II 

109TH CONGRESS 

1ST SESSION S. 697

To amend the Higher Education Act of 1965 to improve higher education, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 5, 2005

Mr. OBAMA (for himself and Mr. INOUYE) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL

To amend the Higher Education Act of 1965 to improve 

higher education, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Higher Education Op5 portunity Through Pell Grant Expansion Act’’. 

6 SEC. 2. SENSE OF THE SENATE. 

7 (a) FINDINGS.—The Senate makes the following 

8 findings: 
2

•S 697 IS 

1 (1) Federal Pell Grants are need-based and are 

2 used by 5,300,000 undergraduate students to fund 

3 their college educations. 

4 (2) Over 90 percent of Federal Pell Grant re5 cipients come from a family with a combined income 

6 of less than $40,000. 

7 (3) Because of the rising cost of college tuition, 

8 the maximum Federal Pell Grant amount of $4,050 

9 for academic year 2004–2005 is $700 less in real 

10 terms than the maximum Federal Pell Grant 

11 amount for academic year 1975–1976. 

12 (4) Federal Pell Grants for academic year 

13 2003–2004 cover only 23 percent of the total cost 

14 of the average 4-year public college. 

15 (b) SENSE OF THE SENATE.—It is the sense of the 

16 Senate that— 

17 (1) eligible undergraduate students should re18 ceive the maximum Federal Pell Grant amount es19 tablished by the amendment made by section 3(b) of 

20 this Act; and 

21 (2) sufficient funds should be appropriated to 

22 allow the awarding of the maximum Federal Pell 

23 Grant amount for which students are eligible pursu24 ant to the amendment made by section 3(b) of this 

25 Act. 
3

•S 697 IS 

1 SEC. 3. FEDERAL PELL GRANTS. 

2 (a) APPROPRIATION OF FUNDS FOR FEDERAL PELL

3 GRANTS.—In addition to any amounts otherwise appro4 priated to carry out subpart 1 of part A of title IV of 

5 the Higher Education Act of 1965 (20 U.S.C. 1070a) for 

6 the fiscal year ending September 30, 2006, there are au7 thorized to be appropriated and there are appropriated, 

8 out of any money in the Treasury not otherwise appro9 priated for the fiscal year ending September 30, 2006, for 

10 carrying out such subpart 1, an additional 

11 $2,000,000,000. 

12 (b) AUTHORIZATION AMOUNT AND MAXIMUM FED13 ERAL PELL GRANT.—Section 401(b)(2)(A) of the Higher 

14 Education Act of 1965 (20 U.S.C. 1070a(b)(2)(A)) is 

15 amended to read as follows: 

16 ‘‘(2)(A)(i) The amount of a Federal Pell Grant for 

17 a student eligible under this part shall be $5,100 for aca18 demic year 2005–2006, less an amount equal to the 

19 amount determined to be the expected family contribution 

20 with respect to that student for that year. 

21 ‘‘(ii) The Secretary shall cumulatively adjust the 

22 amount in clause (i) every 2 academic years beginning 

23 with academic year 2006–2007 to account for any per24 centage increase in the Consumer Price Index for All 

25 Urban Consumers published by the Bureau of Labor Sta26 tistics of the Department of Labor.’’. 
4

•S 697 IS 

1 SEC. 4. ALLOWANCE FOR STATE AND OTHER TAXES. 

2 Notwithstanding any other provision of law, the an3 nual updates to the allowance for State and other taxes 

4 in the tables used in the Federal Needs Analysis Method5 ology to determine a student’s expected family contribu6 tion for the award year 2005–2006 under part F of title 

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

8 1087kk et seq.), published in the Federal Register on 

9 Thursday, December 23, 2004 (69 Fed. Reg. 76926), 

10 shall not apply to a student to the extent the updates will 

11 increase the student’s expected family contribution under 

12 such part F. 

13 SEC. 5. TERMINATION OF EXCESSIVE ALLOWANCES. 

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

15 1965 (20 U.S.C. 1087–1(b)(2)(B)) is amended by striking 

16 clause (v) and inserting the following: 

17 ‘‘(v) This subparagraph shall not 

18 apply to— 

19 ‘‘(I) any loan made or purchased 

20 after the date of enactment of the 

21 Higher Education Opportunity 

22 Through Pell Grant Expansion Act; 

23 ‘‘(II) any loan that had not quali24 fied before such date of enactment for 

25 receipt of a special allowance payment 
5

•S 697 IS 

1 determined under this subparagraph; 

2 or 

3 ‘‘(III) any loan made or pur4 chased before such date of enactment 

5 with funds described in the first or 

6 second sentence of clause (i) if— 

7 ‘‘(aa) the obligation de8 scribed in the first such sentence 

9 has, after such date of enact10 ment, matured, or been retired or 

11 defeased; or 

12 ‘‘(bb) the maturity date or 

13 the date of retirement of the obli14 gation described in the first such 

15 sentence has, after such date of 

16 enactment, been extended.’’. 

17 SEC. 6. WINDFALL PROFIT OFFSET. 

18 Section 438 of the Higher Education Act of 1965 (20 

19 U.S.C. 1087–1) is further amended by adding at the end 

20 the following: 

21 ‘‘(g) WINDFALL PROFIT OFFSET.—At the end of 

22 every fiscal quarter for which an eligible lender does not 

23 receive a special allowance payment under this section, the 

24 eligible lender shall pay to the Secretary of the Treasury 

25 for deposit into the Treasury as miscellaneous receipts a 
6

•S 697 IS 

1 windfall profit offset payment for the fiscal quarter equal 

2 to the amount by which—

3 ‘‘(1) the aggregate amount of all payments of 

4 interest received by the eligible lender from bor5 rowers on all loans made, insured, or guaranteed 

6 under this part during the fiscal quarter; exceeds 

7 ‘‘(2) interest guaranteed the lender under this 

8 section for the fiscal quarter, irrespective of the 

9 amount received under subparagraph (A).’’.

Æ