597
successfully make long-term placements of
individuals into the work force.
‘‘(ii) ELIGIBLE APPLICANTS.—As used
in clause (i), the term ‘eligible applicant’
means a private industry council or a polit-
ical subdivision of a State.
‘‘(iii) DETERMINATION
OF
GRANT
AMOUNT.—In determining the amount of a
grant to be made under this subparagraph
for a demonstration project proposed by an
applicant, the Secretary shall provide the
applicant with an amount sufficient to en-
sure that the project has a reasonable op-
portunity to be successful, taking into ac-
count the number of long-term recipients
of assistance under a State program fund-
ed under this part, the level of unemploy-
ment, the job opportunities and job
growth, the poverty rate, and such other
factors as the Secretary deems appro-
priate, in the area to be served by the
project.
‘‘(iv) FUNDING.—For grants under
this subparagraph for each fiscal year
specified in subparagraph (H), there shall
598
be available to the Secretary an amount
equal to the sum of—
‘‘(I) 5 percent of—
‘‘(aa) the amount specified
in subparagraph (H) for the fis-
cal year; minus
‘‘(bb) 
the 
total 
of 
the
amounts reserved pursuant to
subparagraphs (F) and (G) for
the fiscal year;
‘‘(II) any amount available for
grants under this paragraph for the
immediately preceding fiscal year that
has not been obligated;
‘‘(III) any amount reserved pur-
suant to subparagraph (F) for the im-
mediately preceding fiscal year that
has not been obligated; and
‘‘(IV) any available amount (as
defined in subparagraph (A)(iv)) for
the immediately preceding fiscal year
that has not been obligated by a State
or sub-State entity.
‘‘(C) LIMITATIONS ON USE OF FUNDS.—
599
‘‘(i) ALLOWABLE ACTIVITIES.—An en-
tity to which funds are provided under this
paragraph may use the funds to move into
the work force recipients of assistance
under the program funded under this part
of the State in which the entity is located,
by means of any of the following:
‘‘(I) Job creation through public
or private sector employment wage
subsidies.
‘‘(II) On-the-job training.
‘‘(III) Contracts with job place-
ment companies or public job place-
ment programs.
‘‘(IV) Job vouchers.
‘‘(V) Job retention or support
services if such services are not other-
wise available.
‘‘(ii) REQUIRED BENEFICIARIES.—An
entity that operates a project with funds
provided under this paragraph shall expend
at least 90 percent of all funds provided to
the project for the benefit of recipients of
assistance under the program funded
under this part of the State in which the
600
entity is located who meet the require-
ments of any of the following subclauses:
‘‘(I) The individual has received
assistance under the State program
funded under this part (whether in ef-
fect before or after the amendments
made by section 103 of the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 first apply
to the State) for at least 30 months
(whether or not consecutive).
‘‘(II) At least 2 of the following
apply to the recipient:
‘‘(aa) The individual has not
completed secondary school or
obtained a certificate of general
equivalency, and has low skills in
reading and mathematics.
‘‘(bb) The individual re-
quires substance abuse treatment
for employment.
‘‘(cc) The individual has a
poor work history.
601
The Secretary shall prescribe such
regulations as may be necessary to in-
terpret this subclause.
‘‘(III) Within 12 months, the in-
dividual will become ineligible for as-
sistance under the State program
funded under this part by reason of a
durational limit on such assistance,
without regard to any exemption pro-
vided 
pursuant 
to 
section
408(a)(7)(C) that may apply to the
individual.
‘‘(iii) LIMITATION ON APPLICABILITY
OF
SECTION
404.—The rules of section
404, other than subsections (b), (f), and
(h) of section 404, shall not apply to a
grant made under this paragraph.
‘‘(iv) PROHIBITION
AGAINST
PROVI-
SION OF SERVICES BY PRIVATE INDUSTRY
COUNCIL.—A private industry council may
not directly provide services using funds
provided under this paragraph.
‘‘(v) PROHIBITION
AGAINST
USE
OF
GRANT
FUNDS
FOR
ANY
OTHER
FUND
MATCHING
REQUIREMENT.—An entity to
602
which funds are provided under this para-
graph shall not use any part of the funds
to fulfill any obligation of any State, politi-
cal subdivision, or private industry council
to contribute funds under other Federal
law.
‘‘(vi) 
DEADLINE
FOR
EXPENDI-
TURE.—An entity to which funds are pro-
vided under this paragraph shall remit to
the Secretary any part of the funds that
are not expended within 3 years after the
date the funds are so provided.
‘‘(D) INDIVIDUALS
WITH
INCOME
LESS
THAN THE POVERTY LINE.—For purposes of
this paragraph, the number of individuals with
an income that is less than the poverty line
shall be determined based on the methodology
used by the Bureau of the Census to produce
and publish intercensal poverty data for 1993
for States and counties.
‘‘(E) DEFINITIONS.—As used in this para-
graph:
‘‘(i) PRIVATE INDUSTRY COUNCIL.—
The term ‘private industry council’ means,
with respect to a service delivery area, the
603
private industry council (or successor en-
tity) established for the service delivery
area pursuant to the Job Training Part-
nership Act.
‘‘(ii) SECRETARY.—The term ‘Sec-
retary’ means the Secretary of Labor, ex-
cept as otherwise expressly provided.
‘‘(iii) SERVICE DELIVERY AREA.—The
term ‘service delivery area’ shall have the
meaning given such term for purposes of
the Job Training Partnership Act (or suc-
cessor area).
‘‘(F) FUNDING
FOR
INDIAN
TRIBES.—1
percent of the amount specified in subpara-
graph (H) for each fiscal year shall be reserved
for grants to Indian tribes under section
412(a)(3).
‘‘(G) EVALUATIONS.—0.5 percent of the
amount specified in subparagraph (H) for each
fiscal year shall be reserved for use by the Sec-
retary of Health and Human Services to carry
out section 413(j).
‘‘(H) FUNDING.—The amount specified in
this subparagraph is $1,500,000,000 for each
of fiscal years 1998 and 1999.
604
‘‘(I) BUDGET SCORING.—Notwithstanding
section 457(b)(2) of the Balanced Budget and
Emergency Deficit Control Act of 1985, the
baseline shall assume that no grant shall be
made under this paragraph or under section
412(a)(3) after fiscal year 2001.’’.
(b) GRANTS TO TERRITORIES.—Section 1108(a) of
such Act (42 U.S.C. 1308(a)) is amended by inserting
‘‘(except section 403(a)(5))’’ after ‘‘title IV’’.
(c) GRANTS TO INDIAN TRIBES.—Section 412(a) of
such Act (42 U.S.C. 612(a)) is amended by adding at the
end the following:
‘‘(3) WELFARE-TO-WORK GRANTS.—
‘‘(A) IN
GENERAL.—The Secretary shall
make a grant in accordance with this paragraph
to an Indian tribe for each fiscal year specified
in section 403(a)(5)(H) for which the Indian
605
tribe is a welfare-to-work tribe, in such amount
as the Secretary deems appropriate, subject to
subparagraph (B) of this paragraph.
‘‘(B) WELFARE-TO-WORK TRIBE.—An In-
dian tribe shall be considered a welfare-to-work
tribe for a fiscal year for purposes of this para-
graph if the Indian tribe meets the following re-
quirements:
‘‘(i) The Indian tribe has submitted to
the Secretary (in the form of an addendum
to the tribal family assistance plan, if any,
of the Indian tribe) a plan which describes
how, consistent with section 403(a)(5), the
Indian tribe will use any funds provided
under this paragraph during the fiscal
year.
‘‘(ii) The Indian tribe has provided
the Secretary with an estimate of the
amount that the Indian tribe intends to ex-
pend during the fiscal year (excluding trib-
al 
expenditures 
described 
in 
section
409(a)(7)(B)(iv)) for activities described in
section 403(a)(5)(C)(i).
‘‘(iii) The Indian tribe has agreed to
negotiate in good faith with the Secretary
606
of Health and Human Services with re-
spect to the substance of any evaluation
under section 413(j), and to cooperate with
the conduct of any such evaluation.
‘‘(C) LIMITATIONS ON USE OF FUNDS.—
Section 403(a)(5)(C) shall apply to funds pro-
vided to Indian tribes under this paragraph in
the same manner in which such section applies
to funds provided under section 403(a)(5).’’.
(d) FUNDS RECEIVED FROM GRANTS TO BE DIS-
REGARDED IN APPLYING DURATIONAL LIMIT ON ASSIST-
ANCE.—Section 408(a)(7) of such Act (42 U.S.C.
608(a)(7)) is amended by adding at the end the following:
‘‘(G) INAPPLICABILITY
TO
WELFARE-TO-
WORK GRANTS AND ASSISTANCE.—For purposes
of subparagraph (A) of this paragraph, a grant
made under section 403(a)(5) shall not be con-
sidered a grant made under section 403, and
assistance from funds provided under section
403(a)(5) shall not be considered assistance.’’.
(e) EVALUATIONS.—Section 413 of such Act (42
U.S.C. 613) is amended by adding at the end the follow-
ing:
‘‘(j) EVALUATION
OF
WELFARE-TO-WORK
PRO-
GRAMS.—The Secretary—
607
‘‘(1) shall, in consultation with the Secretary of
Labor, develop a plan to evaluate how grants made
under sections 403(a)(5) and 412(a)(3) have been
used; and
‘‘(2) may evaluate the use of such grants by
such grantees as the Secretary deems appropriate, in
accordance with an agreement entered into with the
grantees after good-faith negotiations.’’.
SEC. 5002. CLARIFICATION OF LIMITATION ON NUMBER OF
PERSONS WHO MAY BE TREATED AS EN-
GAGED IN WORK BY REASON OF PARTICIPA-
TION IN EDUCATIONAL ACTIVITIES.
(a) IN GENERAL.—Section 407(c)(2)(D) of the Social
Security Act (42 U.S.C. 607(c)(2)(D)) is amended to read
as follows:
‘‘(D) LIMITATION
ON
NUMBER
OF
PER-
SONS WHO MAY BE TREATED AS ENGAGED IN
WORK BY REASON OF PARTICIPATION IN EDU-
CATIONAL ACTIVITIES.—For purposes of deter-
mining monthly participation rates under para-
graphs (1)(B)(i) and (2)(B) of subsection (b),
not more than 20 percent of the number of in-
dividuals in all families and in 2-parent fami-
lies, respectively, in a State who are treated as
engaged in work for a month may consist of in-
608
dividuals who are determined to be engaged in
work for the month by reason of participation
in vocational educational training, or deemed to
be engaged in work for the month by reason of
subparagraph (C) of this paragraph.’’.
(b) RETROACTIVITY.—The amendment made by sub-
section (a) of this section shall take effect as if included
in the enactment of section 103(a) of the Personal Re-
sponsibility and Work Opportunity Reconciliation Act of
1996.
SEC. 5003. PENALTY FOR FAILURE OF STATE TO REDUCE
ASSISTANCE 
FOR 
RECIPIENTS 
REFUSING
WITHOUT GOOD CAUSE TO WORK.
(a) IN GENERAL.—Section 409(a) of the Social Secu-
rity Act (42 U.S.C. 609(a)) is amended by adding at the
end the following:
‘‘(13) PENALTY FOR FAILURE TO REDUCE AS-
SISTANCE
FOR
RECIPIENTS
REFUSING
WITHOUT
GOOD CAUSE TO WORK.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines that a State to which a grant is made
under section 403 in a fiscal year has violated
section 407(e) during the fiscal year, the Sec-
retary shall reduce the grant payable to the
State under section 403(a)(1) for the imme-
609
diately succeeding fiscal year by an amount
equal to not less than 1 percent and not more
than 5 percent of the State family assistance
grant.
‘‘(B) PENALTY
BASED
ON
SEVERITY
OF
FAILURE.—The Secretary shall impose reduc-
tions under subparagraph (A) with respect to a
fiscal year based on the degree of noncompli-
ance.’’.
(b) RETROACTIVITY.—The amendment made by sub-
section (a) of this section shall take effect as if included
in the enactment of section 103(a) of the Personal Re-
sponsibility and Work Opportunity Reconciliation Act of
1996.
SEC. 5004. RULES GOVERNING EXPENDITURE OF FUNDS
FOR WORK EXPERIENCE AND COMMUNITY
SERVICE PROGRAMS.
(a) IN GENERAL.—Section 407 of the Social Security
Act (42 U.S.C. 607) is amended by adding at the end the
following:
‘‘(j) RULES GOVERNING EXPENDITURE OF FUNDS
FOR WORK EXPERIENCE AND COMMUNITY SERVICE PRO-
GRAMS.—
‘‘(1) IN GENERAL.—To the extent that a State
to which a grant is made under section 403(a)(5) or
610
any other provision of section 403 uses the grant to
establish or operate a work experience or community
service program, the State may establish and oper-
ate the program in accordance with this subsection.
‘‘(2) PURPOSE.—The purpose of a work experi-
ence or community experience program is to provide
experience or training for individuals not able to ob-
tain employment in order to assist them to move to
regular employment. Such a program shall be de-
signed to improve the employability of participants
through actual work experience to enable individuals
participating in the program to move promptly into
regular public or private employment. Such a pro-
gram shall not place individuals in private, for-profit
entities.
‘‘(3) LIMITATION ON PROJECTS THAT MAY BE
UNDERTAKEN.—A work experience or community
service program shall be limited to projects which
serve a useful public purpose in fields such as
health, social service, environmental protection, edu-
cation, urban and rural development and redevelop-
ment, welfare, recreation, public facilities, public
safety, and day care, and other purposes identified
by the State.
611
‘‘(4) MAXIMUM HOURS OF PARTICIPATION PER
MONTH.—A State that elects to establish a work ex-
perience or community service program shall operate
the program so that each participant participates in
the program with the maximum number of hours
that any such individual may be required to partici-
pate in any month being a number equal to—
‘‘(A)(i) the amount of assistance provided
during the month to the family of which the in-
dividual is a member under the State program
funded under this part; plus
‘‘(ii) the dollar value equivalent of any ben-
efits provided during the month to the house-
hold of which the individual is a member under
the food stamp program under the Food Stamp
Act of 1977; minus
‘‘(iii) any amount collected by the State as
child support with respect to the family that is
retained by the State; divided by
‘‘(B) the greater of the Federal minimum
wage or the applicable State minimum wage.
‘‘(5) MAXIMUM HOURS OF PARTICIPATION PER
WEEK.—A State that elects to establish a work ex-
perience or community service program may not re-
quire any participant in any such program to par-
612
ticipate in any such program for a combined total of
more than 40 hours per week.
‘‘(6) RULE
OF
INTERPRETATION.—This sub-
section shall not be construed as authorizing the
provision of assistance under a State program fund-
ed under this part as compensation for work per-
formed, nor shall a participant be entitled to a sal-
ary or to any other work or training expense pro-
vided under any other provision of law by reason of
participation in a work experience or community
service program described in this subsection.’’.
(b) RETROACTIVITY.—The amendment made by sub-
section (a) of this section shall take effect as if included
in the enactment of section 103(a) of the Personal Re-
sponsibility and Work Opportunity Reconciliation Act of
1996.
SEC. 5005. STATE OPTION TO TAKE ACCOUNT OF CERTAIN
WORK ACTIVITIES OF RECIPIENTS WITH SUF-
FICIENT PARTICIPATION IN WORK EXPERI-
ENCE OR COMMUNITY SERVICE PROGRAMS.
(a) IN GENERAL.—Section 407(c) of the Social Secu-
rity Act (42 U.S.C. 607(c)) is amended by adding at the
end the following:
‘‘(3) STATE OPTION TO TAKE ACCOUNT OF CER-
TAIN WORK ACTIVITIES OF RECIPIENTS WITH SUFFI-
613
CIENT
PARTICIPATION
IN
WORK
EXPERIENCE
OR
COMMUNITY SERVICE PROGRAMS.—Notwithstanding
paragraphs (1) and (2) of this subsection and sub-
section (d)(8), for purposes of determining monthly
participation rates under paragraphs (1)(B)(i) and
(2)(B) of subsection (b), an individual who, during
a month, has participated in a work experience or
community service program operated in accordance
with subsection (j), for the maximum number of
hours that the individual may be required to partici-
pate in such a program during the month shall be
treated as engaged in work for the month if, during
the month, the individual has participated in any
other work activity for a number of hours that is not
less than the number of hours required by sub-
section (c)(1) for the month minus such maximum
number of hours.’’.
(b) RETROACTIVITY.—The amendment made by sub-
section (a) of this section shall take effect as if included
in the enactment of section 103(a) of the Personal Re-
sponsibility and Work Opportunity Reconciliation Act of
1996.
SEC. 5006. WORKER PROTECTIONS.
Section 407(f) of the Social Security Act (42 U.S.C.
607(f)) is amended to read as follows:
614
‘‘(f) WORKER PROTECTIONS.—
‘‘(1) NONDISPLACEMENT
IN
WORK
ACTIVI-
TIES.—
‘‘(A) GENERAL PROHIBITION.—Subject to
this paragraph, an adult in a family receiving
assistance under a State program funded under
this part attributable to funds provided by the
Federal Government may fill a vacant employ-
ment position in order to engage in a work ac-
tivity.
‘‘(B) PROHIBITION AGAINST VIOLATION OF
CONTRACTS.—A work activity shall not violate
an existing contract for services or collective
bargaining agreement.
‘‘(C) OTHER
PROHIBITIONS.—An adult
participant in a work activity shall not be em-
ployed or assigned—
‘‘(i) when any other individual is on
layoff from the same or any substantially
equivalent job; or
‘‘(ii) if the employer has terminated
the employment of any regular employee or
otherwise caused an involuntary reduction
if its workforce with the intention of filling
615
the vacancy so created with the partici-
pant.
‘‘(2) HEALTH AND SAFETY.—Health and safety
standards established under Federal and State law
otherwise applicable to working conditions of em-
ployees shall be equally applicable to working condi-
tions of participants engaged in a work activity.
‘‘(3) NONDISCRIMINATION.—In addition to the
protections provided under the provisions of law
specified in section 408(c), an individual may not be
discriminated against with respect to participation in
work activities by reason of gender.
‘‘(4) GRIEVANCE PROCEDURE.—
‘‘(A) IN GENERAL.—Each State to which a
grant is made under section 403 shall establish
and maintain a procedure for grievances or
complaints from employees alleging violations of
paragraph (1) and participants in work activi-
ties alleging violations of paragraph (1), (2), or
(3).
‘‘(B) HEARING.—The procedure shall in-
clude an opportunity for a hearing.
‘‘(C) REMEDIES.—The procedure shall in-
clude remedies for violation of paragraph (1),
(2), or (3), which may include—
616
‘‘(i) prohibition against placement of a
participant with an employer that has vio-
lated paragraph (1), (2), or (3);
‘‘(ii) where applicable, reinstatement
of an employee, payment of lost wages and
benefits, and reestablishment of other rel-
evant terms, conditions and privileges of
employment; and
‘‘(iii) where appropriate, other equi-
table relief.
‘‘(5) 
NONPREEMPTION
OF
STATE
NON-
DISPLACEMENT LAWS.—The provisions of this sub-
section relating to nondisplacement of employees
shall not be construed to preempt any provision of
State law relating to nondisplacement of employees
that affords greater protections to employees than is
afforded by such provisions of this subsection.’’.
Subtitle B—Higher Education
Programs
SEC. 5101. MANAGEMENT AND RECOVERY OF RESERVES.
(a) AMENDMENT.—Section 422 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1072) is amended by add-
ing after subsection (g) the following new subsection:
‘‘(h) RECALL OF RESERVES; LIMITATIONS ON USE
OF RESERVE FUNDS AND ASSETS.—(1) Notwithstanding
617
any other provision of law, the Secretary shall, except as
otherwise 
provided 
in 
this 
subsection, 
recall
$1,000,000,000 from the reserve funds held by guaranty
agencies on September 1, 2002.
‘‘(2) Funds recalled by the Secretary under this sub-
section shall be deposited in the Treasury.
‘‘(3) The Secretary shall require each guaranty agen-
cy to return reserve funds under paragraph (1) based on
such agency’s required share of recalled reserve funds held
by guaranty agencies as of September 30, 1996. For pur-
poses of this paragraph, a guaranty agency’s required
share of recalled reserve funds shall be determined as fol-
lows:
‘‘(A) The Secretary shall compute each agency’s
reserve ratio by dividing (i) the amount held in such
agency’s reserve funds as of September 30, 1996
(but reflecting later accounting or auditing adjust-
ments approved by the Secretary), by (ii) the origi-
nal principal amount of all loans for which such
agency has an outstanding insurance obligation as of
such date.
‘‘(B) If the reserve ratio of any agency as com-
puted under subparagraph (A) exceeds 2.0 percent,
the agency’s required share shall include so much of
618
the amounts held in such agency’s reserve fund as
exceed a reserve ratio of 2.0 percent.
‘‘(C) If any additional amount is required to be
recalled under paragraph (1) (after deducting the
total of the required shares calculated under sub-
paragraph (B)), the agencies’ required shares shall
include additional amounts—
‘‘(i) determined by imposing on each such
agency an equal percentage reduction in the
amount of each agency’s reserve fund remain-
ing after deduction of the amount recalled
under subparagraph (B); and
‘‘(ii) the total of which equals the addi-
tional amount that is required to be recalled
under paragraph (1) (after deducting the total
of the required shares calculated under sub-
paragraph (B)).
‘‘(4) Within 90 days after the beginning of each of
fiscal years 1998 through 2002, each guaranty agency
shall transfer a portion of each agency’s required share
determined under paragraph (3) to a restricted account
established by the guaranty agency that is of a type se-
lected by the guaranty agency with the approval of the
Secretary. Funds transferred to such restricted accounts
shall be invested in obligations issued or guaranteed by
619
the United States or in other similarly low-risk securities.
A guaranty agency shall not use the funds in such a re-
stricted account for any purpose without the express writ-
ten permission of the Secretary, except that a guaranty
agency may use the earnings from such restricted account
to assist in meeting the agency’s operational expenses
under this part. In each of fiscal years 1998 through
2002, each agency shall transfer its required share to such
restricted account in 5 equal annual installments, except
that—
‘‘(A) a guarantee agency that has a reserve
ratio (as computed under subparagraph (3)(A))
equal to or less than 1.10 percent may transfer its
required share to such account in 4 equal install-
ments beginning in fiscal year 1999; and
‘‘(B) a guarantee agency may transfer such re-
quired share to such account in accordance with
such other payment schedules as are approved by
the Secretary.
‘‘(5) If, on September 1, 2002, the total amount in
the restricted accounts described in paragraph (4) is less
than the amount the Secretary is required to recall under
paragraph (1), the Secretary may require the return of
the amount of the shortage from other reserve funds held
620
by guaranty agencies under procedures established by the
Secretary.
‘‘(6) The Secretary may take such reasonable meas-
ures, and require such information, as may be necessary
to ensure that guaranty agencies comply with the require-
ments of this subsection. Notwithstanding any other provi-
sion of this part, if the Secretary determines that a guar-
anty agency is not in compliance with the requirements
of this subsection, such agency may not receive any other
funds under this part until the Secretary determines that
such agency is in compliance.
‘‘(7) The Secretary shall not have any authority to
direct a guaranty agency to return reserve funds under
subsection (g)(1)(A) during the period from the date of
enactment of this subsection through September 30, 2002,
and any reserve funds otherwise returned under sub-
section (g)(1) during such period shall be treated as
amounts recalled under this subsection and shall not be
available under subsection (g)(4).
‘‘(8) For purposes of this subsection, the term ‘re-
serve funds’ when used with respect to a guaranty agen-
cy—
‘‘(A) includes any cash reserve funds held by
the guaranty agency, or held by, or under the con-
trol of, any other entity; and
621
‘‘(B) does not include buildings, equipment, or
other nonliquid assets.’’.
(b) 
CONFORMING
AMENDMENT.—Section
428(c)(9)(A) of the Higher Education Act of 1965 (20
U.S.C. 1078(c)(9)(A)) is amended—
(1) in the first sentence, by striking ‘‘for the
fiscal year of the agency that begins in 1993’’; and
(2) by striking the third sentence.
SEC. 5102. REPEAL OF DIRECT LOAN ORIGINATION FEES TO
INSTITUTIONS OF HIGHER EDUCATION.
Section 452 of the Higher Education Act of 1965 (20
U.S.C. 1087b) is amended—
(1) by striking subsection (b); and
(2) by redesignating subsections (c) and (d) as
subsections (b) and (c), respectively.
SEC. 5103. FUNDS FOR ADMINISTRATIVE EXPENSES.
Subsection (a) of section 458 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087h(a)) is amended to
read as follows:
‘‘(a) IN GENERAL.—(1) Each fiscal year, there shall
be available to the Secretary from funds not otherwise ap-
propriated, funds to be obligated for—
‘‘(A) administrative costs under this part and
part B, including the costs of the direct student loan
programs under this part, and
622
‘‘(B) administrative cost allowances payable to
guaranty agencies under part B and calculated in
accordance with paragraph (2),
not to exceed (from such funds not otherwise appro-
priated) $532,000,000 in fiscal year 1998, $610,000,000
in fiscal year 1999, $705,000,000 in fiscal year 2000,
$750,000,000 in fiscal year 2001, and $750,000,000 in
fiscal year 2002. Administrative cost allowances under
subparagraph (B) of this paragraph shall be paid quar-
terly and used in accordance with section 428(f). The Sec-
retary may carry over funds available under this section
to a subsequent fiscal year.
‘‘(2) Administrative cost allowances payable to guar-
anty agencies under paragraph (1)(B) shall be calculated
on the basis of 0.85 percent of the total principal amount
of loans upon which insurance is issued on or after the
date of enactment of the Balanced Budget Act of 1997,
except that such allowances shall not exceed—
‘‘(A) $170,000,000 for each of the fiscal years
1998 and 1999; or
‘‘(B) $150,000,000 for each of the fiscal years
2000, 2001, and 2002.’’.