Higher Education Savings Accounts Act of 2015

To direct the Secretary of Education to carry out a pilot program under which higher education savings accounts are established for the benefit of eligible secondary school students. 1. Short title This Act may be cited as the Higher Education Savings Accounts Act of 2015 2. Higher education pledge accounts pilot program (a) In general The Secretary shall carry out a pilot program under which savings accounts (to be known as higher education pledge accounts (b) Eligibility and selection of participants (1) Eligible students To be eligible to participate in the pilot program, a student must be— (A) enrolled in the 9th or 10th grade at a secondary school; and (B) eligible to receive free or reduced price lunches under the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1751 et seq. (2) Selection of eligible students The Secretary shall select eligible students for participation in the pilot program based on such criteria as the Secretary determines to be appropriate. (c) Deposits (1) Initial deposit (A) In general The Secretary shall deposit an initial amount into each higher education pledge account. (B) Amount of initial deposit The amount of the initial deposit described in subparagraph (A) shall be equal to the amount of the maximum Federal Pell Grant under section 401(b) of the Higher Education Act of 1965, as specified in the last enacted appropriation Act applicable to that award year. (2) Subsequent deposits (A) In general The Secretary may make additional deposits into a higher education pledge account based on an evaluation of the academic progress of the student in accordance with subsection (g). (B) Amount of subsequent deposits The amount of an additional deposit made under subparagraph (A) for an award year beginning after the date of the initial deposit under paragraph (1) shall be not less than the amount of the maximum Federal Pell Grant under section 401(b) of the Higher Education Act of 1965, as specified in the last enacted appropriation Act applicable to that award year. (d) Distributions A student may use funds from the student’s higher education pledge account only to pay the cost of attendance at a qualified institution. (e) Tax treatment of accounts (1) In general A higher education pledge account is exempt from taxation under subtitle A of the Internal Revenue Code of 1986. (2) Contributions and distributions For purposes of such subtitle— (A) any contribution to a higher education pledge account by the Secretary under this Act shall not be includible in gross income; and (B) any distribution from a higher education pledge account which is permitted under this Act shall not be includible in the gross income of the individual for whose benefit such account is maintained. (f) Offset of Federal Pell Grant Amounts The amount of any Federal Pell Grant awarded to a student attending a qualified institution shall be reduced by the amount in such student’s higher education pledge account. (g) Monitoring of academic progress The Secretary shall monitor the academic progress of each student for whose benefit a higher education pledge account is maintained. (h) Financial counseling The Secretary shall ensure that each student for whose benefit a higher education pledge account is maintained receives not less than 12 hours of financial counseling with respect to— (1) the rules pertaining to deposits, distributions, and the tax treatment of funds in the higher education pledge account; and (2) sources of Federal financial assistance for higher education. 3. Definitions In this Act: (1) Cost of attendance The term cost of attendance 20 U.S.C. 1087ll (2) Federal financial assistance The term Federal financial assistance (3) Institution of higher education The term institution of higher education 20 U.S.C. 1002(a) 20 U.S.C. 1002(b) (4) Qualified institution The term qualified institution (A) has in effect a program participation agreement under section 487 of the Higher Education Act of 1965 ( 20 U.S.C. 1094 (B) is eligible to participate in programs under title IV of such Act ( 20 U.S.C. 1070 et seq. (5) Secondary school The term secondary school 20 U.S.C. 7801 (6) Secretary The term Secretary

Summary: Higher Education Savings Accounts Act of 2015 This bill requires the Department of Education (ED) to carry out a pilot program under which tax-exempt savings accounts (to be known as higher education pledge accounts) are established for the benefit of 9th and 10th grade students who are eligible to receive free or reduced price lunches under the Richard B. Russell National School Lunch Act. ED: (1) shall deposit into each account for a selected student an initial amount equal to the amount of the maximum federal Pell Grant for the award year, and (2) may make additional deposits of such amount based on the student's academic progress. A student may use funds from such account only to pay the cost of attendance at a qualified institution. Any contribution to or distribution from such account shall not be includible in gross income. The amount of any Pell Grant awarded to a student attending a qualified institution shall be reduced by the amount in such student's account. ED shall: (1) monitor the academic progress of each student for whose benefit an account is maintained; and (2) ensure that each such student receives at least 12 hours of financial counseling on the rules pertaining to deposits, distributions, and the tax treatment of funds in the account and on sources of federal financial assistance for higher education.