II 

114TH CONGRESS 

1ST SESSION S. 687 

To authorize the establishment of American Dream Accounts. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2015 

Mr. COONS (for himself and Mr. RUBIO) introduced the following bill; which 

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

Labor, and Pensions 

A BILL 

To authorize the establishment of American Dream Accounts. 

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 ‘‘American Dream Ac5 counts Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Only 9.8 out of every 100 individuals from 

9 low-income families will graduate from an institution 

10 of higher education before reaching the age of 24. 


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1 (2) Lack of knowledge about how to apply to, 

2 and pay for, an institution of higher education is a 

3 barrier for many low-income students and students 

4 who would be in the first generation in their families 

5 to attend an institution of higher education. 

6 (3) According to Public Agenda, most young 

7 adults give secondary school counselors fair or poor 

8 ratings for advice about attending an institution of 

9 higher education, including advice about how to de10 cide what institution of higher education to attend, 

11 how to pay for higher education, what careers to 

12 pursue, and how to apply to an institution of higher 

13 education. 

14 (4) More than 1,700,000 students fail to file 

15 the Free Application for Federal Student Aid 

16 (FAFSA), and about one-third of such students 

17 would qualify for a Federal Pell Grant. 

18 (5) During the last 2 decades, costs of attend19 ing institutions of higher education have increased 

20 dramatically, but need-based financial aid has not 

21 kept pace with such increasing costs. 

22 (6) In the 1990–1991 school year, the max23 imum Federal Pell Grant covered 45 percent of the 

24 average cost of attendance at a public 4-year institu25 tion of higher education (including tuition, fees, 


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1 room, and board), but in the 2010–2011 school year, 

2 the maximum Federal Pell Grant covered only 34 

3 percent of such cost. 

4 (7) Parental and youth college savings are 

5 strong predictors of a youth’s expectations about at6 tendance at an institution of higher education. 

7 (8) Only 32 percent of parents who earn less 

8 than $35,000 a year are saving for their child’s edu9 cation at an institution of higher education. 

10 (9) According to the Center for Social Develop11 ment, ‘‘wilt’’ occurs when a young person who ex12 pects to graduate from a 4-year institution of higher 

13 education has not yet attended such institution by 

14 the ages of 19 to 22. 

15 (10) Children who have savings dedicated for 

16 attendance at an institution of higher education are 

17 4 times more likely to attend a 4-year institution of 

18 higher education and avoid ‘‘wilt’’. 

19 SEC. 3. DEFINITIONS. 

20 In this Act: 

21 (1) AMERICAN DREAM ACCOUNT.—The term 

22 ‘‘American Dream Account’’ means a personal on23 line account for low-income students that monitors 

24 higher education readiness and includes a college 

25 savings account. 


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1 (2) APPROPRIATE COMMITTEES OF CON2 GRESS.—The term ‘‘appropriate committees of Con3 gress’’ means the Committee on Health, Education, 

4 Labor, and Pensions, the Committee on Appropria5 tions, and the Committee on Finance of the Senate, 

6 and the Committee on Education and the Work7 force, the Committee on Appropriations, and the 

8 Committee on Ways and Means of the House of 

9 Representatives, as well as any other Committee of 

10 the Senate or House of Representatives that the 

11 Secretary determines appropriate. 

12 (3) CHARTER SCHOOL.—The term ‘‘charter 

13 school’’ has the meaning given such term in section 

14 5210 of the Elementary and Secondary Education 

15 Act of 1965 (20 U.S.C. 7221i). 

16 (4) COLLEGE SAVINGS ACCOUNT.—The term 

17 ‘‘college savings account’’ means a trust created or 

18 organized exclusively for the purpose of paying the 

19 qualified expenses of only an individual who, when 

20 the trust is created or organized, has not obtained 

21 18 years of age, if the written governing instrument 

22 creating the trust contains the following require23 ments: 

24 (A) The trustee is a Federally insured fi25 nancial institution, or a State insured financial 


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1 institution if a Federally insured financial insti2 tution is not available. 

3 (B) The assets of the trust will be invested 

4 in accordance with the direction of the indi5 vidual or of a parent or guardian of the indi6 vidual, after consultation with the entity pro7 viding the initial contribution to the trust or, if 

8 applicable, a matching or other contribution for 

9 the individual. 

10 (C) The assets of the trust will not be 

11 commingled with other property except in a 

12 common trust fund or common investment 

13 fund. 

14 (D) Any amount in the trust that is attrib15 utable to an account seed or matched deposit 

16 may be paid or distributed from the trust only 

17 for the purpose of paying qualified expenses of 

18 the individual. 

19 (5) DUAL OR CONCURRENT ENROLLMENT PRO20 GRAM.—The term ‘‘dual or concurrent enrollment 

21 program’’ means a program of study— 

22 (A) provided by an institution of higher 

23 education through which a student who has not 

24 graduated from high school with a regular high 

25 school diploma (as defined in section 


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1 200.19(b)(1)(iv) of title 34, Code of Federal 

2 Regulations, as such section was in effect on 

3 November 28, 2008) is able to earn postsec4 ondary credit; and 

5 (B) that shall consist of not less than 2 

6 postsecondary credit-bearing courses and sup7 port and academic services that help a student 

8 persist and complete such courses. 

9 (6) EARLY COLLEGE HIGH SCHOOL PRO10 GRAM.—The term ‘‘early college high school pro11 gram’’ means a formal partnership between at least 

12 1 local educational agency and at least 1 institution 

13 of higher education that allows participants, who are 

14 primarily low-income students, to simultaneously 

15 complete requirements toward earning a regular 

16 high school diploma (as defined in section 

17 200.19(b)(1)(iv) of title 34, Code of Federal Regula18 tions, as such section was in effect on November 28, 

19 2008) and earn not less than 12 transferable credits 

20 as part of an organized course of study toward a 

21 postsecondary degree or credential. 

22 (7) ELIGIBLE ENTITY.—The term ‘‘eligible enti23 ty’’ means— 

24 (A) a State educational agency; 


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1 (B) a local educational agency, including a 

2 charter school that operates as its own local 

3 educational agency; 

4 (C) a charter management organization or 

5 charter school authorizer; 

6 (D) an institution of higher education or a 

7 Tribal College or University; 

8 (E) a nonprofit organization; 

9 (F) an entity with demonstrated experience 

10 in educational savings or in assisting low-in11 come students to prepare for, and attend, an in12 stitution of higher education; 

13 (G) a consortium of 2 or more of the enti14 ties described in subparagraphs (A) through 

15 (F); or 

16 (H) a consortium of 1 or more of the enti17 ties described in subparagraphs (A) through 

18 (F) and a public school, a charter school, a 

19 school operated by the Bureau of Indian Af20 fairs, or a tribally controlled school. 

21 (8) INSTITUTION OF HIGHER EDUCATION.—The 

22 term ‘‘institution of higher education’’ has the 

23 meaning given such term in section 101(a) of the 

24 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 


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1 (9) LOCAL EDUCATIONAL AGENCY.—The term 

2 ‘‘local educational agency’’ has the meaning given 

3 such term in section 9101 of the Elementary and 

4 Secondary Education Act of 1965 (20 U.S.C. 7801). 

5 (10) LOW-INCOME STUDENT.—The term ‘‘low6 income student’’ means a student who is eligible to 

7 receive a free or reduced price lunch under the Rich8 ard B. Russell National School Lunch Act (42 

9 U.S.C. 1751 et seq.). 

10 (11) PARENT.—The term ‘‘parent’’ has the 

11 meaning given such term in section 9101 of the Ele12 mentary and Secondary Education Act of 1965 (20 

13 U.S.C. 7801). 

14 (12) QUALIFIED EXPENSES.—The term ‘‘quali15 fied expenses’’ means, with respect to an individual, 

16 expenses that— 

17 (A) are incurred after the individual re18 ceives a secondary school diploma or its recog19 nized equivalent; and 

20 (B) are associated with attending an insti21 tution of higher education, including— 

22 (i) tuition and fees; 

23 (ii) room and board; 

24 (iii) textbooks; 

25 (iv) supplies and equipment; and 


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1 (v) Internet access. 

2 (13) SECRETARY.—The term ‘‘Secretary’’ 

3 means the Secretary of Education. 

4 (14) STATE EDUCATIONAL AGENCY.—The term 

5 ‘‘State educational agency’’ has the meaning given 

6 such term in section 9101 of the Elementary and 

7 Secondary Education Act of 1965 (20 U.S.C. 7801). 

8 (15) TRIBAL COLLEGE OR UNIVERSITY.—The 

9 term ‘‘Tribal College or University’’ has the meaning 

10 given such term in section 316(b) of the Higher 

11 Education Act of 1965 (20 U.S.C. 1059c(b)). 

12 (16) TRIBALLY CONTROLLED SCHOOL.—The 

13 term ‘‘tribally controlled school’’ has the meaning 

14 given such term in section 5212 of the Tribally Con15 trolled Schools Act of 1988 (25 U.S.C. 2511). 

16 SEC. 4. GRANT PROGRAM. 

17 (a) PROGRAM AUTHORIZED.—The Secretary is au18 thorized to award grants, on a competitive basis, to eligible 

19 entities to enable such eligible entities to establish and ad20 minister American Dream Accounts for a group of low21 income students. 

22 (b) RESERVATION.—From the amounts appropriated 

23 each fiscal year to carry out this Act, the Secretary shall 

24 reserve not more than 5 percent of such amount to carry 

25 out the evaluation activities described in section 7. 


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1 (c) DURATION.—A grant awarded under this Act 

2 shall be for a period of not more than 3 years. The Sec3 retary may extend such grant for an additional 2-year pe4 riod if the Secretary determines that the eligible entity has 

5 demonstrated significant progress, based on the factors 

6 described in section 5(b)(11). 

7 SEC. 5. APPLICATIONS; PRIORITY. 

8 (a) IN GENERAL.—Each eligible entity desiring a 

9 grant under this Act shall submit an application to the 

10 Secretary at such time, in such manner, and containing 

11 such information as the Secretary may require. 

12 (b) CONTENTS.—At a minimum, the application de13 scribed in subsection (a) shall include the following: 

14 (1) A description of the characteristics of a 

15 group of not less than 30 low-income public school 

16 students who— 

17 (A) are, at the time of the application, at18 tending a grade not higher than grade 9; and 

19 (B) will, under the grant, receive an Amer20 ican Dream Account. 

21 (2) A description of how the eligible entity will 

22 engage, and provide support (such as tutoring and 

23 mentoring for students, and training for teachers 

24 and other stakeholders) either online or in person, 

25 to— 


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1 (A) the students in the group described in 

2 paragraph (1); 

3 (B) the family members and teachers of 

4 such students; and 

5 (C) other stakeholders such as school ad6 ministrators and school counselors. 

7 (3) An identification of partners who will assist 

8 the eligible entity in establishing and sustaining 

9 American Dream Accounts. 

10 (4) A description of what experience the eligible 

11 entity or the partners of the eligible entity have in 

12 managing college savings accounts, preparing low-in13 come students for postsecondary education, man14 aging online systems, and teaching financial literacy. 

15 (5) A demonstration that the eligible entity has 

16 sufficient resources to provide an initial deposit into 

17 the college savings account portion of each American 

18 Dream Account. 

19 (6) A description of how the eligible entity will 

20 help increase the value of the college savings account 

21 portion of each American Dream Account, such as 

22 by providing matching funds or incentives for aca23 demic achievement. 

24 (7) A description of how the eligible entity will 

25 notify each participating student in the group deVerDate Sep 11 2014 00:03 Mar 13, 2015 Jkt 049200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S687.IS S687

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1 scribed in paragraph (1), on a semiannual basis, of 

2 the current balance and status of the college savings 

3 account portion of the American Dream Account of 

4 the student. 

5 (8) A plan that describes how the eligible entity 

6 will monitor participating students in the group de7 scribed in paragraph (1) to ensure that the Amer8 ican Dream Account of each student will be main9 tained if a student in such group changes schools be10 fore graduating from secondary school. 

11 (9) A plan that describes how the American 

12 Dream Accounts will be managed for not less than 

13 1 year after a majority of the students in the group 

14 described in paragraph (1) graduate from secondary 

15 school. 

16 (10) A description of how the eligible entity will 

17 encourage students in the group described in para18 graph (1) who fail to graduate from secondary 

19 school to continue their education. 

20 (11) A description of how the eligible entity will 

21 evaluate the grant program, including by collecting, 

22 as applicable, the following data about the students 

23 in the group described in paragraph (1) during the 

24 grant period, or until the time of graduation from a 

25 secondary school, whichever comes first, and, if sufVerDate Sep 11 2014 00:03 Mar 13, 2015 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S687.IS S687

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1 ficient grant funds are available, after the grant pe2 riod: 

3 (A) Attendance rates. 

4 (B) Progress reports. 

5 (C) Grades and course selections. 

6 (D) The student graduation rate, as de7 fined in section 1111(b)(2)(C)(vi) of the Ele8 mentary and Secondary Education Act of 1965 

9 (20 U.S.C. 6311(b)(2)(C)(vi)). 

10 (E) Rates of student completion of the 

11 Free Application for Federal Student Aid de12 scribed in section 483 of the Higher Education 

13 Act of 1965 (20 U.S.C. 1090). 

14 (F) Rates of enrollment in an institution of 

15 higher education. 

16 (G) Rates of completion at an institution 

17 of higher education. 

18 (12) A description of what will happen to the 

19 funds in the college savings account portion of the 

20 American Dream Accounts that are dedicated to 

21 participating students described in paragraph (1) 

22 who have not matriculated at an institution of high23 er education at the time of the conclusion of the pe24 riod of American Dream Account management deVerDate Sep 11 2014 00:03 Mar 13, 2015 Jkt 049200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S687.IS S687

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1 scribed in paragraph (9), including how the eligible 

2 entity will give students this information. 

3 (13) A description of how the eligible entity will 

4 ensure that participating students described in para5 graph (1) will have access to the Internet. 

6 (14) A description of how the eligible entity will 

7 take into consideration how funds in the college sav8 ings account portion of American Dream Accounts 

9 will affect participating families’ eligibility for public 

10 assistance. 

11 (c) PRIORITY.—In awarding grants under this Act, 

12 the Secretary shall give priority to applications from eligi13 ble entities that— 

14 (1) are described in subparagraph (G) or (H) of 

15 section 3(7); 

16 (2) serve the largest number of low-income stu17 dents; 

18 (3) in the case of an eligible entity described in 

19 subparagraph (A) or (B) of section 3(7), provide op20 portunities for participating students described in 

21 subsection (b)(1) to participate in a dual or concur22 rent enrollment program or early college high school 

23 program at no cost to the student or the student’s 

24 family; or 


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1 (4) as of the time of application, have been 

2 awarded a grant under chapter 2 of subpart 2 of 

3 part A of title IV of the Higher Education Act of 

4 1965 (20 U.S.C. 1070a–21 et seq.) (commonly re5 ferred to as the ‘‘GEAR UP program’’). 

6 SEC. 6. AUTHORIZED ACTIVITIES. 

7 (a) IN GENERAL.—An eligible entity that receives a 

8 grant under this Act shall use such grant funds to estab9 lish an American Dream Account for each participating 

10 student described in section 5(b)(1), that will be used to— 

11 (1) open a college savings account for such stu12 dent; 

13 (2) monitor the progress of such student online, 

14 which— 

15 (A) shall include monitoring student data 

16 relating to— 

17 (i) grades and course selections; 

18 (ii) progress reports; and 

19 (iii) attendance and disciplinary 

20 records; and 

21 (B) may also include monitoring student 

22 data relating to a broad range of information, 

23 provided by teachers and family members, re24 lated to postsecondary education readiness, ac25 cess, and completion; 


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1 (3) provide opportunities for such students, ei2 ther online or in person, to learn about financial lit3 eracy, including by— 

4 (A) assisting such students in financial 

5 planning for enrollment in an institution of 

6 higher education; 

7 (B) assisting such students in identifying 

8 and applying for financial aid (such as loans, 

9 grants, and scholarships) for an institution of 

10 higher education; and 

11 (C) enhancing student understanding of 

12 consumer, economic, and personal finance con13 cepts; 

14 (4) provide opportunities for such students, ei15 ther online or in person, to learn about preparing for 

16 enrollment in an institution of higher education, in17 cluding by providing instruction to students about— 

18 (A) choosing the appropriate courses to 

19 prepare for postsecondary education; 

20 (B) applying to an institution of higher 

21 education; 

22 (C) building a student portfolio, which may 

23 be used when applying to an institution of high24 er education; 


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1 (D) selecting an institution of higher edu2 cation; 

3 (E) choosing a major for the student’s 

4 postsecondary program of education or a career 

5 path; and 

6 (F) adapting to life at an institution of 

7 higher education; and 

8 (5) provide opportunities for such students, ei9 ther online or in person, to identify skills or inter10 ests, including career interests. 

11 (b) ACCESS TO AMERICAN DREAM ACCOUNT.— 

12 (1) IN GENERAL.—Subject to paragraphs (3) 

13 and (4), and in accordance with applicable Federal 

14 laws and regulations relating to privacy of informa15 tion and the privacy of children, an eligible entity 

16 that receives a grant under this Act shall allow vest17 ed stakeholders, as described in paragraph (2), to 

18 have secure access, through an Internet website, to 

19 an American Dream Account. 

20 (2) VESTED STAKEHOLDERS.—The vested 

21 stakeholders that an eligible entity shall permit to 

22 access an American Dream Account are individuals 

23 (such as the student’s teachers, school counselors, 

24 school administrators, or other individuals) that are 

25 designated, in accordance with section 444 of the 


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1 General Education Provisions Act (20 U.S.C. 1232g, 

2 commonly known as the ‘‘Family Educational Rights 

3 and Privacy Act of 1974’’), by the parent of a par4 ticipating student in whose name such American 

5 Dream Account is held, as having permission to ac6 cess the account. A student’s parent may withdraw 

7 such designation from an individual at any time. 

8 (3) EXCEPTION FOR COLLEGE SAVINGS AC9 COUNT.—An eligible entity that receives a grant 

10 under this Act shall not be required to give vested 

11 stakeholders, as described in paragraph (2), access 

12 to the college savings account portion of a student’s 

13 American Dream Account. 

14 (4) ADULT STUDENTS.—Notwithstanding para15 graphs (1), (2), and (3), if a participating student 

16 is age 18 or older, an eligible entity that receives a 

17 grant under this Act shall not provide access to such 

18 participating student’s American Dream Account 

19 without the student’s consent, in accordance with 

20 section 444 of the General Education Provisions Act 

21 (20 U.S.C. 1232g, commonly known as the ‘‘Family 

22 Educational Rights and Privacy Act of 1974’’). 

23 (5) INPUT OF STUDENT INFORMATION.—Stu24 dent data collected pursuant to subsection (a)(2)(A) 

25 shall be entered into an American Dream Account 


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1 only by a school administrator or the designee of 

2 such administrator. 

3 (c) PROHIBITION ON USE OF STUDENT INFORMA4 TION.—An eligible entity that receives a grant under this 

5 Act shall not use any student-level information or data for 

6 the purpose of soliciting, advertising, or marketing any fi7 nancial or non-financial consumer product or service that 

8 is offered by such eligible entity, or on behalf of any other 

9 person. 

10 (d) PROHIBITION ON THE USE OF GRANT FUNDS.— 

11 An eligible entity shall not use grant funds provided under 

12 this Act to provide the initial deposit into a college savings 

13 account portion of a student’s American Dream Account. 

14 SEC. 7. REPORTS AND EVALUATIONS. 

15 (a) IN GENERAL.—Not later than 1 year after the 

16 Secretary has disbursed grants under this Act, and annu17 ally thereafter until each grant disbursed under this Act 

18 has ended, the Secretary shall prepare and submit a report 

19 to the appropriate committees of Congress, which shall in20 clude an evaluation of the effectiveness of the grant pro21 gram established under this Act. 

22 (b) CONTENTS.—The report described in subsection 

23 (a) shall— 

24 (1) list the grants that have been awarded 

25 under section 4(a); 


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1 (2) include the number of students who have an 

2 American Dream Account established through a 

3 grant awarded under section 4(a); 

4 (3) provide data (including the interest accrued 

5 on college savings accounts that are part of an 

6 American Dream Account) in the aggregate, regard7 ing students who have an American Dream Account 

8 established through a grant awarded under section 

9 4(a), as compared to similarly situated students who 

10 do not have an American Dream Account; 

11 (4) identify best practices developed by the eli12 gible entities receiving grants under this Act; 

13 (5) identify any issues related to student pri14 vacy and stakeholder accessibility to American 

15 Dream Accounts; 

16 (6) provide feedback from participating stu17 dents and the parents of such students about the 

18 grant program, including— 

19 (A) the impact of the program; 

20 (B) aspects of the program that are suc21 cessful; 

22 (C) aspects of the program that are not 

23 successful; and 

24 (D) any other data required by the Sec25 retary; and 


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1 (7) provide recommendations for expanding the 

2 American Dream Accounts program. 

3 SEC. 8. ELIGIBILITY TO RECEIVE FEDERAL STUDENT FI4 NANCIAL AID. 

5 Notwithstanding any other provision of law, any 

6 funds that are in the college savings account portion of 

7 a student’s American Dream Account shall not affect such 

8 student’s eligibility to receive Federal student financial 

9 aid, including any Federal student financial aid under the 

10 Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), 

11 and shall not be considered in determining the amount of 

12 any such Federal student aid. 

13 SEC. 9. AUTHORIZATION OF APPROPRIATIONS. 

14 There are authorized to be appropriated to carry out 

15 this Act such sums as may be necessary for fiscal year 

16 2016 and each of the 4 succeeding fiscal years. 

Æ 


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