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an annual net tuition increase (expressed as a per-
centage) for the most recent academic year for 
which satisfactory data is available that is equal to 
or less than the percentage change in the higher 
education price index for such academic year. 
‘‘(2) USE OF FUNDS.—Funds awarded to an in-
stitution of higher education under paragraph (1) 
shall be distributed by the institution in the form of 
need-based grant aid to students who are eligible for 
Federal Pell Grants, except that no student shall re-
ceive an amount under this section that would cause 
the amount of total financial aid received by such 
student to exceed the cost of attendance of the insti-
tution. 
‘‘(b) REWARDS FOR GUARANTEED TUITION.— 
‘‘(1) BONUS.—For each institution of higher 
education that the Secretary of Education deter-
mines complies with the requirements of paragraph 
(2) or (3) of this subsection, the Secretary shall pro-
vide to such institution a bonus amount. Such insti-
tution shall award the bonus amount first to stu-
dents who are eligible for Federal Pell Grants who 
were in attendance at the institution during the 
award year that such institution satisfied the eligi-
bility criteria for maintaining low tuition and fees, 
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then to students who are eligible for Federal Pell 
Grants who were not in attendance at the institution 
during such award year, in the form of need-based 
aid. 
‘‘(2) 4-YEAR INSTITUTIONS.—An institution of 
higher education that provides a program of instruc-
tion for which it awards a bachelor’s degree complies 
with the requirements of this paragraph if such in-
stitution guarantees that for any academic year be-
ginning on or after July 1, 2008, and for each of the 
4 succeeding continuous academic years, the net tui-
tion charged to an undergraduate student will not 
exceed— 
‘‘(A) the amount that the student was 
charged for an academic year at the time he or 
she first enrolled in the institution of higher 
education, plus 
‘‘(B) the product of the percentage in-
crease in the higher education price index for 
the prior academic year, or the most recent 
prior academic year for which data is available, 
multiplied by the amount determined under 
subparagraph (A). 
‘‘(3) LESS-THAN
4-YEAR
INSTITUTIONS.—An 
institution of higher education that does not provide 
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a program of instruction for which it awards a bach-
elor’s degree complies with the requirements of this 
paragraph if such institution guarantees that for 
any academic year (or the equivalent) beginning on 
or after July 1, 2008, and for each of the 1.5 suc-
ceeding continuous academic years, the net tuition 
charged to an undergraduate student will not ex-
ceed— 
‘‘(A) the amount that the student was 
charged for an academic year at the time he or 
she first enrolled in the institution of higher 
education, plus 
‘‘(B) the product of the percentage in-
crease in the higher education price index for 
the prior academic year, or the most recent 
prior academic year for which data is available, 
multiplied by the amount determined under 
subparagraph (A). 
‘‘(c) MAINTAINING AFFORDABLE TUITION.— 
‘‘(1) INSTITUTION REPORTS.—If an institution 
of higher education has an increase in annual net 
tuition (expressed as a percentage), for the most re-
cent academic year for which satisfactory data is 
available, that is greater than the percentage in-
crease in the higher education price index for such 
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academic year, the institution is required to submit 
to the Secretary the following information, within 6 
months of such determination— 
‘‘(A) a report on the factors contributing 
to the increase in the institution’s costs and the 
increase in net tuition and fees charged to stu-
dents, including identification of the major 
areas in the institution’s budget with the great-
est cost increases; 
‘‘(B) the institution’s 3 most recent Form 
990s submitted to the Internal Revenue Serv-
ice, as required under section 6033 of the Inter-
nal Revenue Code of 1986; 
‘‘(C) a description of the major areas of 
expenditures in the institution’s budget with the 
greatest increase for such academic year; and 
‘‘(D) voluntary actions being taken by the 
institution to reduce net tuition. 
‘‘(2) REPORT
TO
CONGRESS.—The Secretary 
shall compile the information submitted under this 
subsection and shall provide to the relevant author-
izing committees an annual report relating to such 
information. 
‘‘(d) PRIORITY.—In awarding incentives and rewards 
under this section, the Secretary shall give priority to in-
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stitutions of higher education with the lowest annual net 
tuition increase for the most recent academic year for 
which satisfactory data is available, when compared with 
other institutions of higher education with annual net tui-
tion increases that are equal to or less than the higher 
education price index for such academic year. 
‘‘(e) EXEMPTIONS.—An institution shall still be eligi-
ble to receive rewards under subsections (a) and (b), and 
will not be penalized under subsection (c) if, for any 2- 
year interval for which net tuition is computed under such 
subsections— 
‘‘(1) with respect to the class of institutions de-
scribed in section 131(d)(5) to which the institution 
belongs, the net tuition of the institution is in the 
lowest quartile of institutions within such class, as 
determined by the Secretary, during the last year of 
such 2-year interval; or 
‘‘(2) the institution has a percentage change in 
its net tuition computed under subsection (a) or (c) 
that exceeds the rate of change in the higher edu-
cation price index (as defined in section 401B(d)) 
over the same time period, but the dollar amount of 
the net tuition increase is less than $500. 
‘‘(f) DEFINITIONS.— 
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‘‘(1) NET TUITION.—The term ‘net tuition’ has 
the same meaning as provided in section 131(h). 
‘‘(2) HIGHER EDUCATION PRICE INDEX.—The 
term ‘higher education price index’ has the same 
meaning as provided in section 131(h). 
‘‘(g) FUNDING.—There shall be available to the Sec-
retary to carry out this section, from funds not otherwise 
appropriated, $15,000,000 for each of the fiscal years 
2008 through 2012. 
‘‘(h) SUNSET.—The authority to carry out this sec-
tion shall expire at the end of fiscal year 2012.’’. 
TITLE III—ENSURING A HIGHLY 
QUALIFIED 
TEACHER 
IN 
EVERY CLASSROOM 
PART A—TEACH GRANTS 
SEC. 301. TEACH GRANTS. 
Part A of title IV (20 U.S.C. 1070a et seq.) is 
amended by adding at the end the following new subpart: 
‘‘Subpart 9—TEACH Grants 
‘‘SEC. 420L. PROGRAM ESTABLISHED. 
‘‘(a) PROGRAM AUTHORITY.— 
‘‘(1) PAYMENTS
REQUIRED.—The Secretary 
shall pay to each eligible institution such sums as 
may be necessary to pay to each eligible student (de-
fined in accordance with section 484) who files an 
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application and agreement in accordance with sec-
tion 420M, and who qualifies— 
‘‘(A) under paragraph (2) of section 
420M(a), a TEACH Grant in the amount of 
$4,000 for each academic year during which 
that student is in attendance at the institution; 
and 
‘‘(B) under paragraphs (2) and (3) of sec-
tion 420M(a), a Bonus TEACH Grant in the 
amount of $500 (in addition to the amount of 
the TEACH Grant under subparagraph (A)) 
for each academic year during which that stu-
dent so qualifies. 
‘‘(2) REFERENCE.—Grants made under— 
‘‘(A) paragraph (1)(A) shall be known as 
‘Teacher Education Assistance for College and 
Higher Education Grants’ or ‘TEACH Grants’; 
and 
‘‘(B) paragraph (1)(B) shall be known as 
Bonus TEACH Grants. 
‘‘(b) PAYMENT METHODOLOGY.— 
‘‘(1) PREPAYMENT.—Not less than 85 percent 
of any funds provided to an institution under sub-
section (a) shall be advanced to eligible institutions 
prior to the start of each payment period and shall 
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be based upon an amount requested by the institu-
tion as needed to pay eligible students until such 
time as the Secretary determines and publishes in 
the Federal Register with an opportunity for com-
ment, an alternative payment system that provides 
payments to institutions in an accurate and timely 
manner, except that this sentence shall not be con-
strued to limit the authority of the Secretary to 
place an institution on a reimbursement system of 
payment. 
‘‘(2) DIRECT PAYMENT.—Nothing in this sec-
tion shall be interpreted to prohibit the Secretary 
from paying directly to students, in advance of the 
beginning of the academic term, an amount for 
which they are eligible, in cases where the eligible in-
stitution elects not to participate in the disburse-
ment system required by paragraph (1). 
‘‘(3) DISTRIBUTION
OF
GRANTS
TO
STU-
DENTS.—Payments under this subpart shall be 
made, in accordance with regulations promulgated 
by the Secretary for such purpose, in such manner 
as will best accomplish the purposes of this subpart. 
Any disbursement allowed to be made by crediting 
the student’s account shall be limited to tuition and 
fees and, in the case of institutionally-owned hous-
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ing, room and board. The student may elect to have 
the institution provide other such goods and services 
by crediting the student’s account. 
‘‘(c) REDUCTIONS IN AMOUNT.— 
‘‘(1) PART-TIME
STUDENTS.—In any case 
where a student attends an institution of higher edu-
cation on less than a full-time basis (including a stu-
dent who attends an institution of higher education 
on less than a half-time basis) during any academic 
year, the amount of a grant under this subpart for 
which that student is eligible shall be reduced in 
proportion to the degree to which that student is not 
attending on a full-time basis, in accordance with a 
schedule of reductions established by the Secretary 
for the purposes of this subpart, computed in ac-
cordance with this subpart. Such schedule of reduc-
tions shall be established by regulation and pub-
lished in the Federal Register in accordance with 
section 482 of this Act. 
‘‘(2) NO EXCEEDING COST.—The amount of a 
grant awarded under this subpart, in combination 
with Federal assistance and other student assist-
ance, shall not exceed the cost of attendance (as de-
fined in section 472) at the institution at which that 
student is in attendance. If, with respect to any stu-
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dent, it is determined that the amount of a TEACH 
Grant or a Bonus TEACH Grant exceeds the cost 
of attendance for that year, the amount of the 
TEACH Grant or Bonus TEACH Grant, respec-
tively, shall be reduced until such grant does not ex-
ceed the cost of attendance at such institution. 
‘‘(d) PERIOD OF ELIGIBILITY FOR GRANTS.— 
‘‘(1) 
UNDERGRADUATE
AND
POST-BACCA-
LAUREATE STUDENTS.—The period during which an 
undergraduate or post-baccalaureate student may re-
ceive grants under this subpart shall be the period 
required for the completion of the first under-
graduate baccalaureate or post-baccalaureate course 
of study being pursued by that student at the insti-
tution at which the student is in attendance except 
that— 
‘‘(A) any period during which the student 
is enrolled in a noncredit or remedial course of 
study as defined in paragraph (3) shall not be 
counted for the purpose of this paragraph; and 
‘‘(B) the total amount that a student may 
receive under this subpart for undergraduate or 
post-baccalaureate 
study 
shall 
not 
exceed 
$16,000 with respect to a student who receives 
only TEACH Grants, and $18,000 with respect 
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to a student who receives TEACH Grants and 
Bonus TEACH Grants. 
‘‘(2) GRADUATE STUDENTS.—The period dur-
ing which a graduate student may receive grants 
under this subpart shall be the period required for 
the completion of a master’s degree course of study 
being pursued by that student at the institution at 
which the student is in attendance, except that the 
total amount that a student may receive under this 
subpart for graduate study shall not exceed $8,000 
with respect to a student who receives only TEACH 
Grants, and $10,000 with respect to a student who 
receives TEACH Grants and Bonus TEACH 
Grants. 
‘‘(3) REMEDIAL
COURSE; STUDY
ABROAD.— 
Nothing in this section shall exclude from eligibility 
courses of study which are noncredit or remedial in 
nature (including courses in English language acqui-
sition) which are determined by the institution to be 
necessary to help the student be prepared for the 
pursuit of a first undergraduate baccalaureate or 
post-baccalaureate degree or certificate or, in the 
case of courses in English language instruction, to 
be necessary to enable the student to utilize already 
existing knowledge, training, or skills. Nothing in 
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this section shall exclude from eligibility programs of 
study abroad that are approved for credit by the 
home institution at which the student is enrolled. 
‘‘SEC. 420M. ELIGIBILITY; APPLICATIONS. 
‘‘(a) APPLICATIONS; DEMONSTRATION
OF ELIGI-
BILITY.— 
‘‘(1) FILING REQUIRED.—The Secretary shall 
from time to time set dates by which students shall 
file applications for grants under this subpart. Each 
student desiring a grant under this subpart for any 
year shall file an application containing such infor-
mation and assurances as the Secretary may deem 
necessary to enable the Secretary to carry out the 
functions and responsibilities of this subpart. 
‘‘(2) DEMONSTRATION OF TEACH GRANT ELIGI-
BILITY.—Each application submitted under para-
graph (1) for a TEACH Grant shall contain such in-
formation as is necessary to demonstrate that— 
‘‘(A) if the applicant is an enrolled stu-
dent— 
‘‘(i) the student is an eligible student 
for purposes of section 484; 
‘‘(ii) the student— 
‘‘(I) has a grade point average 
that is determined, under standards 
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