HR 2669 PCS
(2) by redesignating paragraphs (4) and (5) as 
paragraphs (5) and (6), respectively; and 
(3) by inserting after paragraph (3) the fol-
lowing: 
‘‘(4) A qualified education benefit shall be con-
sidered an asset of the student for purposes of sec-
tion 476 and 477.’’. 
(d) 
OTHER
FINANCIAL
ASSISTANCE.—Section 
480(j)(2) (20 U.S.C. 1087vv(j)(2)) is amended by insert-
ing ‘‘, or a distribution that is not includable in gross in-
come under section 529 of such Code, under another pre-
paid tuition plan offered by a State, or under a Coverdell 
education savings account under section 530 of such 
Code,’’ after ‘‘1986’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall be effective on July 1, 2009. 
PART B—MAKING STUDENT LOANS MORE 
AFFORDABLE 
SEC. 111. INTEREST RATE REDUCTIONS. 
(a) FFEL INTEREST RATES.— 
(1) Section 427A(l) (20 U.S.C. 1077a(l)) is 
amended by adding at the end the following new 
paragraph: 
‘‘(4) REDUCED
RATES
FOR
UNDERGRADUATE 
SUBSIDIZED
LOANS.—Notwithstanding subsection 
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(h) and paragraph (1) of this subsection, with re-
spect to any loan to an undergraduate student made, 
insured, or guaranteed under this part (other than 
a loan made pursuant to section 428B, 428C, or 
428H) for which the first disbursement is made on 
or after July 1, 2006, and before July 1, 2013, the 
applicable rate of interest shall be as follows: 
‘‘(A) For a loan for which the first dis-
bursement is made on or after July 1, 2006, 
and before July 1, 2008, 6.80 percent on the 
unpaid principal balance of the loan. 
‘‘(B) For a loan for which the first dis-
bursement is made on or after July 1, 2008, 
and before July 1, 2009, 6.12 percent on the 
unpaid principal balance of the loan. 
‘‘(C) For a loan for which the first dis-
bursement is made on or after July 1, 2009, 
and before July 1, 2010, 5.44 percent on the 
unpaid principal balance of the loan. 
‘‘(D) For a loan for which the first dis-
bursement is made on or after July 1, 2010, 
and before July 1, 2011, 4.76 percent on the 
unpaid principal balance of the loan. 
‘‘(E) For a loan for which the first dis-
bursement is made on or after July 1, 2011, 
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and before July 1, 2012, 4.08 percent on the 
unpaid principal balance of the loan. 
‘‘(F) For a loan for which the first dis-
bursement is made on or after July 1, 2012 
and before July 1, 2013, 3.40 percent on the 
unpaid principal balance of the loan.’’. 
(2) SPECIAL ALLOWANCE CROSS REFERENCE.— 
Section 
438(b)(2)(I)(ii)(II) 
(20 
U.S.C. 
1086(b)(2)(I)(ii)(II)) is amended by striking ‘‘sec-
tion 427A(l)(1)’’ and inserting ‘‘section 427A(l)(1) 
or (l)(4)’’. 
(b) DIRECT
LOAN
INTEREST
RATES.—Section 
455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended by adding 
at the end the following new subparagraph: 
‘‘(D) 
REDUCED
RATES
FOR
UNDER-
GRADUATE
FDSL.—Notwithstanding the pre-
ceding paragraphs of this subsection, for Fed-
eral Direct Stafford Loans made to under-
graduate students for which the first disburse-
ment is made on or after July 1, 2006, and be-
fore July 1, 2013, the applicable rate of interest 
shall be as follows: 
‘‘(i) For a loan for which the first dis-
bursement is made on or after July 1, 
2006, and before July 1, 2008, 6.80 per-
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cent on the unpaid principal balance of the 
loan. 
‘‘(ii) For a loan for which the first 
disbursement is made on or after July 1, 
2008, and before July 1, 2009, 6.12 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iii) For a loan for which the first 
disbursement is made on or after July 1, 
2009, and before July 1, 2010, 5.44 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iv) For a loan for which the first 
disbursement is made on or after July 1, 
2010, and before July 1, 2011, 4.76 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(v) For a loan for which the first 
disbursement is made on or after July 1, 
2011, and before July 1, 2012, 4.08 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(vi) For a loan for which the first 
disbursement is made on or after July 1, 
2012, and before July 1, 2013, 3.40 per-
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cent on the unpaid principal balance of the 
loan.’’. 
SEC. 112. INCREASES IN LOAN LIMITS. 
(a) INCREASE IN THIRD AND SUBSEQUENT YEAR 
LIMITS.— 
(1) FEDERAL
INSURANCE
LIMITS.—Section 
425(a)(1)(A)(iii) (20 U.S.C. 1075(a)(1)(A)(iii)) is 
amended by striking ‘‘$5,500’’ and inserting 
‘‘$7,500’’. 
(2) 
GUARANTY
LIMITS.—Section 
428(b)(1)(A)(iii)(I) (20 U.S.C. 1078(b)(1)(A)(iii)(I)) 
is amended by striking ‘‘$5,500’’ and inserting 
‘‘$7,500’’. 
(b) INCREASE IN AGGREGATE LIMITS.— 
(1) FEDERAL
INSURANCE
LIMITS.—Section 
425(a)(2)(A) 
(20 
U.S.C. 
1075(a)(2)(A)(i)) 
is 
amended— 
(A) in clause (i), by striking ‘‘$23,000’’ 
and inserting ‘‘$30,500’’; and 
(B) in clause (ii), by striking ‘‘$65,500’’ 
and inserting ‘‘$73,000’’. 
(2) GUARANTY LIMITS.—Section 428(b)(1)(B) 
(20 U.S.C. 1078(b)(1)(A)(iii)(I)) is amended— 
(A) in clause (i), by striking ‘‘$23,000’’ 
and inserting ‘‘$30,500’’; and 
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