I 
109TH CONGRESS 
1ST SESSION 
H. R. 151 
To ensure that all college students and their families have the tools and 
resources to adequately save for, finance, and repay their postsecondary 
and post-baccalaureate expenses. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 4, 2005 
Mr. MENENDEZ introduced the following bill; which was referred to the Com-
mittee on Education and the Workforce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To ensure that all college students and their families have 
the tools and resources to adequately save for, finance, 
and repay their postsecondary and post-baccalaureate ex-
penses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Higher Education Af-
fordability Resource Act’’.
SEC. 2. HOPE SCHOLARSHIP CREDIT EXPANDED TO COVER 
EXPENSES FOR OTHER EDUCATIONAL EX-
PENSES. 
(a) IN GENERAL.—Sections 25A and 6050S of the 
Internal Revenue Code of 1986 are each amended by 
striking ‘‘qualified tuition and related expenses’’ each 
place it appears and inserting ‘‘qualified higher education 
expenses’’. 
(b) QUALIFIED HIGHER EDUCATION EXPENSES.— 
Section 25A(f)(1) of such Code is amended to read as fol-
lows: 
‘‘(1) QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—The term ‘qualified higher education ex-
penses’ means the qualified higher education ex-
penses (as defined by section 529(e)(3) without re-
gard to subparagraph (B) thereof) required for the 
enrollment or attendance of— 
‘‘(A) the taxpayer, 
‘‘(B) the taxpayer’s spouse, or 
‘‘(C) any dependent of the taxpayer with 
respect to whom the taxpayer is allowed a de-
duction under section 151, 
at an eligible educational institution for courses of 
instruction of such individual at such institution.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid after December
31, 2005 (in taxable years ending after such date), for 
education furnished in academic periods beginning after 
such date. 
SEC. 3. LOAN FORGIVENESS FOR PUBLIC SERVICE EM-
PLOYEES. 
Section 428K (20 U.S.C. 1078–11) is amended to 
read as follows: 
‘‘SEC. 428K. LOAN FORGIVENESS FOR PUBLIC SERVICE EM-
PLOYEES. 
‘‘(a) PURPOSES.—The purposes of this section are— 
‘‘(1) to reduce the burden of student debt, par-
ticularly for Americans who dedicate their careers to 
meeting certain urgent national needs; and 
‘‘(2) to attract more excellent individuals into 
important public service careers. 
‘‘(b) LOAN FORGIVENESS.— 
‘‘(1) IN GENERAL.—The Secretary shall assume 
the obligation to repay, pursuant to subsection (c), 
a loan made under section 428 or 428H, a Federal 
Direct Stafford Loan or Federal Direct Unsub-
sidized Stafford Loan, a Federal Direct Consolida-
tion Loan, or a Federal Perkins Loan for any new 
borrower after the date of enactment of the Higher 
Education Amendments of 1998, who—
‘‘(A) is employed full time in a qualified 
public service position described in paragraph 
(2); and 
‘‘(B) is not in default on a loan for which 
the borrower seeks forgiveness. 
‘‘(2) QUALIFIED PUBLIC SERVICE POSITIONS.— 
For purposes of this section, an individual shall be 
treated as employed in a qualified public service po-
sition if the individual is any of the following: 
‘‘(A) HIGHLY
QUALIFIED
TEACHERS
IN 
LOW-INCOME
COMMUNITIES
AND
OF
MATHE-
MATICS, SCIENCE, AND
BILINGUAL
AND
SPE-
CIAL EDUCATION.—An individual who— 
‘‘(i) is highly qualified as such term is 
defined in section 9101 of the Elementary 
and Secondary Education Act of 1965; and 
‘‘(ii)(I) has obtained employment as a 
teacher for service in a public or nonprofit 
private elementary or secondary school 
which is in the school district of a local 
educational agency which is eligible in such 
year for assistance pursuant to title I of 
the Elementary and Secondary Education 
Act of 1965, and which for the purpose of 
this paragraph and for that year has been
determined by the Secretary (pursuant to 
regulations and after consultation with the 
State educational agency of the State in 
which the school is located) to be a school 
in which the enrollment of children counted 
under section 1113(a)(5) of the Elemen-
tary and Secondary Education Act of 1965 
exceeds 40 percent of the total enrollment 
of that school; or 
‘‘(II) has obtained employment as a 
full-time teacher of mathematics, science, 
or bilingual or special education. 
‘‘(B) NURSES
IN
LOW
INCOME
COMMU-
NITIES.—An individual who has obtained em-
ployment — 
‘‘(i)(I) in a clinical setting; or 
‘‘(II) as a member of the nursing fac-
ulty at an accredited school of nursing (as 
those terms are defined in section 801 of 
the Public Health Service Act (42 U.S.C. 
296)); and 
‘‘(ii) serves a low-income or needy 
community. 
‘‘(C) CHILD WELFARE WORKERS.—An in-
dividual who—
‘‘(i) has completed a degree in social 
work or related field with a focus on serv-
ing children and families (as determined in 
accordance with regulations prescribed by 
the Secretary); and 
‘‘(ii) has obtained employment in pub-
lic or private child welfare services. 
‘‘(D) FIRST RESPONDERS IN LOW-INCOME 
COMMUNITIES.—An individual who, as deter-
mined by the Secretary of Education by regula-
tion— 
‘‘(i) has obtained employment as a 
firefighter, police officer, or emergency 
medical technician; and 
‘‘(ii) serves a low-income community. 
‘‘(c) LOAN REPAYMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall assume 
the obligation to repay— 
‘‘(A) after each of the first or second years 
of service by an individual in a qualified public 
service position, 15 percent of the total amount 
of principal and interest of the loans described 
in subsection (b)(1) to such individual that are 
outstanding immediately preceding such first 
year of such service;
‘‘(B) after each of the third or fourth years 
of such service, 20 percent of such total 
amount; and 
‘‘(C) after the fifth year of such service, 30 
percent of such total amount. 
‘‘(2) TREATMENT OF CONSOLIDATION LOANS.— 
A loan amount for a loan made under section 428C 
or for a Federal Direct Consolidation Loan may be 
a qualified loan amount for the purposes of this sub-
section only to the extent that such loan amount was 
used to repay a loan described in subsection (b)(1) 
for a borrower who meets the requirements of sub-
section (b), as determined in accordance with regula-
tions prescribed by the Secretary. 
‘‘(3) CONSTRUCTION.—Nothing in this section 
shall be construed to authorize the refunding of any 
repayment of a loan made under section 428 or 
428H, a Federal Direct Stafford Loan or Federal 
Direct Unsubsidized Stafford Loan, a Federal Direct 
Loan, or a Federal Perkins Loan. 
‘‘(4) INTEREST.—If a portion of a loan is re-
paid by the Secretary under this section for any 
year, the proportionate amount of interest on such 
loan that accrues for such year shall be repaid by 
the Secretary.
‘‘(5) INELIGIBILITY
OF
NATIONAL
SERVICE 
AWARD RECIPIENTS.—No student borrower may, for 
the same service, receive a benefit under both this 
section and subtitle D of title I of the National and 
Community Service Act of 1990 (42 U.S.C. 12601 
et seq.). 
‘‘(6) INELIGIBILITY FOR DOUBLE BENEFITS.— 
No borrower may receive a reduction of loan obliga-
tions under both this section and section 428J or 
460. 
‘‘(7) CONTINUED ELIGIBILITY OF TEACHERS.— 
Any teacher who performs service in a school that— 
‘‘(A) meets the requirements of subsection 
(b)(2)(A)(ii)(I) in any year during such service; 
and 
‘‘(B) in a subsequent year fails to meet the 
requirements of such subsection, 
may continue to teach in such school and shall be 
eligible for loan forgiveness pursuant to subsection 
(b). 
‘‘(d) REPAYMENT
TO
ELIGIBLE
LENDERS
AND 
HOLDERS.—The Secretary shall pay to each eligible lend-
er or holder for each fiscal year an amount equal to the 
aggregate amount of the lender’s or holder’s loans that
are subject to repayment pursuant to this section for such 
year. 
‘‘(e) APPLICATION FOR REPAYMENT.— 
‘‘(1) IN GENERAL.—Each eligible individual de-
siring loan repayment under this section shall sub-
mit a complete and accurate application to the Sec-
retary at such time, in such manner, and containing 
such information as the Secretary may require. 
‘‘(2) CONDITIONS.—An eligible individual may 
apply for loan repayment under this section after 
completing each of the consecutive years of quali-
fying service described in subsection (c)(1). The bor-
rower may elect to receive forbearance while engaged 
in qualifying service described in subsection (c)(1) 
unless the borrower is in deferment while so en-
gaged. 
‘‘(f) REGULATIONS.—The Secretary is authorized to 
prescribe such regulations as may be necessary to carry 
out the provisions of this section. 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) CHILD
WELFARE
SERVICES.—The term 
‘child welfare services’ has the meaning given the 
term in section 425 of the Social Security Act.
‘‘(2) DEGREE.—The term ‘degree’ means an as-
sociate’s or bachelor’s degree awarded by an institu-
tion of higher education. 
‘‘(3) ELIGIBLE
NURSE.—The term ‘eligible 
nurse’ means a nurse who meets all of the following: 
‘‘(A) The nurse graduated from— 
‘‘(i) an accredited school of nursing 
(as those terms are defined in section 801 
of the Public Health Service Act (42 
U.S.C. 296)); 
‘‘(ii) a nursing center; or 
‘‘(iii) an academic health center that 
provides nurse training. 
‘‘(B) The nurse holds a valid and unre-
stricted license to practice nursing in the State 
in which the nurse practices in a clinical set-
ting. 
‘‘(C) The nurse holds 1 or more of the fol-
lowing: 
‘‘(i) A graduate degree in nursing, or 
an equivalent degree. 
‘‘(ii) A nursing degree from a colle-
giate school of nursing (as defined in sec-
tion 801 of the Public Health Service Act 
(42 U.S.C. 296)).
‘‘(iii) A nursing degree from an asso-
ciate degree school of nursing (as defined 
in section 801 of the Public Health Service 
Act (42 U.S.C. 296)). 
‘‘(iv) A nursing degree from a diploma 
school of nursing (as defined in section 
801 of the Public Health Service Act (42 
U.S.C. 296)). 
‘‘(4) LOW-INCOME COMMUNITY.—In this sub-
section, the term ‘low-income community’ means a 
community in which 70 percent of households earn 
less than 85 percent of the State median household 
income. 
‘‘(5) YEAR.—The term ‘year’, where applied to 
service as a teacher (or service as a member of an 
accredited school of nursing (as those terms are de-
fined in section 801 of the Public Health Service Act 
(42 U.S.C. 296))), means an academic year as de-
fined by the Secretary.’’. 
SEC. 4. YEAR-ROUND PELL GRANTS. 
Section 401(b)(6) (20 U.S.C. 1070a(b)(6)) is amend-
ed by striking ‘‘may allow, on a case-by-case basis,’’ and 
inserting ‘‘shall allow’’.
SEC. 5. TREATMENT OF PREPAYMENT AND SAVINGS PLANS 
UNDER 
STUDENT 
FINANCIAL 
AID 
NEEDS 
ANALYSIS. 
(a) DEFINITION OF ASSETS.—Subsection (f) of sec-
tion 480 of the Higher Education Act of 1965 (20 U.S.C. 
1087vv(j)) is amended— 
(1) in paragraph (1), by inserting ‘‘qualified 
education benefit (except as provided in paragraph 
(3)),’’ after ‘‘tax shelters,’’; and 
(2) by adding at the end the following new 
paragraphs: 
‘‘(3) A qualified education benefit shall not be consid-
ered an asset of the student under section 475 of this part. 
‘‘(4) For purposes of this subsection, the term ‘quali-
fied education benefit’ means— 
‘‘(A) a program which is described in clause (i) 
of section 529(b)(1)(A) of the Internal Revenue 
Code of 1986 and which meets the requirements of 
section 529(b)(1)(B) of such Code; 
‘‘(B) a State tuition program described in 
clause (ii) of section 529(b)(1)(A) of the Internal 
Revenue Code of 1986 which meets the requirements 
of section 529(b)(1)(B) of such Code; and 
‘‘(C) a Coverdell education savings account (as 
defined in section 530(b)(1) of the Internal Revenue 
Code of 1986).’’.