(b) DEFINITION
OF OTHER FINANCIAL ASSIST-
ANCE.—Subsection (j) of section 480 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087vv(j)) is amended— 
(1) by striking ‘‘; Tuition Prepayment Plans’’ 
in the heading of such subsection; 
(2) by striking ‘‘(1) For purposes’’ and insert-
ing ‘‘For purposes’’; and 
(3) by striking paragraph (2). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to determinations of 
need under part F of title IV of the Higher Education 
Act of 1965 for academic years beginning on or after July 
1, 2005. 
SEC. 6. SPECIAL TRANSITION ASSISTANCE PLANS FOR BOR-
ROWERS. 
(a) PLANS AUTHORIZED.—Section 428(b)(9) (20 
U.S.C. 1078(b)(9)) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) SPECIAL
TRANSITION
ASSISTANCE 
PLANS.—In addition to the plans required by 
subparagraph (A), the lender shall provide a 
borrower who has not yet completed 12 months 
in the repayment period with the option to 
repay a loan made under this section in accord-
ance with a special transition assistance plan.
The interest rate on a loan for which the bor-
rower elected a special transition assistance 
plan shall be determined in accordance with 
section 427A(k) or 427A(l), as applicable. If a 
borrower participates in a special transition as-
sistance plan for 24 or more months, and then 
repays the outstanding balance of the loan more 
than 24 months prior to the last scheduled pay-
ment on the loan, the borrower shall repay the 
Secretary the amount of interest that accrued 
on the loan during the 24 months beginning on 
the effective date of the plan.’’. 
(b) INTEREST RATES.— 
(1) PRE-2006
LOANS.—Section 427A(k) (20 
U.S.C. 1077a(k)) is amended— 
(A) by redesignating paragraph (6) as 
paragraph (7); and 
(B) by inserting after paragraph (5) the 
following new paragraph: 
‘‘(6) SPECIAL TRANSITION ASSISTANCE PLANS 
INTEREST RATES.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), with respect to any loan for which 
the borrower elected a special transition assist-
ance plan as provided in section 428(b)(9)(C)—
‘‘(i) for 24 months beginning on the 
effective date of the plan the applicable 
rate of interest shall be 3.4 percent; and 
‘‘(ii) for the last 24 months of the 
scheduled repayment period the applicable 
rate of interest shall be computed for each 
calendar quarter beginning January 1, 
April 1, July 1, and October 1 of each 
year— 
‘‘(I) by determining the average 
of the bond equivalent rates of the 
quotes of the 3-month commercial 
paper (financial) rates in effect for 
each of the days in such quarter as 
reported by the Federal Reserve in 
Publication H–15 (or its successor) 
for such 3-month period; 
‘‘(II) by subtracting the applica-
ble interest rates on such loans from 
such average bond equivalent rate; 
‘‘(III) by adding 2.34 percent to 
the resultant percent; and by dividing 
the resultant percent by 4. 
‘‘(B) EXCEPTION.—The interest rate on a 
loan for which the borrower elected a special
transition assistance plan for the period begin-
ning the first day of the last 24 months of the 
scheduled repayment period until the beginning 
of the first calendar quarter thereafter will be 
computed using the average of the bond equiva-
lent rates of the quotes of the 3-month commer-
cial paper (financial) rates in effect for the 
quarter ending the previous March 31, June 30, 
September 30, or December 31.’’. 
(2) POST-2006
LOANS.—Section 427A(l) (20 
U.S.C. 1077a(l)) is amended by adding at the end 
the following new paragraph: 
‘‘(4) SPECIAL TRANSITION ASSISTANCE PLANS 
INTEREST RATES.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), with respect to any loan for which 
the borrower elected a special transition assist-
ance plan as provided in section 428(b)(9)(C)— 
‘‘(i) for 24 months beginning on the 
effective date of the plan the applicable 
rate of interest shall be 3.4 percent; and 
‘‘(ii) for the last 24 months of the 
scheduled repayment period the applicable 
rate of interest shall be computed for each 
calendar quarter beginning January 1,
April 1, July 1, and October 1 of each 
year— 
‘‘(I) by determining the average 
of the bond equivalent rates of the 
quotes of the 3-month commercial 
paper (financial) rates in effect for 
each of the days in such quarter as 
reported by the Federal Reserve in 
Publication H–15 (or its successor) 
for such 3-month period; 
‘‘(II) by subtracting the applica-
ble interest rates on such loans from 
such average bond equivalent rate; 
‘‘(III) by adding 2.34 percent to 
the resultant percent; and by dividing 
the resultant percent by 4. 
‘‘(B) EXCEPTION.—The interest rate on a 
loan for which the borrower elected a special 
transition assistance plan for the period begin-
ning the first day of the last 24 months of the 
scheduled repayment period until the beginning 
of the first calendar quarter thereafter will be 
computed using the average of the bond equiva-
lent rates of the quotes of the 3-month commer-
cial paper (financial) rates in effect for the
quarter ending the previous March 31, June 30, 
September 30, or December 31.’’. 
(c) ADDITIONAL CONFORMING AMENDMENTS.— 
(1) 
Section 
427(a)(2)(H) 
(20 
U.S.C. 
1077(a)(2)(H)) is amended by inserting after ‘‘regu-
lations of the Secretary’’ the following: ‘‘or in ac-
cordance with a special transition assistance plan as 
provided in section 428(b)(9)(C)’’. 
(2) 
Section 
428(b)(1)(E)(i) 
(20 
U.S.C. 
1078(b)(1)(E)(i)) is amended by inserting after 
‘‘regulations of the Secretary’’ the following: ‘‘or in 
accordance with a special transition assistance plan 
as provided in section 428(b)(9)(C)’’. 
(3) 
Section 
428(b)(1)(L)(i) 
(20 
U.S.C. 
1078(b)(1)(L)(i)) is amended by inserting before ‘‘, 
be less than $600’’ the following: ‘‘or the borrower 
is in the first 24 months after the borrower elected 
a special transition assistance plan as provided in 
section 428(b)(9)(C)’’. 
(4) Section 428C(a)(4)(A) (20 U.S.C. 1078– 
3(a)(4)(A)) is amended by inserting before the semi-
colon the following: ‘‘ except a loan for which the 
borrower elected a special transition assistance plan 
as provided in section 428(b)(9)(C)’’.
(5) Section 428J(e)(1) (20 U.S.C. 1078– 
10(e)(1)) is amended by adding at the end the fol-
lowing new sentence: ‘‘A loan for which the borrower 
elected a special transition assistance plan as pro-
vided in section 428(b)(9)(C) is not eligible for re-
payment under this section.’’. 
SEC. 7. SUPPORT FOR ACADEMIC CREDIT TRANSFERS. 
Subpart 2 of part A of title IV of the Higher Edu-
cation Act of 1965 is amended— 
(1) by redesignating section 407E as section 
406E; and 
(2) by inserting after chapter 3 (20 U.S.C. 
1070a–31 et seq.) the following new chapter: 
‘‘CHAPTER 4—SUPPORT FOR ACADEMIC 
CREDIT TRANSFERS 
‘‘SEC. 407A. PURPOSE. 
‘‘It is the purpose of this chapter to enhance opportu-
nities of students to transfer between institutions in order 
to complete bachelor’s degrees by supporting the develop-
ment and implementation of articulation and guaranteed 
transfer agreements. 
‘‘SEC. 407B. ACTIVITIES. 
‘‘(a) GRANTS AUTHORIZED.—From the amounts ap-
propriated under section 407C, the Secretary shall award 
grants to a partnership that includes two or more institu-
tions of higher education, at least one of which offers a 
baccalaureate or postbaccalaureate degree. 
‘‘(b) USE OF FUNDS.—Grants awarded under this 
part shall be used for— 
‘‘(1) the development of policies to promote the 
transfer of academic credits between institutions and 
expanding articulation and guaranteed transfer 
agreements; 
‘‘(2) support services to students participating 
in the program, such as tutoring, mentoring, and 
academic and personal counseling, as well as any 
service that facilitates the transition of students be-
tween the partner institutions; 
‘‘(3) academic program enhancements at the 
community or technical college that result in increas-
ing the quality of the program offered and the num-
ber of student participants in the dual degree pro-
gram offered in conjunction with a baccalaureate de-
gree granting institution; and 
‘‘(4) programs to identify barriers that inhibit 
student transfers. 
‘‘(c) APPLICATIONS.—Any partnership that desires to 
obtain a grant under this section shall submit to the Sec-
retary an application at such time, in such manner, and
containing such information or assurances as the Sec-
retary may require. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to carry out this 
section. 
‘‘SEC. 407C. AUTHORIZATION OF APPROPRIATIONS. 
‘‘There 
are 
authorized 
to 
be 
appropriated 
$70,000,000 to carry out this chapter for fiscal year 2004 
and such sums as may be necessary for each of the 3 suc-
ceeding fiscal years.’’. 
SEC. 8. FINANCIAL AID ADMINISTRATOR DISCRETION. 
Section 479A(a) (20 U.S.C. 1087tt(a)) is amended— 
(1) by inserting ‘‘as described in paragraph 
(1)’’ after ‘‘on the basis of adequate documenta-
tion’’; and 
(2) by inserting ‘‘on a case-by-case basis to’’ 
after ‘‘on a case-by-case basis to the cost of attend-
ance or’’. 
SEC. 9. PREVENTION OF EXCESSIVE DEBT. 
Section 479A(c) (20 U.S.C. 1087tt(c)) is amended— 
(1) by inserting ‘‘or on a program, class-year, 
or institution-wide basis’’ after ‘‘On a case-by-case 
basis’’; and 
(2) by adding at the end the following new sen-
tences: ‘‘An institution may not refuse to certify, or
reduce the amount certified for, a loan under part 
B in order to require the student to borrow a loan 
under part D if the student has remaining loan eligi-
bility under part B. An institution that refuses or 
reduces a certification under this subsection may 
subsequently certify or increase the amount certified, 
subject to the remaining loan eligibility of the stu-
dent borrower.’’. 
Æ