that new sites offered 
        through telecommunications for programs previously included in 
        the scope of accreditation approval need not be subject to such 
        on-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) by striking ``Standards'' and inserting 
                ``Criteria''; and
                    (B) by striking ``standards'' and inserting 
                ``criteria'';
            (4) in subsection (k)(2), by striking ``standards'' and 
        inserting ``criteria'';
            (5) in subsection (l)--
                    (A) by striking ``Approval'' in the heading of such 
                subsection and inserting ``Recognition'';
                    (B) by striking ``the standards'' each place it 
                appears and inserting ``its standards''; and
                    (C) by striking ``approval'' and inserting 
                ``recognition''; and
            (6) in subsection (n)--
                    (A) by striking ``standards'' each place it appears 
                and inserting ``criteria'';
                    (B) in paragraph (3)--
                            (i) by striking ``approval or disapproval'' 
                        and inserting ``recognition or denial of 
                        recognition''; and
                            (ii) by striking ``approval process'' and 
                        inserting ``recognition process''; 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. 478. ELIGIBILITY AND CERTIFICATION PROCEDURES.

    (a) Single Application Form.--Section 498(b)(1) (20 U.S.C. 
1099c(b)(1)) is amended by striking ``accreditation, and capability'' 
and inserting ``accreditation, financial responsibility, and 
administrative capacity''.
    (b) Financial Responsibility Standards.--Section 498(c) is 
amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``is able'' and inserting ``has sufficient 
        resources to ensure against the precipitous closure of the 
        institution and is able'';
            (2) in paragraph (2)--
                    (A) in the first sentence, by striking ``operating 
                losses, net worth, asset-to-liabilities ratios, or 
                operating fund deficits'' and inserting ``to ratios 
                that demonstrate financial responsibility,'';
                    (B) in the second sentence, by inserting ``, 
                public,'' after ``for profit''; and
                    (C) by inserting before the period at the end the 
                following: ``, and develop an appropriate and cost 
                effective process under this subpart that does not 
                duplicate other reporting requirements for assessing 
                and reviewing financial responsibility''; and
            (3) in paragraph (4)--
                    (A) in the first sentence, 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 
                imposed by the Secretary pursuant to paragraph (2)''.
    (c) Administrative Capacity.--Section 498(d)(1) is amended--
            (1) in subparagraph (A), by striking ``student aid 
        programs; and'' and inserting ``student financial assistance 
        under this title;'';
            (2) by redesignating subparagraph (B) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (A) the following new 
        subparagraphs:
                    ``(B) written procedures for, or written 
                information relating to, each office with respect to, 
                the approval, disbursement, and delivery of student 
                financial assistance under this title;
                    ``(C)(i) a division of functions for authorizing 
                payments of student financial assistance under this 
                title and the disbursement or delivery of such 
                assistance, so that no office at the institution has 
                responsibility for both functions; and
                    ``(ii) an adequate system of checks and balances 
                for internal control at the institution with respect to 
                student financial assistance under this title; and''.
    (d) Financial Responsibility for Refunds During Provisional 
Certification.--
            (1) Amendment.--Section 498(e) is amended by adding at the 
        end the following new paragraph:
            ``(6) Notwithstanding any other provision of law, any 
        person required to pay, on behalf of a student or borrower, a 
        refund of unearned institutional charges to a lender, or the 
        Secretary, who 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 title 26, United States Code, with respect 
        to the nonpayment of taxes.''.
            (2) Effective date.--The amendments 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.
    (e) Actions on Applications.--Section 498(f) is amended--
            (1) by striking ``shall conduct'' and inserting ``may 
        conduct'';
            (2) by striking ``may establish'' and inserting ``shall 
        establish'';
            (3) by striking ``may coordinate'' and inserting ``shall, 
        to the extent practicable, coordinate''; and
            (4) by adding at the end the following new sentence: ``The 
        Secretary may exempt from the site visit requirement any 
        institution that is participating in the Quality Assurance 
        Program established under section 487A at the time such site 
        visit would be required under this subsection.''.
    (f) Time Limitations.--Section 498(g) is amended to read as 
follows:
    ``(g) Time Limitations.--(1) After the expiration of the 
certification of any institution 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) The Secretary shall notify each institution of the expiration 
of its eligibility no later than six months prior to such 
expiration.''.
    (g) Conforming Amendment.--Section 498(h)(2) is amended by striking 
``approval'' and inserting ``recognition''.
    (h) Provisional Certification.--Section 498(i) is amended by adding 
at the end the following new paragraph:
    ``(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 
no 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.''.

SEC. 479. PROGRAM REVIEW AND DATA.

    (a) General Authority.--Section 498A(a) (20 U.S.C. 1099c-1(a)) is 
amended--
            (1) in paragraph (2)--
                    (A) by striking ``may give'' and inserting ``shall 
                give'';
                    (B) by inserting before the semicolon at the end of 
                subparagraph (C) the following: ``, that are not 
                accounted for by changes in those programs'';
                    (C) in subparagraph (D), by striking ``the 
                appropriate'' and everything that follows through ``of 
                this part'' and inserting ``the State licensing or 
                authorizing agency'';
                    (D) by striking subparagraph (F); and
                    (E) by redesignating subparagraph (G) as 
                subparagraph (F); and
            (2) in paragraph (3)(A), by inserting ``relevant'' after 
        ``all''.
    (b) Special Administrative Rules.--Section 498A(b) is amended to 
read as follows:
    ``(b) Special Administrative Rules.--(1) In carrying out paragraphs 
(1) and (2) of subsection (a), the Secretary shall--
            ``(A) establish guidelines designed to ensure uniformity of 
        practice in the conduct of program reviews of institutions; and
            ``(B) inform the appropriate State agency and accrediting 
        agency or association whenever taking action against an 
        institution under this section, section 498, or section 432.
    ``(2) The Secretary shall review the regulations of the Department 
and the application of such regulations to ensure the uniformity of 
interpretation and application of the regulations. In conducting such 
review, the Secretary shall consult with relevant representatives of 
institutions participating in the programs authorized by this title.''.

                    TITLE V--DEVELOPING INSTITUTIONS

SEC. 501. ESTABLISHMENT OF NEW TITLE V.

    Title V is amended to read as follows:

                   ``TITLE V--DEVELOPING INSTITUTIONS

                ``PART A--HISPANIC-SERVING INSTITUTIONS

``SEC. 501. PROGRAM AUTHORIZED.

    ``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 and other low-income 
students.

``SEC. 502. ELIGIBILITY; DEFINITIONS.

    ``(a) Definitions.--For the purpose of this part:
            ``(1) Hispanic-serving institution.--The term `Hispanic-
        serving institution' means an institution of higher education 
        which--
                    ``(A)(i) is an eligible institution; or
                    ``(ii) is an institution of higher education (as 
                such term is defined in section 101(a)(2)) that 
                provides a 4-year baccalaureate program, is regionally 
                accredited, and serves at least 1,500 Hispanic 
                students;
                    ``(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 its Hispanic students are low-income 
                individuals.
            ``(2) Eligible institution.--The term `eligible 
        institution' means--
                    ``(A) an institution of higher education--
                            ``(i) which has an enrollment of needy 
                        students as required by subsection (b) of this 
                        section;
                            ``(ii) except as provided in section 
                        522(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) which is--
                                    ``(I) legally authorized to 
                                provide, and provides within the State, 
                                an educational program for which such 
                                institution awards a bachelor's degree; 
                                or
                                    ``(II) a junior or community 
                                college;
                            ``(iv) which 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 which is, according to such an agency or 
                        association, making reasonable progress toward 
                        accreditation;
                            ``(v) which meets such other requirements 
                        as the Secretary may prescribe; and
                            ``(vi) which is located in a State; and
                    ``(B) any branch of any institution of higher 
                education described under subparagraph (A) which 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) 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.
            ``(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) 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 it awards a bachelor's degree (or an 
                equivalent degree); and
                    ``(C) that--
                            ``(i) provides an educational program of 
                        not less than 2 years 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.
            ``(6) Educational and general expenditures.--For the 
        purpose of this part, the term `educational and general 
        expenditures' means the total amount expended by an institution 
        of higher education 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 which the institution is required 
        to pay by law.
            ``(7) Endowment fund.--For the purpose of this part, the 
        term `endowment fund' means a fund that--
                    ``(A) is established by State law, by an 
                institution of higher education, 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.
    ``(b) Enrollment of Needy Students.--For the purpose of this part, 
the term `enrollment of needy students' means an enrollment at an 
institution of higher education or a junior or community college which 
includes--
            ``(1) at least 50 percent of the degree students so 
        enrolled who are receiving need-based assistance under title IV 
        of this Act in the second fiscal year preceding the fiscal year 
        for which the determination is being made (other than loans for 
        which an interest subsidy is paid pursuant to section 428); or
            ``(2) a substantial percentage of students receiving Pell 
        Grants in the second fiscal year preceding the fiscal year for 
        which determination is being made, in comparison with the 
        percentage of students receiving 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 subdivision is waived under section 522(a).

``SEC. 503. AUTHORIZED ACTIVITIES.

    ``(a) Types of Activities Authorized.--Grants awarded under this 
part shall be used by Hispanic-serving institutions of higher education 
to assist such institutions to plan, develop, undertake, and carry out 
programs.
    ``(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 their 
        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 and secondary schools;
            ``(12) establishing community outreach programs which will 
        encourage elementary and secondary school students to develop 
        academic skills and the interest to pursue postsecondary 
        education;
            ``(13) improving and expanding graduate and professional 
        opportunities for Hispanic students; and
            ``(14) other activities proposed in the application 
        submitted pursuant to section 504 that--
                    ``(A) contribute to carrying out the purposes of 
                this section; 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.--An institution may not use more 
        than 20 percent of its grant under this part for any fiscal 
        year for establishing or improving an endowment fund.
            ``(2) Matching required.--An institution that uses any 
        portion of its grant under this part for any fiscal year for 
        establishing or improving an endowment fund shall provide an 
        equal or greater amount for such purposes from non-Federal 
        funds.
            ``(3) Regulations.--The Secretary shall publish rules and 
        regulations specifically governing the use of funds for 
        establishing or improving an endowment fund.

``SEC. 504. APPLICATION PROCESS.

    ``(a) Institutional Eligibility.--Each Hispanic-serving institution 
desiring to receive assistance under this part shall submit to the 
Secretary such enrollment data as may be necessary to demonstrate that 
it is a Hispanic-serving institution, along with such other information 
and data as the Secretary may by regulation require.
    ``(b) Applications.--Any institution which is determined by the 
Secretary to be a Hispanic-serving institution (on the basis of the 
information and data submitted under subsection (a)) may submit an 
application for assistance under this section to the Secretary. Such 
application shall include--
            ``(1) a 5-year plan for improving the assistance provided 
        by the Hispanic-serving institution to Hispanic and other low-
        income students; and
            ``(2) such other information and assurance as the Secretary 
        may require.
    ``(c) Priority.--The Secretary shall give priority to applications 
that contain satisfactory evidence that such institution has entered 
into or will enter into a collaborative arrangement with at least one 
local educational agency or community-based organization having 
demonstrated effectiveness to provide such agency with assistance (from 
funds other than funds provided under this part) in reducing Hispanic 
dropout rates, improving Hispanic rates of academic achievement, and 
increasing the rates at which Hispanic high school graduates enroll in 
higher education.
    ``(d) Special Rule.--For the purposes of this part, no Hispanic-
serving college or university which is eligible for and receives funds 
under this part may concurrently receive other funds under title III.

``SEC. 505. DURATION OF GRANT.

    ``(a) Award Period.--The Secretary may award a grant to an eligible 
institution under this part for 5 years, except that no institution 
shall be eligible to secure a subsequent 5-year grant award under this 
part until two years have elapsed since the expiration of its most 
recent 5-year grant award.
    ``(b) Limitations.--In awarding grants under this part the 
Secretary shall give priority to applicants who are not already 
receiving a grant under this part, except that for the purpose of this 
subsection a grant under section 524(a)(1) shall not be considered a 
grant under this part.
    ``(c) Planning Grants.--Notwithstanding subsection (a), the 
Secretary may award a grant to an eligible institution under this part 
for a period of one year for the purpose of preparation of plans and 
applications for a grant under this part.

                      ``PART B--GENERAL PROVISIONS

``SEC. 521. APPLICATIONS FOR ASSISTANCE.

    ``(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 its 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);
                    ``(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.
            ``(2) Preliminary applications.--In carrying out paragraph 
        (1), the Secretary shall develop a preliminary application for 
        use by eligible institutions applying under part A prior to the 
        submission of the principal application.
    ``(b) Contents.--An institution, in its 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) 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 503, and in no case supplant those 
        funds;
            ``(3) 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;
            ``(4) 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 applicant under 
        this title;
            ``(5) provide (A) for making such reports, in such form and 
        containing such information, as the Secretary may require to 
        carry out the functions under this title and the Government 
        Performance and Results Act, including not less than one report 
        annually setting forth the institution's progress toward 
        achieving the objectives for which the funds were awarded, and 
        (B) for keeping such records and affording such access thereto, 
        as the Secretary may find necessary to assure the correctness 
        and verification of such reports;
            ``(6) provide that the institution will comply with the 
        limitations set forth in section 526;
            ``(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 which 
                consists of several components (as described by the 
                applicant 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 applicant);
                    ``(C) an evaluation by the applicant 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 applicant under this title, and 
                a similar evaluation regarding priorities among the 
                components of any single proposed project (as described 
                by the applicant pursuant to subparagraph (A));
                    ``(D) a detailed budget showing the manner in which 
                funds for any proposed project would be spent by the 
                applicant; 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); and
            ``(8) include such other information as the Secretary may 
        prescribe.
    ``(c) Priority Criteria Publication Required.--The Secretary shall 
publish in the Federal Register, pursuant to chapter 5 of title 5, 
United States Code, all policies and procedures required to exercise 
the authority set forth in subsection (a). No other criteria, policies, 
or procedures shall apply.
    ``(d) 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 of this Act in making 
eligibility determinations and shall advance the base-year forward 
following each annual grant cycle.

``SEC. 522. 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) which is extensively subsidized by the State in which 
        it is located and charges low or no tuition;
            ``(2) which serves a substantial number of low-income 
        students as a percentage of its total student population;
            ``(3) which 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) 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 that criterion is 
due to factors which, when used in the determination of compliance with 
such criterion, distort such determination, and that the institution's 
designation as an eligible institution under part A is otherwise 
consistent with the purposes of such part.
    ``(2) The Secretary shall submit to the Congress every other year a 
report concerning the institutions which, although not satisfying the 
criterion contained in section 502(a)(2)(A)(ii), have been determined 
to be eligible institutions under part A institutions which enroll 
significant numbers of Black American, Hispanic, Native American, Asian 
American, or Native Hawaiian students under part A, as the case may be. 
Such report shall--
            ``(A) identify the factors referred to in paragraph (1) 
        which were considered by the Secretary as factors that 
        distorted the determination of compliance with section 
        502(a)(2)(A)(ii); 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. 523. APPLICATION REVIEW PROCESS.

    ``(a) Review Panel.--All applications submitted under this title by 
institutions of higher education shall be read by a panel of readers 
composed of individuals selected by the Secretary. The Secretary shall 
assure that no individual assigned under this section to review any 
application has any conflict of interest with regard to the application 
which might impair the impartiality with which the individual conducts 
the review under this section.
    ``(2) All readers selected by the Secretary shall receive thorough 
instruction from the Secretary regarding the evaluation process for 
applications submitted under this title and consistent with the 
provisions of this title, including--
            ``(A) an enumeration of the factors to be used to determine 
        the quality of applications submitted under this title; and
            ``(B) 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.
    ``(b) Recommendations of Panel.--In awarding grants under this 
title, the Secretary shall take into consideration the recommendations 
of the panel made under subsection (a).
    ``(c) Notification.--Not later than June 30 of each year, the 
Secretary shall notify each institution of higher education making an 
application under this title of--
            ``(1) the scores given the applicant 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. 524. COOPERATIVE ARRANGEMENTS.

    ``(a) General Authority.--The Secretary may make grants to 
encourage cooperative arrangements with funds available to carry out 
part A, between institutions eligible for assistance under part A 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 to achieve the purposes of such part and avoid costly 
duplicative efforts and to enhance the development of part A eligible 
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 institution.
    ``(c) Duration.--Grants to institutions having a cooperative 
arrangement may be made under this section for a period as determined 
under section 505.

``SEC. 525. ASSISTANCE TO INSTITUTIONS UNDER OTHER PROGRAMS.

    ``(a) Assistance Eligibility.--Each institution which the Secretary 
determines to be an institution eligible under part A may be eligible 
for waivers in accordance with subsection (b).
    ``(b) Waiver Applicability.--(1) Subject to, and in accordance 
with, regulations promulgated for the purpose of this section, in the 
case of any application by an 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) The provisions of this section shall apply to any program 
authorized by title IV or VII of this Act.
    ``(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. 526. LIMITATIONS.

    The funds appropriated under section 528 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 such 
        institution;
            ``(3) for an activity that is inconsistent with a State 
        plan of higher education applicable to such institution; or
            ``(4) for purposes other than the purposes set forth in the 
        approved application under which the funds were made available 
        to the institution.

``SEC. 527. 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 which 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. 528. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) Authorizations.--There are authorized to be appropriated to 
carry out part A, $80,000,000 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 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 
recipient.''.

        TITLE VI--INTERNATIONAL AND GRADUATE EDUCATION PROGRAMS

SEC. 601. INTERNATIONAL AND FOREIGN LANGUAGE STUDIES.

    (a) Statutory Structure.--Title VI is amended--
            (1) by striking

         ``PART A--INTERNATIONAL AND FOREIGN LANGUAGE STUDIES''

        and inserting the following:

                   ``PART A--INTERNATIONAL EDUCATION

       ``Subpart 1--International and Foreign Language Studies'';

            (2) by striking

       ``PART B--BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS''

        and inserting the following:

     ``Subpart 2--Business and International Education Programs'';

            (3) by striking

         ``PART C--INSTITUTE FOR INTERNATIONAL PUBLIC POLICY''

        and inserting the following:

     ``Subpart 3--Institute for International Public Policy''; and

            (4) by striking

                     ``PART D--GENERAL PROVISIONS''

        and inserting the following:

                   ``Subpart 4--General Provisions''.

    (b) Findings and Purposes.--Section 601 (20 U.S.C. 1121) is amended 
to read as follows:

``SEC. 601. FINDINGS AND PURPOSES.

    ``(a) Findings.--The 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 on 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 and to encourage a broader cross-section of institutions 
        of higher education to develop and expand programs for 
        producing graduates with international and foreign language 
        expertise and knowledge, and research on such areas, in a 
        variety of disciplines and at all levels of graduate and 
        undergraduate education.
            ``(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 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 and other international 
        studies, including professional international affairs education 
        and research.''.
    (c) Graduate and Undergraduate National Resource Centers.--
            (1) National resource centers.--Section 602(a) (20 U.S.C. 
        1122(a)) is amended--
                    (A) in the heading, by striking ``National Language 
                and Area Centers Authorized'' and inserting ``National 
                Resource Centers for Foreign Language and Area or 
                International Studies Authorized'';
                    (B) in paragraph (1)(A), by striking 
                ``comprehensive language and area centers'' and 
                inserting ``comprehensive foreign language and area or 
                international studies centers'';
                    (C) in paragraph (1)(B), by striking ``language and 
                area centers'' and inserting ``foreign language and 
                area or international studies centers''; and
                    (D) by striking paragraph (2) and inserting the 
                following:
            ``(2) Authorized activities.--
                    ``(A) In general.--Any grant made under paragraph 
                (1) may be used to pay all or part of the cost of 
                establishing or operating a center or program, in 
                accordance with this subsection.
                    ``(B) Mandatory activities.--Activities to be 
                conducted by centers assisted under this subsection 
                shall include--
                            ``(i) support for the instruction of 
                        foreign languages and the offering of courses 
                        in a variety of nonlanguage disciplines that 
                        cover the center's subject area or topic, and 
                        the incorporation of such instruction in 
                        baccalaureate and graduate programs of study in 
                        a variety of disciplinary, interdisciplinary, 
                        or professional fields;
                            ``(ii) support for teaching and research 
                        materials, including library acquisitions, in 
                        the center's subject area or topic;
                            ``(iii) programs of outreach or linkage 
                        with State and local educational agencies, 
                        postsecondary education institutions at all 
                        levels, professional schools, government, 
                        business, media, or the general public; and
                            ``(iv) program coordination and 
                        development, curriculum planning and 
                        development, and student advisement.
                    ``(C) Permissible activities.--Activities to be 
                conducted by centers assisted under this subsection may 
                include--
                            ``(i) support for the creation of faculty 
                        positions in disciplines that are 
                        underrepresented in the center's instructional 
                        program;
                            ``(ii) establishment and maintenance of 
                        linkages with overseas institutions of higher 
                        education for the purpose of contributing to 
                        the teaching and research of the center;
                            ``(iii) support for bringing visiting 
                        scholars and faculty to the center to teach or 
                        conduct research;
                            ``(iv) professional development of the 
                        center's faculty and staff;
                            ``(v) projects conducted in cooperation 
                        with other National Resource Centers addressing 
                        themes of world regional, cross-regional, 
                        international, or global importance;
                            ``(vi) summer institutes in the United 
                        States or abroad designed to provide language 
                        and area training in the center's field or 
                        topic; and
                            ``(vii) 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.''.
            (2) Graduate fellowships; expense limitations.--Section 602 
        is further amended by striking subsections (b) and (c) and 
        inserting the following:
    ``(b) Graduate Fellowships for Foreign Language and Area or 
International Studies.--
            ``(1) Authority.--The Secretary is authorized to make 
        grants to institutions of higher education or combinations of 
        such institutions for the purpose of paying fellowships to 
        individuals undergoing advanced training in any center or 
        program approved by the Secretary under this part.
            ``(2) Eligible students.--Students receiving fellowships 
        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) Rules With Respect to Expenses.--
            ``(1) Undergraduate 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.
            ``(2) Graduate dependent and travel expenses.--Fellowships 
        awarded to graduate level recipients may include allowances for 
        dependents and for travel for research and study in the United 
        States and abroad.''.
    (d) Language Resource Centers.--Section 603(a) (20 U.S.C. 1123(a)) 
is amended--
            (1) by striking paragraph (5) and inserting the following:
            ``(5) a significant focus on the teaching and learning 
        needs of the less commonly taught languages, including an 
        assessment of the strategic needs, the determination of ways to 
        meet those needs nationally, and the publication and 
        dissemination of instructional materials in the less commonly 
        taught languages;'';
            (2) by striking the period at the end of paragraph (6) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) the operation of intensive summer language institutes 
        to train advanced foreign language students, provide 
        professional development, and improve language instruction 
        through preservice and inservice language training for 
        teachers.''.
    (e) Undergraduate International Studies and Foreign Language 
Programs.--Section 604 (20 U.S.C. 1124) is amended--
            (1) in the heading of subsection (a), by striking 
        ``Incentives'' and all that follows through ``Programs'' and 
        inserting ``Program Incentives'';
            (2) in subsection (a)(1)--
                    (A) by striking ``or combinations of such 
                institutions'' in the first sentence and inserting ``, 
                combinations of such institutions, or partnerships 
                between nonprofit educational organizations and such 
                institutions,'';
                    (B) by striking ``a program'' and inserting 
                ``programs''; and
                    (C) by striking the second sentence and inserting 
                the following: ``Such grants shall be awarded for the 
                purpose of seeking to create new programs or to 
                strengthen existing programs in undergraduate area 
                studies, foreign languages, and other international 
                fields.'';
            (3) by striking paragraphs (2) and (3) and inserting the 
        following:
            ``(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 
                programs in undergraduate international studies, and 
                foreign languages and the internationalization of 
                undergraduate education;
                    ``(B) teaching, research, curriculum development, 
                and other related activities;
                    ``(C) training of faculty members in foreign 
                countries;
                    ``(D) expansion of existing and development of new 
                opportunities for learning foreign languages, including 
                the less commonly taught languages;
                    ``(E) programs under which foreign teachers and 
                scholars may visit institutions as visiting faculty;
                    ``(F) international education programs designed to 
                develop or enhance linkages between two- and four-year 
                institutions of higher education, or baccalaureate and 
                postbaccalaureate programs or institutions;
                    ``(G) the development of an international dimension 
                in preservice and inservice teacher training;
                    ``(H) the development of undergraduate educational 
                programs in locations abroad where such opportunities 
                are not otherwise available or which serve students for 
                whom such opportunities are not otherwise available and 
                which provide courses that are closely related to on-
                campus foreign language and international curricula;
                    ``(I) the integration of new and continuing 
                education abroad opportunities for undergraduate 
                students into curricula of specific degree programs;
                    ``(J) 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;
                    ``(K) the expansion of library and teaching 
                resources;
                    ``(L) the development of programs designed to 
                integrate professional and technical education with 
                area studies, foreign languages, and other 
                international fields;
                    ``(M) the establishment of linkages overseas with 
                institutions of higher education and organizations that 
                contribute to the educational objectives of this 
                subsection;
                    ``(N) the conduct of summer institutes in foreign 
                area 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;
                    ``(O) the development of partnerships between 
                institutions of higher education and the private 
                sector, government, and elementary and secondary 
                education institutions to enhance international 
                knowledge and skills; and
                    ``(P) 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 may be provided 
        in cash from the private sector corporations or foundations in 
        an amount equal to one-third of the total requested grant 
        amount, or may be provided as 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 requested grant amount.'';
            (4) by adding at the end of subsection (a) the following 
        new paragraphs:
            ``(5) Special rule.--The Secretary may waive or reduce the 
        required non-Federal share for title III-eligible institutions 
        which have submitted a grant application under this section.
            ``(6) Evaluation criteria and report.--As a condition for 
        the award of any grant under this subsection, the Secretary may 
        establish criteria for evaluating programs and require an 
        annual report which evaluates the progress and performance of 
        students in such programs.''.
            (5) by striking subsection (b);
            (6) by redesignating subsection (c) as subsection (b); and
            (7) by adding at the end the following new subsection:
    ``(c) Funding Support.--The Secretary may use no more than 10 
percent of the total amount appropriated for this part for carrying out 
the purposes of this section.''.
    (f) Intensive Summer Language Institutes.--Section 605 (20 U.S.C. 
1124a) is repealed.
    (g) Research; Studies; Annual report.--Section 606(a) (20 U.S.C. 
1125(a)) is amended--
            (1) in paragraph (4), by inserting before the semicolon at 
        the end the following: ``, area studies, or other international 
        fields'';
            (2) by striking ``and'' at the end of paragraph (5);
            (3) by striking the period at the end of paragraph (6) and 
        inserting ``; and''; and
            (4) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) studies and surveys of the uses of technology in 
        foreign language, area and international studies programs.''.
    (h) Periodicals.--Section 607 (20 U.S.C. 1125a) is amended to read 
as follows:

``SEC. 607. 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 library 
institutions, or consortia of such institutions, 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 the 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 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.''.
    (i) Development Grants.--Section 610 (20 U.S.C. 1127) is amended by 
adding at the end the following new subsection:
    ``(d) Development Grants Authorized.--The Secretary is encouraged 
to consider the establishment of new centers, and may use at least 10 
percent of the funds available for this section to make grants for the 
establishment of such new centers.''.
    (j) Authorization of Appropriations.--Section 610A (20 U.S.C. 1128) 
is amended by striking ``1993'' and inserting ``1999''.
    (k) Conforming Amendment.--Title VI is further amended by 
redesignating sections 606, 607, 608, 609, 610, and 610A as sections 
605 through 610, respectively.

SEC. 602. BUSINESS AND INTERNATIONAL EDUCATION PROGRAMS.

    (a) Centers for International Business Education.--Section 612 (20 
U.S.C. 1130-1) is amended--
            (1) in subsection (c)(1)(B), by striking ``advanced'';
            (2) in subsection (c)(1)(C), by striking ``evening or 
        summer programs,'' and inserting ``programs'';
            (3) in subsection (c)(2)--
                    (A) by striking ``and'' at the end of subparagraph 
                (E);
                    (B) by redesignating subparagraph (F) as 
                subparagraph (G); and
                    (C) by inserting after subparagraph (E) the 
                following new subparagraph:
                    ``(F) professional graduate degrees in translation 
                and interpretation; and''; and
            (4) in subsection (d)(2)(G), by inserting before the period 
        at the end the following: ``, such as a representative of a 
        community college in the region served by the center''.
    (b) Authorization of Appropriations.--Section 614 (20 U.S.C. 1130b) 
is amended by striking ``1993'' each place it appears and inserting 
``1999''.
    (c) Technical Amendment.--The heading of section 611 (20 U.S.C. 
1130) is amended to read as follows:

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

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) Junior Year and Summer Abroad Program.--Section 622 (20 U.S.C. 
1131a) is amended--
            (1) in the heading of such section, by inserting ``and 
        summer'' after ``year'';
            (2) in subsection (a)--
                    (A) by striking ``shall conduct'' and inserting 
                ``is authorized to conduct'';
                    (B) by inserting ``and summer'' after ``junior 
                year'' each place it appears in the first and second 
                sentences;
                    (C) by inserting ``in a junior year abroad 
                program'' after ``Each student'' in the last sentence;
            (3) in subsection (b)(2), by inserting ``or summer'' after 
        ``junior year''; and
            (4) in subsection (c)--
                    (A) by inserting ``or summer abroad program'' after 
                ``junior year abroad program'' each place it appears; 
                and
                    (B) by striking ``abroad or internship'' and 
                inserting ``abroad, summer abroad, or internship''.
    (c) Internships.--Section 624 (20 U.S.C. 1132c) is amended--
            (1) by striking ``The Institute'' and inserting ``(a) In 
        General.--The Institute''; and
            (2) by adding at the end the following new subsection:
    ``(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 in Washington, 
D.C., for students who have completed study for the baccalaureate 
degree. The Internship program authorized by this subsection shall--
            ``(1) be designated to assist the students to prepare for a 
        master's degree program;
            ``(2) be carried out with the assistance of the Woodrow 
        Wilson Fellowship program;
            ``(3) contain work experience for the students designated 
        to contribute to the objectives set forth in paragraph (1); and
            ``(4) contain such other elements as the Institute 
        determines will carry out the objectives of this subsection.''.
    (d) New Programs.--Title VI is further amended--
            (1) by redesignating sections 625 through 627 (20 U.S.C. 
        1131d-1131f) as sections 627 through 629; and
            (2) by inserting after section 624 the following new 
        sections:

``SEC. 625. INSTITUTIONAL DEVELOPMENT.

    ``(a) In General.--The Institute shall make grants, from amounts 
available to it in each fiscal year, to Historically Black Colleges and 
Universities, Hispanic-serving Institutions, Tribally Controlled Indian 
Community Colleges, 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 under 
this section 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.--As used in this section--
            ``(1) the term `Historically Black College and University' 
        has the same meaning given the term by section 322(2) of this 
        Act;
            ``(2) the term `Hispanic-serving Institution' has the same 
        meaning given the term by section 316(b)(1) of this Act;
            ``(3) the term `Tribally controlled Indian community 
        college' has the same meaning given that term by the Tribally 
        Controlled Community College Assistance Act of 1978; and
            ``(4) the term `minority institution' has the same meaning 
        given that term in section 347 of this Act.

``SEC. 626. INTERAGENCY COMMITTEE ON MINORITY CAREERS IN INTERNATIONAL 
              AFFAIRS.

    ``(a) Establishment.--There is established in the executive branch 
of the Federal Government an Interagency Committee on Minority Careers 
in International Affairs composed of 7 members. The members of the 
Committee shall be--
            ``(1) the Undersecretary for International Affairs and 
        Commodity Programs of the Department of Agriculture, appointed 
        by the Secretary of Agriculture;
            ``(2) the Assistant Secretary and Director General, the 
        Commercial Service of the Department of Commerce, appointed by 
        the Secretary of Commerce;
            ``(3) the Undersecretary of Defense for Personnel and 
        Readiness of the Department of Defense, appointed by the 
        Secretary of Defense;
            ``(4) the Assistant Secretary for Postsecondary Education 
        in the Department of Education, appointed by the Secretary of 
        Education;
            ``(5) the Director General of the Foreign Service of the 
        Department of State, appointed by the Secretary of State;
            ``(6) the General Counsel of the Agency for International 
        Development, appointed by the Administrator; and
            ``(7) the Associate Director for Educational and Cultural 
        Affairs of the United States Information Agency, appointed by 
        the Director.
    ``(b) Functions.--The Interagency Committee established by this 
section shall--
            ``(1) advise the Secretary and the Institute with respect 
        to programs authorized by this part; and
            ``(2) promote policies in each department and agency 
        participating on the Committee that are designed to carry out 
        the objectives of this part.''.
    (e) Authorization.--Section 629 (20 U.S.C. 1131f) (as redesignated 
by subsection (d)) is amended 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 new 
        paragraphs:
            ``(9) the term `internationalization of undergraduate 
        education' means the incorporation of foreign languages and 
        area and international studies perspectives in any 
        undergraduate course or curriculum in order to provide 
        international content for that course of study; and
            ``(10) 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.

SEC. 605. TRANSFER AND REAUTHORIZATION OF GRADUATE ASSISTANCE IN AREAS 
              OF NATIONAL NEED PROGRAM.

    (a) Amendment.--Title VI is amended by adding at the end the 
following new part:

        ``PART B--GRADUATE ASSISTANCE IN AREAS OF NATIONAL NEED

``SEC. 651. PURPOSE.

    ``In order to sustain and enhance the capacity for graduate 
education in areas of national need, it is the purpose of this part to 
provide, through academic departments and programs of institutions of 
higher education, a fellowship program to assist graduate students of 
superior ability who demonstrate financial need.

``SEC. 652. GRANTS TO ACADEMIC DEPARTMENTS AND PROGRAMS OF 
              INSTITUTIONS.

    ``(a) Grant Authority.--
            ``(1) In general.--The Secretary shall make grants to 
        academic departments and 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 part. The Secretary shall coordinate the 
        administration and regulation of programs under this part with 
        other Federal programs providing graduate assistance to 
        minimize duplication and improve efficiency.
            ``(2) Additional grants.--The Secretary may also make 
        grants to such departments and programs and to other 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 allocation 
        of awards 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 making such grants, 
        promote an equitable geographic distribution among eligible 
        public and private institutions of higher education.
            ``(2) Duration.--The Secretary shall approve a grant 
        recipient under this part for a 3-year period. From the sums 
        appropriated under this part for any fiscal year, the Secretary 
        shall not make a grant to any academic department or program of 
        an institution of higher education of less than $125,000 or 
        greater than $750,000 per fiscal year.
            ``(3) Reallotment.--Whenever the Secretary determines that 
        an academic department or program of an institution of higher 
        education is unable to use all of the amounts available to it 
        under this part, the Secretary shall, on such dates during each 
        fiscal year as the Secretary may fix, reallot the amounts not 
        needed to academic departments and programs of institutions 
        which can use the grants authorized by this part.

``SEC. 653. INSTITUTIONAL ELIGIBILITY.

    ``(a) Eligibility Criteria.--Any academic department or program 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 part. No department or program 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 part.
    ``(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 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. 654. CRITERIA FOR APPLICATIONS.

    ``(a) Selection of Applications.--The Secretary shall make grants 
to academic departments and programs 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 or program 
of an institution of higher education, in its 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 funds, for the purposes of the 
        fellowship program under this part an amount equal to at least 
        25 percent of the amount of the grant received under this part, 
        which contribution may be in cash or in kind fairly valued;
            ``(3) describe the number, types, and amounts of the 
        fellowships that the applicant intends to offer under the 
        grant;
            ``(4) set forth policies and procedures to assure that, in 
        making fellowship awards under this part, 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;
            ``(5) set forth policies and procedures to ensure that 
        Federal funds made available under this part 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 part and in no case to supplant those 
        funds;
            ``(6) provide assurances that, in the event that funds made 
        available to the academic department or program under this part 
        are insufficient to provide the assistance due a student under 
        the commitment entered into between the academic department or 
        program and the student, the academic department or program 
        will, from any funds available to it, fulfill the commitment to 
        the student;
            ``(7) provide that the applicant will comply with the 
        limitations set forth in section 655;
            ``(8) provide assurances that the academic department will 
        provide at least 1 year of supervised training in instruction 
        for students; and
            ``(9) include such other information as the Secretary may 
        prescribe.

``SEC. 655. AWARDS TO GRADUATE STUDENTS.

    ``(a) Commitments to Graduate Students.--
            ``(1) In general.--An academic department or program of an 
        institution of higher education shall make commitments to 
        eligible graduate students as defined in 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 3 years.
            ``(2) Special rule.--No such commitments shall be made to 
        students under this part unless the academic department or 
        program has determined adequate funds are available to fulfill 
        the commitment either from funds received or anticipated under 
        this part, 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 part. The stipends 
the Secretary establishes shall reflect the purpose of this program to 
encourage highly talented students to undertake graduate study as 
described in this part. In the case of an individual who receives such 
individual's first stipend under this part 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 part in 
amounts that exceed the institutional payments made by the Secretary 
pursuant to section 656(a) may count the excess of such payments toward 
the amounts the institution is required to provide pursuant to section 
654(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. 656. ADDITIONAL ASSISTANCE FOR COST OF EDUCATION.

    ``(a) Institutional Payments.--(1) The Secretary shall (in addition 
to stipends paid to individuals under this part) pay to the institution 
of higher education, for each individual awarded a fellowship under 
this part at such institution, an institutional allowance. Except as 
provided in paragraph (2), such allowance shall be--
            ``(A) $10,000 annually with respect to individuals who 
        first received fellowships under this part prior to academic 
        year 1999-2000; and
            ``(B) with respect to individuals who first receive 
        fellowships during or after academic year 1999-2000--
                    ``(i) $10,000 for the academic year 1999-2000; and
                    ``(ii) for succeeding academic years, $10,000 
                adjusted annually thereafter in accordance with 
                inflation as determined by the Department of Labor's 
                Consumer Price Index for the previous calendar year.
    ``(2) 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 part may not be used for the general operational overhead of 
the academic department or program.

``SEC. 657. CONTINUATION AWARDS.

    ``Before making new awards under this part for any fiscal year, the 
Secretary shall, as appropriate, making continuation awards to 
recipients of awards under parts B, C, and D of title IX as in effect 
prior to the enactment of the Higher Education Amendments of 1998.

``SEC. 658. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $40,000,000 for fiscal 
year 1999 and such sums as may be necessary for each of the 4 
succeeding fiscal years to carry out this part.''.
    (b) Repeal.--Title IX (20 U.S.C. 1134 et seq.) is repealed.

  TITLE VII--CONSTRUCTION, RECONSTRUCTION, AND RENOVATION OF ACADEMIC 
                               FACILITIES

SEC. 701. EXTENSION OF PRIOR RIGHTS AND OBLIGATIONS.

    Section 702(a) (20 U.S.C. 1132a-1(a)) is amended by striking 
``fiscal year 1993'' and inserting ``fiscal year 1999''.

SEC. 702. REPEAL OF PART A.

    (a) Repeal.--Part A of title VII (20 U.S.C. 1132b et seq.) is 
repealed.
    (b) Conforming Amendments.--
            (1) Section 701(b) (20 U.S.C. 1132a(b)) is amended by 
        striking ``part A or B'' and inserting ``part B''.
            (2) Part B of title VII is amended by striking section 726 
        (20 U.S.C. 1132c-5).
            (3) Section 781 (20 U.S.C. 1132i) is amended by striking 
        ``part A of this title, or'' each place it appears.

SEC. 703. EXTENSION OF AUTHORIZATION OF PART B.

    Section 727(c) (20 U.S.C. 1132c-6(c)) is amended by striking 
``fiscal year 1993'' and inserting ``fiscal year 1999''.

SEC. 704. EXTENSION OF AUTHORIZATION OF PART C.

    Section 735 (20 U.S.C. 1132d-4) is amended by striking ``fiscal 
year 1993'' and inserting ``fiscal year 1999''.

                   TITLE VIII--ADDITIONAL PROVISIONS

SEC. 801. 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 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 his 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. 802. STUDY OF MARKET MECHANISMS IN FEDERAL STUDENT LOAN PROGRAMS.

    (a) Study Required.--The Comptroller General, in consultation with 
interested parties, shall conduct a study of the potential to use 
auctions or other market mechanisms in the delivery of Federal student 
loans in order to reduce costs both to the Federal Government and to 
borrowers. Such study shall include an examination of--
            (1) the feasibility of using an auction of lending 
        authority for Federal student loans, and the appropriate 
        Federal role in the operation of such an auction or other 
        alternative market mechanisms;
            (2) methods for operating such a system to ensure loan 
        access for all eligible borrowers, while maximizing the cost-
        effectiveness (for the Government and borrowers) in the 
        delivery of such loans;
            (3) the impact of such mechanisms on student loan 
        availability;
            (4) any necessary transition procedures for implementing 
        such mechanisms;
            (5) the costs or savings likely to be attained for the 
        Government and borrowers;
            (6) the feasibility of incorporating income-contingent 
        repayment options into the student loan system and requiring 
        borrowers to repay through income tax withholding, and the 
        impact of such an option on the willingness of lenders to 
        participate in auctions or other market mechanisms and on the 
        efficiency of Federal management of student loan programs;
            (7) the ability of the Department of the Treasury to 
        effectively auction the right to make student loans; and
            (8) other relevant issues.
    (b) Recommendations.--Within 2 years after the date of enactment of 
this Act, the Comptroller General shall submit to the Congress a report 
on the study required by subsection (a) and shall include with such 
report any legislative recommendations the Comptroller General 
considers appropriate.

SEC. 803. 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) Separation of undergraduate and graduate costs.--Such 
        consistent methodologies shall permit the Secretary to collect 
        and disseminate separate data with respect to the costs 
        incurred in providing undergraduate and graduate postsecondary 
        education.
            (3) 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.
    (b) Data Dissemination.--The Secretary shall publish, in both 
printed and electronic form, of 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 following costs for typical full-
time undergraduate or graduate students--
            (1) tuition charges published by the institution;
            (2) the institution's cost of educating students on a full-
        time equivalent basis;
            (3) the general subsidy on a full-time equivalent basis;
            (4) instructional cost by level of instruction;
            (5) the total price of attendance; and
            (6) the average amount of per student financial aid 
        received, including and excluding assistance in the form of 
        loans.

SEC. 804. DIFFERENTIAL REGULATION.

    (a) GAO Study.--The Comptroller General shall conduct a study of 
the extent to which unnecessary costs are imposed on postsecondary 
education as a consequence of the applicability to postsecondary 
facilities and equipment of regulations prescribed for purposes of 
regulating industrial and commercial enterprises.
    (b) Report Required.--Within one year after the date of enactment 
of this Act, the Comptroller General shall submit a report to the 
Congress on the results of the study required by subsection (a).

SEC. 805. ANNUAL REPORT ON COST OF HIGHER EDUCATION.

    (a) GAO Report Required.--The Comptroller General shall conduct an 
on-going analysis of the following:
            (1) The increase in tuition compared with other commodities 
        and services.
            (2) Trends in college and university administrative costs, 
        including administrative staffing, ratio of administrative 
        staff to instructors, ratio of administrative staff to 
        students, remuneration of administrative staff, and 
        remuneration of college and university presidents or 
        chancellors.
            (3) Trends in: (A) faculty workload and remuneration 
        (including the use of adjunct faculty); (B) faculty-to-student 
        ratios; (C) number of hours spent in the classroom by faculty; 
        and (D) tenure practices, and the impact of such trends on 
        tuition.
            (4) Trends in: (A) the construction and renovation of 
        academic and other collegiate facilities; and (B) the 
        modernization of facilities to access and utilize new 
        technologies, and the impact of such trends on tuition.
            (5) The extent to which increases in institutional 
        financial aid and tuition discounting have affected tuition 
        increases, including the demographics of students receiving 
        such aid, the extent to which such aid is provided to students 
        with limited need in order to attract such students to 
        particular institutions or major fields of study, and the 
        extent to which Federal financial aid, including loan aid, has 
        been used to offset such increases.
            (6) The extent to which Federal, State, and local laws, 
        regulations, or other mandates contribute to increasing 
        tuition, and recommendations on reducing those mandates.
            (7) The establishment of a mechanism for a more timely and 
        widespread distribution of data on tuition trends and other 
        costs of operating colleges and universities.
            (8) The extent to which student financial aid programs have 
        contributed to changes in tuition.
            (9) Trends in State fiscal policies that have affected 
        college costs.
            (10) Other related topics determined to be appropriate by 
        the Comptroller General.
    (b) Annual Report to Congress.--The Comptroller General shall 
submit to the Congress an annual report on the results of the analysis 
required by subsection (a).

SEC. 806. STUDY OF CONSOLIDATION OPTIONS.

    No later than 2 years after the date of enactment of this Act, the 
Secretary shall report to Congress on the desirability and feasibility 
of possible new Federal efforts to assist individuals who have 
substantial alternative student loans (other than direct student loans 
and federally guaranteed student loans) to repay their student loans. 
The report shall include an analysis of the extent to which the high 
monthly payments associated with such loans deter such individuals from 
jobs (including public-interest and public-service jobs) with lower 
salaries than the average in relevant professions. The report shall 
include an analysis of the desirability and feasibility of allowing the 
consolidation of alternative student loans held by such individuals 
through the Federal student loan consolidation program or the use of 
other means to provide income-contingent repayment plans for 
alternative student loans.

SEC. 807. EDUCATIONAL MERCHANDISE LICENSING CODES OF CONDUCT.

    It is the sense of the 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 it;
            (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; and
            (6) an explicit requirement that companies maintain a safe 
        and healthy workplace.

SEC. 808. REPEALS AND EXTENSIONS OF PREVIOUS HIGHER EDUCATION 
              AMENDMENTS PROVISIONS.

    (a) Higher Education Amendments of 1986.--Title XIII of the Higher 
Education Amendments of 1986 (20 U.S.C. 1091 note, 1121 note, 1221e-1 
note, 1011 note, 1070a note, 1071 note, 1221-1 note, and 1091 note) is 
repealed.
    (b) Higher Education Amendments of 1992.--
            (1) Title XIV.--Title XIV of the Higher Education 
        Amendments of 1992 (20 U.S.C. 1071 note, 1080 note, 1221e note, 
        1070 note, 1221e-1 note, 1070a-21 note, 1134 note, 1132a note, 
        1221-1 note, and 1101 note) is repealed.
            (2) Title XV.--Parts A, B, C, D, and E of title XV of the 
        Higher Education Amendments of 1992 (29 U.S.C. 2401 et seq., 20 
        U.S.C. 1452 note, 1101 note, 1145h, and 1070 note) are 
        repealed.
            (3) Olympic Scholarships.--Section 1543(d) of the Higher 
        Education Amendments of 1992 is amended by striking ``1993'' 
        and inserting ``1999''.

SEC. 809. LIMITATION.

    None of the funds appropriated under the Higher Education Act of 
1965 or any other Act shall be made available by any Federal agency to 
the National Board for Professional Teaching Standards.

SEC. 810. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR ELIGIBLE 
              DISABLED VETERANS.

    The Secretary shall, in consultation with the Secretary of Veterans 
Affairs, develop and implement a procedure under which Department of 
Veterans Affairs physicians shall provide the certification and 
affidavits needed to enable eligible disabled veterans to document 
their eligibility for deferments and cancellations of student loans 
made, insured, or guaranteed under this title. Not later than 6 months 
after the date of the enactment of this Act, the Secretaries of 
Education and Veterans Affairs shall jointly report to Congress on the 
progress made in developing and implementing this procedure.

                   TITLE IX--AMENDMENTS TO OTHER LAWS

                   PART A--EDUCATION OF THE DEAF ACT

                    Subpart 1--Gallaudet University

SEC. 901. BOARD OF TRUSTEES MEMBERSHIP.

    Section 103(a)(1) of the Education of the Deaf Act of 1986 (20 
U.S.C. 4303(a)(1)) is amended--
            (1) in the matter preceding subparagraph (A), by striking 
        ``twenty-one'' and inserting ``twenty-two'';
            (2) in subparagraph (A), by striking ``and'' at the end;
            (3) in subparagraph (B), by striking the period at the end 
        and inserting ``; and''; and
            (4) by adding at the end the following:
            ``(C) the liaison designated under section 206, who shall 
        serve as an ex-officio, nonvoting member.''.

SEC. 902. ELEMENTARY AND SECONDARY EDUCATION PROGRAMS.

    (a) Compliance With Certain Requirements Under the Individuals With 
Disabilities Education Act.--Section 104(b)(3) of the Education of the 
Deaf Act of 1986 (20 U.S.C. 4304(b)(3)) is amended by striking 
``intermediate educational unit'' and inserting ``educational service 
agency''.
    (b) Additional Requirements.--Section 104(b)(4)(C) of such Act (20 
U.S.C. 4304(b)(4)(C)) is amended by striking clauses (i) through (iv) 
and inserting the following:
                    ``(i) Paragraph (1) and paragraphs (3) through (6) 
                of subsection (b).
                    ``(ii) Subsections (e) through (g).
                    ``(iii) Subsection (h), except the provision 
                contained in such subsection that requires that 
                findings of fact and decisions be transmitted to the 
                State advisory panel.
                    ``(iv) Paragraphs (1) and (2) of subsection (i).
                    ``(v) Subsection (j), except that such subsection 
                shall not be applicable to a decision by the University 
                to refuse to admit or to dismiss a child, except that, 
                before dismissing any child, the University shall give 
                at least 60 days notice to the child's parents and to 
                the local educational agency in which the child 
                resides.
                    ``(vi) Subsections (k) through (m).''.

SEC. 903. 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) in the first sentence, 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 necessity of the periodic update referred to in the 
        preceding sentence shall be determined by the Secretary or the 
        University.''.

               Subpart 2--National Institute For The Deaf

SEC. 911. AGREEMENT FOR THE NATIONAL TECHNICAL INSTITUTE FOR THE DEAF.

    Section 112 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4332) is amended--
            (1) in subsection (a)(2), by striking ``under this 
        section'' and all that follows and inserting the following: 
        ``under this section--
            ``(A) shall periodically assess the need for modification 
        of the agreement; and
            ``(B) shall also periodically update the agreement as 
        determined to be necessary by the Secretary or the 
        institution.''; and
            (2) in subsection (b)(3), by striking ``Committee on 
        Education and Labor'' and inserting ``Committee on Education 
        and the Workforce''.

                     Subpart 3--General Provisions

SEC. 921. 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'' before ``the Commonwealth 
                of the Northern Mariana Islands''; and
                    (B) by striking ``, and Palau'' and all that 
                follows and inserting a period.

SEC. 922. AUDITS.

    Section 203(b) of the Education of the Deaf Act of 1986 (20 U.S.C. 
4353(b)) is amended in the first sentence by inserting before the 
period at the end the following: ``, including the national mission and 
school operations of the elementary and secondary programs''.

SEC. 923. REPORTS.

    Section 204 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4354) is amended in the matter preceding paragraph (1) by striking 
``Committee on Education and Labor'' and inserting ``Committee on 
Education and the Workforce''.

SEC. 924. 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 ``1999 through 2003''.

SEC. 925. RESPONSIBILITY OF THE LIAISON.

    Section 206 of the Education of the Deaf Act (20 U.S.C. 4356) is 
amended--
            (1) in subsection (a), by striking ``Not later than 30 days 
        after the date of enactment of this Act, the'' and inserting 
        ``The''; and
            (2) in subsection (b)--
                    (A) in paragraph (2), by striking ``and'' at the 
                end;
                    (B) by redesignating paragraph (3) as paragraph 
                (4); and
                    (C) by inserting after paragraph (2) the following:
            ``(3) serve as an ex-officio, nonvoting member of the Board 
        of Trustees under section 103; and''.

SEC. 926. FEDERAL ENDOWMENT PROGRAMS.

    (a) Federal Payments.--Section 207(b) of the Education of the Deaf 
Act of 1986 (20 U.S.C. 4357(b)) is amended--
            (1) in 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
            (2) by striking paragraph (3).
    (b) Withdrawals and Expenditures.--Section 207(d)(2)(C) of such Act 
(20 U.S.C. 4357(d)(2)(C)) is amended by striking ``Beginning on October 
1, 1992, the'' and inserting ``The''.
    (c) Authorization of Appropriations.--Section 207(h) of such Act 
(20 U.S.C. 4357(h)) is amended by striking ``fiscal years 1993 through 
1997'' each place it appears and inserting ``fiscal years 1999 through 
2003''.

SEC. 927. SCHOLARSHIP PROGRAM.

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

SEC. 928. 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. 929. INTERNATIONAL STUDENTS.

    (a) Enrollment.--Section 210(a) of the Education of the Deaf Act of 
1986 (20 U.S.C. 4359a(a)) is amended to read as follows:
    ``(a) Enrollment.--A qualified United States citizen seeking 
admission to the University or NTID shall not be denied admission in a 
given year due to the enrollment of international students.''.
    (b) Conforming Amendment.--Section 210 of such Act (20 U.S.C. 
4359a) is amended by redesignating such section as section 209.

SEC. 930. AUTHORIZATION OF APPROPRIATIONS.

    Section 211 of the Education of the Deaf Act of 1986 (20 U.S.C. 
4360) is amended--
            (1) in subsection (a), by striking ``such sums as may be 
        necessary for each of the fiscal years 1993 through 1997'' and 
        inserting ``$83,480,000 for fiscal year 1999, $84,732,000 for 
        fiscal year 2000, $86,003,000 for fiscal year 2001, $87,293,000 
        for fiscal year 2002, and $88,603,000 for fiscal year 2003'';
            (2) in subsection (b), by striking ``such sums as may be 
        necessary for each of the fiscal years 1993 through 1997'' and 
        inserting ``$44,791,000 for fiscal year 1999, $46,303,000 for 
        fiscal year 2000, $50,136,000 for fiscal year 2001, $50,818,000 
        for fiscal year 2002, and $46,850,000 for fiscal year 2003''; 
        and
            (3) by redesignating such section as section 210.

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

SEC. 951. TRIBALLY CONTROLLED COLLEGES AND UNIVERSITIES.

    (a) Extension to Colleges and Universities.--The Tribally 
Controlled Community College Assistance Act of 1978 (25 U.S.C. 1801 et 
seq.) is amended--
            (1) by striking ``community college'' each place it appears 
        and inserting ``college or university'';
            (2) by striking ``community colleges'' each place it 
        appears and inserting ``colleges and universities'';
            (3) by striking ``COMMUNITY COLLEGES'' in the heading of 
        title I and inserting ``COLLEGES AND UNIVERSITIES'';
            (4) by striking ``community college's'' in section 2(b)(5) 
        and inserting ``college's or university's'';
            (5) by striking ``the college'' in sections 102(b), 
        113(c)(2), and 305(a) and inserting ``the college or 
        university'';
            (6) by striking ``such colleges'' in sections 104(a)(2) and 
        111(a)(2) and inserting ``such colleges and universities'';
            (7) by striking ``community colleges'' in the heading of 
        section 107 and inserting ``colleges and universities'';
            (8) by striking ``such college'' each place it appears in 
        sections 108(a), 113(b)(2), 113(c)(2), 302, 303, 304, and 305 
        and inserting ``such college or university'';
            (9) by striking ``such colleges'' in section 109(b) and 
        inserting ``such college or university'';
            (10) in section 110(a)(4), by striking ``Tribally 
        Controlled Community Colleges'' and inserting ``tribally 
        controlled colleges and universities'';
            (11) by striking ``COMMUNITY COLLEGE'' in the heading of 
        title III and inserting ``COLLEGE AND UNIVERSITY'';
            (11) by striking ``that college'' in sections 302(b)(4) and 
        305(a) and inserting ``such college or university''; and
            (12) by striking ``other colleges'' in section 302(b)(4) 
        and insert ``other colleges and universities''.
    (b) Title I Eligible Grant Recipients.--Section 103 of the Tribally 
Controlled Community College Assistance Act of 1978 (25 U.S.C. 1804) is 
amended--
            (1) by striking ``and'' at the end of paragraph (2);
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(4) has been accredited by a nationally recognized 
        accrediting agency or association determined by the Secretary 
        of Education to be a reliable authority as to the quality of 
        training offered, or is, according to such an agency or 
        association, making reasonable progress toward such 
        accreditation.''.
    (c) Amount of Title I Grants.--Section 108(a)(2) of such Act (25 
U.S.C. 1808(a)(2)) is amended by striking ``$5,820'' and inserting 
``$6,000''.
    (d) Clerical Amendment.--Section 109 of such Act (25 U.S.C. 1809) 
is amended by redesignating subsection (d) as subsection (c).
    (e) Authorization of Appropriations for Title I.--Section 110 of 
such Act (25 U.S.C. 1810) is amended--
            (1) by striking ``1993'' each place it appears and 
        inserting ``1999''; and
            (2) in subsection (a)(2), by striking ``$30,000,000'' and 
        inserting ``$40,000,000''.
    (f) Authorization of Appropriations for Titles III and IV.--
Sections 306 and 403 of such Act (25 U.S.C. 1836, 1852) are each 
amended by striking ``1993'' and inserting ``1999''.

SEC. 952. REAUTHORIZATION OF PROVISIONS FROM HIGHER EDUCATION 
              AMENDMENTS OF 1992.

    Title XIII of the Higher Education Amendments of 1992 (25 U.S.C. 
3301 et seq.) is amended by striking ``1993'' each place it appears in 
sections 1348, 1365, and 1371(e), and inserting ``1999''.

SEC. 953. 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 C--GENERAL EDUCATION PROVISIONS ACT

SEC. 961. ACCESS TO RECORDS CONCERNING CRIMES OF VIOLENCE.

    Section 444(h) of the General Education Provisions Act (20 U.S.C. 
1232g(h)) is amended to read as follows:
    ``(h) Disciplinary records.--(1) Nothing in this section shall 
prohibit an educational agency or institution from--
            ``(A) including appropriate information in the education 
        record of any student concerning disciplinary action taken 
        against such student for conduct that posed a significant risk 
        to the safety or well-being of that student, other students, or 
        other members of the school community; or
            ``(B) disclosing such information to teachers and school 
        officials, including teachers and school officials in other 
        schools, who have legitimate educational interests in the 
        behavior of the student.
    ``(2) Nothing in this section shall prohibit any postsecondary 
educational agency or institution from disclosing disciplinary records 
of any kind which contain information that personally identifies a 
student or students who have either admitted to or been found to have 
committed any act, which is a crime of violence (as that term is 
defined in section 16 of title 18, United States Code), in violation of 
institutional policy, either as a violation of the law or a specific 
institutional policy, where such records are directly related to such 
misconduct.''.

                 TITLE X--FACULTY RETIREMENT PROVISIONS

SEC. 1001. 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 1201(a) of 
the Higher Education Act of 1965 (20 U.S.C. 1141(a))) 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 1201(a) 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.

                       TITLE XI--OFFESTS REQUIRED

SEC. 1101. ASSURANCE OF OFFSETS.

    (a) Declaration.--None of the provisions in this Act should take 
effect unless it contains the mandatory offsets set forth in subsection 
(b).
    (b) Enumeration of Offsets.--The offsets referred to in subsection 
(a) are provisions that--
            (1) change the definition of default contained in section 
        435(1) to extend the period of delinquency prior to default by 
        an additional 90 days;
            (2) capitalize the interest accrued on unsubsidized and 
        parent loans at the time that the borrower enters repayment;
            (3) recall $65,000,000 in guaranty agency reserves, in 
        addition to the amount required to be recalled pursuant to the 
        amendments in section 422 of the Higher Education Act of 1965 
        contained in this Act;
            (4) eliminate the dischargeability in bankruptcy of student 
        loans made after the date of the enactment of this Act for the 
        cost of attendance for a baccalaureate or advanced degree, and 
        for which the first payment was due more than seven years 
        before the commencement of the bankruptcy action; and
            (5) sell sufficient commodities from the National Defense 
        stockpile to generate receipts of $80,000,000 in fiscal year 
        1999 and $480,000,000 over five years.

                     TITLE XII--ALCOHOL CONSUMPTION

SEC. 1201. SENSE OF THE HOUSE OF REPRESENTATIVES.

    It is the sense of the House of Representatives that, in an effort 
to change the culture of alcohol consumption on college campuses, all 
college and university administrators should adopt the following code 
of principles:
            (1) For an institution of higher education, the president 
        of the institution shall 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 
        will make recommendations for a broad range of policy and 
        program changes that would serve to reduce alcohol and other 
        drug-related problems. The institution shall provide resources 
        to assist the task force in promoting the campus policies and 
        proposed environmental changes that have been identified.
            (2) The institution shall 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 shall enforce a ``zero tolerance'' 
        policy on the illegal consumption and binge drinking of alcohol 
        by its students and will take steps to reduce the opportunities 
        for students, faculty, staff, and alumni to legally consume 
        alcohol on campus.
            (4) The institution shall vigorously enforce its code of 
        disciplinary sanctions for those who violate campus alcohol 
        policies. Students with alcohol or other drug-related problems 
        shall be referred to an on-campus counseling program.
            (5) The institution shall adopt a policy to discourage 
        alcoholic beverage-related sponsorship of on-campus activities. 
        It shall adopt policies limiting the advertisement and 
        promotion of alcoholic beverages on campus.
            (6) Recognizing that school-centered policies on alcohol 
        will be unsuccessful if local businesses sell alcohol to 
        underage or intoxicated students, the institution shall form a 
        ``Town/Gown'' alliance with community leaders. That alliance 
        shall encourage local commercial establishments that promote or 
        sell alcoholic beverages to curtail illegal student access to 
        alcohol and adopt responsible alcohol marketing and service 
        practices.

    TITLE XIII--PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS

SEC. 1301. PROTECTION OF STUDENT SPEECH AND ASSOCIATION RIGHTS.

    (a) Protection of Rights.--It is the sense of the House of 
Representatives that no student attending an institution of higher 
education on a full- or part-time basis should, on the basis of 
protected speech and 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 directly or 
indirectly receiving financial assistance under the Higher Education 
Act of 1965, whether or not such program, activity, or division is 
sponsored or officially sanctioned by the institution.
    (b) Sanctions for Disruption Permitted.--Nothing in this section 
shall be construed 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.
    (c) Definitions.--For the purposes of this section:
            (1) Protected speech.--The term ``protected speech'' means 
        speech that is protected under the 1st and 14th amendments to 
        the United States Constitution, or would be so protected if the 
        institution of higher education were subjected to those 
        amendments.
            (2) Protected association.--The term ``protected 
        association'' means the right to join, assemble, and reside 
        with others that is protected under the 1st and 14th amendments 
        to the United States Constitution, or would be protected if the 
        institution of higher education were subject to those 
        amendments.
            (3) 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.

                 TITLE XIV--DRUG AND ALCOHOL PREVENTION

SEC. 1401. DRUG AND ALCOHOL ABUSE PREVENTION.

    (a) Grants and Recongnition Awards.--Section 111, as redesignated 
by section 101(a)(3)(E), is amended by adding at the end the following 
new subsections:
    ``(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 contracts with such institutions 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 their associated violence. Such contracts 
        may also be used for the support of a higher education center 
        for alcohol and drug abuse prevention which will provide 
        training, technical assistance, evaluation, dissemination and 
        associated services and assistance to the higher education 
        community as defined by the Secretary and the institutions of 
        higher education.
            ``(2) Awards.--Grants and contracts shall be made available 
        under paragraph (1) on a competitive basis. An institution of 
        higher education, a consortium of such institutions, or other 
        organizations which desire 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.
            ``(3) Additional requirements.--The Secretary shall make 
        every effort to ensure--
                    ``(A) the equitable participation of private and 
                public institutions of higher education (including 
                community and junior colleges); and
                    ``(B) the equitable geographic participation of 
                such institutions,
        in grants and contracts under paragraph (1). In the award of 
        such grants and contracts, the Secretary shall give appropriate 
        consideration to institutions of higher education with limited 
        enrollment.
            ``(4) 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) Awards.--For the purpose of providing models of 
        alcohol and drug abuse prevention and education (including 
        treatment-referral) programs in higher education and to focus 
        national attention on exemplary alcohol and drug abuse 
        prevention efforts, the Secretary of Education shall, on an 
        annual basis, make 10 National Recognition Awards to 
        institutions of higher education that have developed and 
        implemented effective alcohol and drug abuse prevention and 
        education programs. Such awards shall be made at a ceremony in 
        Washington, D.C. and a document describing the programs of 
        those who receive the awards shall be distributed nationally.
            ``(2) Application.--
                    ``(A) In general.--A national recognition award 
                shall be made under paragraph (1) to institutions of 
                higher education which have applied for such award. 
                Such an application shall contain--
                            ``(i) a clear description of the goals and 
                        objectives of the alcohol and drug abuse 
                        programs of the institution applying;
                            ``(ii) a description of program activities 
                        that focus on alcohol and other 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 both 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 program efforts;
                            ``(v) a description of special initiatives 
                        used to reduce high-risk behavior or increase 
                        low risk behavior, or both; 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) Eligibility criteria.--All institutions of 
                higher education which are two- and four-year colleges 
                and universities that have established a drug and 
                alcohol prevention and education program are eligible 
                to apply for a National Recognition Award. To receive 
                such an Award an institution of higher education must 
                be nominated to receive it. An institution of higher 
                education may nominate itself or be nominated by others 
                such as professional associations or student 
                organizations.
                    ``(C) Application review.--The Secretary of 
                Education shall appoint a committee to review 
                applications submitted under subparagraph (A). The 
                committee may include representatives of Federal 
                departments or agencies whose programs include alcohol 
                and drug abuse prevention and education efforts, 
                directors or heads (or their representatives) of 
                professional associations that focus on 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 of 
                Education.
                    ``(D) Review criteria.--Specific review criteria 
                shall be developed by the Secretary in conjunction with 
                the appropriate experts. In reviewing applications 
                under subparagraph (C) the committee shall consider--
                            ``(i) measures of effectiveness of the 
                        program of the applicant that should include 
                        changes in the campus alcohol and other drug 
                        environment or climate and changes in alcohol 
                        and other drug use before and after the 
                        initiation of the program; and
                            ``(ii) measures of program 
                        institutionalization, including an assessment 
                        of needs of the institution, the institution's 
                        alcohol and drug policies, staff and faculty 
                        development activities, drug prevention 
                        criteria, student, faculty, and campus 
                        community involvement, and a continuation of 
                        the program after the cessation of external 
                        funding.
            ``(3) Authorization.--For the implementation of the awards 
        program under this subsection, there are authorized to be 
        appropriated $25,000 for fiscal year 1998, $66,000 for each of 
        the fiscal years 1999 and 2000, and $72,000 for each of the 
        fiscal years 2001, 2002, 2003, and 2004.''.
    (b) Repeal.--Section 4122 of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7132) is repealed.

 TITLE XV--EQUAL OPPORTUNITY FOR INDIVIDUALS WITH LEARNING DISABILITIES

SEC. 1501. DEMONSTRATION PROJECTS ENSURING EQUAL OPPORTUNITY FOR 
              INDIVIDUALS WITH LEARNING DISABILITIES.

    Subpart 2 of part A of title IV, as amended by section 405, is 
further amended by adding at the end the following:

  ``CHAPTER 6--DEMONSTRATION PROJECTS ENSURING EQUAL OPPORTUNITY FOR 
                 INDIVIDUALS WITH LEARNING DISABILITIES

``SEC. 412A. PROGRAM AUTHORITY.

    ``(a) In General.--The Secretary may award grants to, and enter 
into contracts and cooperative agreements with, not more than 5 
institutions of higher education that are described in section 412B for 
demonstration projects to develop, test, and disseminate, in accordance 
with section 412C, methods, techniques, and procedures for ensuring 
equal educational opportunity for individuals with learning 
disabilities in postsecondary education.
    ``(b) Award Basis.--Grants, contracts, and cooperative agreements 
shall be awarded on a competitive basis.
    ``(c) Award Period.--Grants, contracts, and cooperative agreements 
shall be awarded for a period of 3 years.

``SEC. 412B. ELIGIBLE ENTITIES.

    ``Entities eligible to apply for a grant, contract, or cooperative 
agreement under this chapter are institutions of higher education with 
demonstrated prior experience in meeting the postsecondary educational 
needs of individuals with learning disabilities.

``SEC. 412C. REQUIRED ACTIVITIES.

    ``A recipient of a grant, contract, or cooperative agreement under 
this chapter shall use the funds received under this chapter to carry 
out each of the following activities:
            ``(1) Developing or identifying innovative, effective, and 
        efficient approaches, strategies, supports, modifications, 
        adaptations, and accommodations that enable individuals with 
        learning disabilities to fully participate in postsecondary 
        education.
            ``(2) Synthesizing research and other information related 
        to the provision of services to individuals with learning 
        disabilities in postsecondary education.
            ``(3) Conducting training sessions for personnel from other 
        institutions of higher education to enable them to meet the 
        special needs of postsecondary students with learning 
        disabilities.
            ``(4) Preparing and disseminating products based upon the 
        activities described in paragraphs (1) through (3).
            ``(5) Coordinating findings and products from the 
        activities described in paragraphs (1) through (4) with other 
        similar products and findings through participation in 
        conferences, groups, and professional networks involved in the 
        dissemination of technical assistance and information on 
        postsecondary education.

``SEC. 412D. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$10,000,000 for each of the fiscal years 1999 through 2001.''.

TITLE XVI--SENSE OF THE HOUSE OF REPRESENTATIVES REGARDING DETECTION OF 
    LEARNING DISABILITIES, PARTICULARLY DYSLEXIA, IN POSTSECONDARY 
                               EDUCATION

SEC. 1601. SENSE OF THE HOUSE OF REPRESENTATIVES.

    It is the sense of the House of Representatives that colleges and 
universities receiving assistance under the Higher Education Act of 
1965 shall establish policies for identifying students with learning 
disabilities, specifically students with dyslexia, early during their 
postsecondary educational training so they may have the ability to 
receive higher education opportunities.

                     TITLE XVII--SPECIAL PROVISION

SEC. 1701. TERMINATION OF EFFECTIVENESS.

    Notwithstanding section 4 of the Act, subparagraph (K) of section 
485(g)(1) of the Higher Education Act of 1965, as amended by this Act, 
shall cease to be effective on October 1, 1998.

            Passed the House of Representatives May 6, 1998.

            Attest:

                                                ROBIN H. CARLE,

                                                                 Clerk.
```