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‘‘(ii) a graduated repayment plan paid
over a fixed period of time, not to exceed 10
years;
‘‘(iii) an income-sensitive repayment
plan, 
with 
income-sensitive 
repayment
amounts paid over a fixed period of time,
not to exceed 10 years, except that the bor-
rower’s scheduled payments shall not be less
than the amount of interest due; and
‘‘(iv) for first-time borrowers on or
after the date of enactment of the Higher
Education Amendments of 1998 with out-
standing loans under this part totaling
more than $30,000, an extended repayment
plan, with a fixed annual or graduated re-
payment amount paid over an extended pe-
riod of time, not to exceed 25 years, except
that the borrower shall repay annually a
minimum amount determined in accord-
ance with paragraph (2)(L).
‘‘(B) LENDER
SELECTION
OF
OPTION
IF
BORROWER DOES NOT SELECT.—If a borrower of
a loan made under this part does not select a re-
payment plan described in subparagraph (A),
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the lender shall provide the borrower with a re-
payment plan described in subparagraph (A)(i).
‘‘(C) CHANGES
IN
SELECTION.—The bor-
rower of a loan made under this part may
change the borrower’s selection of a repayment
plan under subparagraph (B), as the case may
be, under such conditions as may be prescribed
by the Secretary in regulation.
‘‘(D) ACCELERATION
PERMITTED.—Under
any of the plans described in this paragraph, the
borrower shall be entitled to accelerate, without
penalty, repayment on the borrower’s loans
under this part.’’.
(c) GUARANTY
AGREEMENTS
FOR
REIMBURSING
LOSSES.—Section 428(c) (20 U.S.C. 1078(c)) is amended—
(1) in paragraph (1)—
(A) in the fourth sentence of subparagraph
(A), by striking ‘‘as reimbursement under this
subsection shall be equal to 98 percent’’ and in-
serting ‘‘as reimbursement for loans for which
the first disbursement is made on or after the
date of enactment of the Higher Education
Amendments of 1998 shall be equal to 95 per-
cent’’;
(B) in subparagraph (B)—
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(i) in clause (i), by striking ‘‘88 per-
cent of the amount of such excess’’ and in-
serting ‘‘85 percent of the amount of such
excess for loans for which the first disburse-
ment is made on or after the date of enact-
ment of the Higher Education Amendments
of 1998’’; and
(ii) in clause (ii), by striking ‘‘78 per-
cent of the amount of such excess’’ and in-
serting ‘‘75 percent of the amount of such
excess for loans for which the first disburse-
ment is made on or after the date of enact-
ment of the Higher Education Amendments
of 1998’’;
(C) in subparagraph (E)—
(i) in clause (i), by striking ‘‘98 per-
cent’’ and inserting ‘‘95 percent’’;
(ii) in clause (ii), by striking ‘‘88 per-
cent’’ and inserting ‘‘85 percent’’; and
(iii) in clause (iii), by striking ‘‘78
percent’’ and inserting ‘‘75 percent’’; and
(D) in subparagraph (F)—
(i) in clause (i), by striking ‘‘98 per-
cent’’ and inserting ‘‘95 percent’’; and
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(ii) in clause (ii), by striking ‘‘88 per-
cent’’ and inserting ‘‘85 percent’’;
(2) in paragraph (2)—
(A) in subparagraph (A), by striking ‘‘proof
that reasonable attempts were made’’ and insert-
ing ‘‘proof that the institution was contacted and
other reasonable attempts were made’’; and
(B) in subparagraph (G), by striking ‘‘cer-
tifies to the Secretary that diligent attempts have
been made’’ and inserting ‘‘certifies to the Sec-
retary that diligent attempts, including contact
with the institution, have been made’’.
(3) in paragraph (3)—
(A) in subparagraph (A)(i), by inserting
‘‘or electronic’’ after ‘‘written’’;
(B) in subparagraph (B), by striking ‘‘and’’
after the semicolon;
(C) in subparagraph (C), by striking the
period and inserting ‘‘; and’’; and
(D) by inserting before the matter following
subparagraph (C) the following:
‘‘(D) shall contain provisions that specify
that forbearance for a period not to exceed 60
days may be granted if the lender determines
that such a suspension of collection activity is
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warranted following a borrower’s request for for-
bearance in order to collect or process appro-
priate supporting documentation related to the
request, and that during such period interest
shall not be capitalized.’’;
(4) by amending paragraph (6) to read as fol-
lows:
‘‘(6) SECRETARY’S EQUITABLE SHARE.—For the
purpose of paragraph (2)(D), the Secretary’s equitable
share of payments made by the borrower shall be that
portion of the payments remaining after the guaranty
agency with which the Secretary has an agreement
under this subsection has deducted from such pay-
ments—
‘‘(A) a percentage amount equal to the com-
plement of the reinsurance percentage in effect
when payment under the guaranty agreement
was made with respect to the loan; and
‘‘(B) an amount equal to 24 percent of such
payments for use in accordance with section
422B, except that, beginning on September 30,
2003, this subparagraph shall be applied by sub-
stituting ‘23 percent’ for ‘24 percent’.’’;
(5) in paragraph (8)—
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(A) by striking ‘‘(A) If’’ and inserting ‘‘If’’;
and
(B) by striking subparagraph (B); and
(6) in paragraph (9)—
(A) in subparagraph (A), by striking
‘‘maintain a current minimum reserve level of at
least .5 percent’’ and inserting ‘‘maintain in the
agency’s Federal Student Loan Reserve Fund es-
tablished under section 422A a current mini-
mum reserve level of at least 0.25 percent’’;
(B) in subparagraph (C)—
(i) by striking ‘‘80 percent’’ and in-
serting ‘‘78 percent’’;
(ii) by striking ‘‘, as appropriate,’’;
and
(iii) by striking ‘‘30 working’’ and in-
serting ‘‘45 working’’;
(C) in subparagraph (E)—
(i) in clause (iv), by inserting ‘‘or’’
after the semicolon;
(ii) in clause (v), by striking ‘‘; or’’
and inserting a period; and
(iii) by striking clause (vi);
(D) in subparagraph (F), by amending
clause (vii) to read as follows:
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‘‘(vii) take any other action the Secretary
determines necessary to avoid disruption of the
student loan program, to ensure the continued
availability of loans made under this part to
residents of each State in which the guaranty
agency did business, to ensure the full honoring
of all guarantees issued by the guaranty agency
prior to the Secretary’s assumption of the func-
tions of such agency, and to ensure the proper
servicing of loans guaranteed by the guaranty
agency prior to the Secretary’s assumption of the
functions of such agency.’’; and
(E) in subparagraph (K), by striking ‘‘and
the progress of the transition from the loan pro-
grams under this part to the direct student loan
programs under part D of this title’’.
(d) PAYMENT FOR LENDER REFERRAL SERVICES.—
Subsection (e) of section 428 (20 U.S.C. 1078) is repealed.
(e) PAYMENT OF CERTAIN COSTS.—Subsection (f) of
section 428 (20 U.S.C. 1078) is amended to read as follows:
‘‘(f) PAYMENTS OF CERTAIN COSTS.—
‘‘(1) PAYMENT FOR CERTAIN ACTIVITIES.—
‘‘(A) IN GENERAL.—The Secretary—
‘‘(i) for loans originated on or after
October 1, 1998, and before October 1, 2003,
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and in accordance with the provisions of
this paragraph, shall pay to each guaranty
agency, a loan processing and issuance fee
equal to 0.65 percent of the total principal
amount of the loans on which insurance
was issued under this part during such fis-
cal year by such agency; and
‘‘(ii) for loans originated on or after
October 1, 2003, and in accordance with the
provisions of this paragraph, shall pay to
each guaranty agency, a loan processing
and issuance fee equal to 0.40 percent of the
total principal amount of the loans on
which insurance was issued under this part
during such fiscal year by such agency.
‘‘(B) PAYMENT.—The payment required by
subparagraph (A) shall be paid on a quarterly
basis. The guaranty agency shall be deemed to
have a contractual right against the United
States to receive payments according to the pro-
visions of this subparagraph. Payments shall be
made promptly and without administrative
delay to any guaranty agency submitting an ac-
curate and complete application therefore under
this subparagraph.’’.
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(f) LENDERS-OF-LAST-RESORT.—Paragraph (3) of
section 428(j) (20 U.S.C. 1078(j)) is amended—
(1) in the paragraph heading, by striking ‘‘DUR-
ING TRANSITION TO DIRECT LENDING’’; and
(2) in subparagraph (A), by striking ‘‘during the
transition from the Federal Family Education Loan
Program under this part to the Federal Direct Stu-
dent Loan Program under part D of this title’’;
(g) DEFAULT AVERSION ASSISTANCE.—Subsection (l)
of section 428 (20 U.S.C. 1078) is amended to read as fol-
lows:
‘‘(l) DEFAULT AVERSION ASSISTANCE.—
‘‘(1) ASSISTANCE REQUIRED.—Upon receipt of a
proper request from the lender not earlier than the
60th nor later than the 90th day of delinquency, a
guaranty agency having an agreement with the Sec-
retary under subsection (c) shall engage in default
aversion activities designed to prevent the default by
a borrower on a loan covered by such agreement.
‘‘(2) DEFAULT PREVENTION FEE REQUIRED.—
‘‘(A) IN GENERAL.—A guaranty agency, in
accordance with the provisions of this para-
graph, may transfer from the Federal Student
Loan Reserve Fund to the Agency Operating
Fund a default prevention fee. Such fee shall be
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paid for any loan on which a claim for default
has not been presented that the guaranty agency
successfully brings into current repayment status
on or before the 300th day after the loan becomes
60 days delinquent.
‘‘(B) AMOUNT.—The default prevention fee
shall be equal to 1 percent of the total unpaid
principal and accrued interest on the loan cal-
culated at the time the request is submitted by
the lender. Such fee shall not be paid more than
once on any loan for which the guaranty agency
averts the default unless the borrower remained
current in payments for at least 24 months prior
to the subsequent delinquency. A guaranty agen-
cy may transfer such fees earned under this sub-
section not more frequently than monthly.
‘‘(C) DEFINITION OF CURRENT REPAYMENT
STATUS.—For the purpose of this paragraph, the
term ‘current repayment status’ means that the
borrower is not delinquent, in any respect, in the
payment of principal and interest on the loan at
the time the guaranty agency qualifies for the de-
fault prevention fee.’’.
(h) STATE SHARE OF DEFAULT COSTS.—Subsection
(n) of section 428 (20 U.S.C. 1078) is repealed.
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SEC. 427. VOLUNTARY FLEXIBLE AGREEMENTS WITH GUAR-
ANTY AGENCIES.
Part B of title IV (20 U.S.C. 1071 et seq.) is amended
by inserting after section 428 (20 U.S.C. 1078) the follow-
ing:
‘‘SEC. 428A. VOLUNTARY FLEXIBLE AGREEMENTS WITH
GUARANTY AGENCIES.
‘‘(a) VOLUNTARY AGREEMENTS.—
‘‘(1) AUTHORITY.—The Secretary may enter into
a voluntary, flexible agreement, subject to paragraph
(2), with guaranty agencies under this section, in lieu
of agreements with a guaranty agency under sub-
sections (b) and (c) of section 428. The Secretary may
waive or modify any requirement under such sub-
sections, except that the Secretary may not waive any
statutory requirement pertaining to the terms and
conditions attached to student loans, default claim
payments made to lenders, or the prohibitions on in-
ducements contained in section 428(b)(3).
‘‘(2) ELIGIBILITY.—During fiscal years 1999,
2000, and 2001, the Secretary may enter into a vol-
untary, flexible agreement with not more than 6 guar-
anty agencies that had 1 or more agreements with the
Secretary under subsections (b) and (c) of section 428
as of the day before the date of enactment of the High-
er Education Amendments of 1998. Beginning in fis-
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cal year 2002, any guaranty agency or consortium
thereof may enter into a similar agreement with the
Secretary.
‘‘(3) REPORT REQUIRED.—Not later than Sep-
tember 30, 2001, the Secretary shall report to the
Committee on Labor and Human Resources of the
Senate and the Committee on Education and the
Workforce of the House of Representatives regarding
the impact that the voluntary flexible agreements have
had upon program integrity, program and cost effi-
ciencies, and the availability and delivery of student
financial aid. Such report shall include—
‘‘(A) a description of each voluntary flexible
agreement and the performance goals established
by the Secretary for each agreement;
‘‘(B) a list of participating guaranty agen-
cies and the specific statutory or regulatory
waivers provided to each guaranty agency;
‘‘(C) a description of the standards by
which each agency’s performance under the agen-
cy’s voluntary flexible agreement was assessed
and the degree to which each agency achieved the
performance standards; and
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‘‘(D) an analysis of the fees paid by the
Secretary, and the costs and efficiencies achieved
under each voluntary agreement.
‘‘(b) TERMS OF AGREEMENT.—An agreement between
the Secretary and a guaranty agency under this section—
‘‘(1) shall be developed by the Secretary, in con-
sultation with the guaranty agency, on a case-by case
basis;
‘‘(2) may be secured by the parties;
‘‘(3) may only include provisions—
‘‘(A) specifying the responsibilities of the
guaranty agency under the agreement, with re-
spect to—
‘‘(i) administering the issuance of in-
surance on loans made under this part on
behalf of the Secretary;
‘‘(ii) monitoring insurance commit-
ments made under this part;
‘‘(iii) default aversion activities;
‘‘(iv) review of default claims made by
lenders;
‘‘(v) payment of default claims;
‘‘(vi) collection of defaulted loans;
‘‘(vii) adoption of internal systems of
accounting and auditing that are acceptable
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to the Secretary, and reporting the result
thereof to the Secretary in a timely manner,
and on an accurate, and auditable basis;
‘‘(viii) timely and accurate collection
and reporting of such other data as the Sec-
retary may require to carry out the pur-
poses of the programs under this title;
‘‘(ix) monitoring of institutions and
lenders participating in the program under
this part; and
‘‘(x) informational outreach to schools
and students in support of access to higher
education;
‘‘(B) regarding the fees the Secretary shall
pay, in lieu of revenues that the guaranty agen-
cy may otherwise receive under this part, to the
guaranty agency under the agreement, and other
funds that the guaranty agency may receive or
retain under the agreement, except that in no
case may the cost to the Secretary of the agree-
ment, as reasonably projected by the Secretary,
exceed the cost to the Secretary, as similarly pro-
jected, in the absence of the agreement;
‘‘(C) regarding the use of net revenues, as
described in the agreement under this section, for
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such other activities in support of postsecondary
education as may be agreed to by the Secretary
and the guaranty agency;
‘‘(D) regarding the standards by which the
guaranty agency’s performance of the agency’s
responsibilities under the agreement will be as-
sessed, and the consequences for a guaranty
agency’s failure to achieve a specified level of
performance on one or more performance stand-
ards;
‘‘(E) regarding the circumstances in which
a guaranty agency’s agreement under this sec-
tion may be ended in advance of the agreement’s
expiration date;
‘‘(F) regarding such other businesses, pre-
viously purchased or developed with reserve
funds, that relate to the program under this part
and in which the Secretary permits the guaranty
agency to engage; and
‘‘(G) such other provisions as the Secretary
may determine to be necessary to protect the
United States from the risk of unreasonable loss
and to promote the purposes of this part;
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‘‘(4) shall provide for uniform lender participa-
tion with the guaranty agency under the terms of the
agreement; and
‘‘(5) shall not prohibit or restrict borrowers from
selecting a lender of the borrower’s choosing, subject to
the prohibitions and restrictions applicable to the se-
lection under this Act.
‘‘(c) PUBLIC NOTICE.—
‘‘(1) IN GENERAL.—The Secretary shall publish
in the Federal Register a notice to all guaranty agen-
cies that sets forth—
‘‘(A) an invitation for the guaranty agen-
cies to enter into agreements under this section;
and
‘‘(B) the criteria that the Secretary will use
for selecting the guaranty agencies with which
the Secretary will enter into agreements under
this section.
‘‘(2) AGREEMENT NOTICE.—The Secretary shall
notify the Chairperson and the Ranking Minority
Members of the Committee on Labor and Human Re-
sources of the Senate, and the Committee on Edu-
cation and Workforce of the House of Representatives,
and shall publish a notice in the Federal Register,
with a request for public comment, at least 30 days
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prior to concluding an agreement under this section.
The notice shall contain—
‘‘(A) a description of the voluntary flexible
agreement and the performance goals established
by the Secretary for the agreement;
‘‘(B) a list of participating guaranty agen-
cies and the specific statutory or regulatory
waivers provided to each guaranty agency;
‘‘(C) a description of the standards by
which each guaranty agency’s performance under
the agreement will be assessed; and
‘‘(D) a description of the fees that will be
paid to each participating guaranty agency.
‘‘(3) PUBLIC AVAILABILITY.—The text of any vol-
untary flexible agreement, and any subsequent revi-
sions, shall be readily available to the public.
‘‘(4) MODIFICATION
NOTICE.—The Secretary
shall notify the Chairperson and the Ranking Minor-
ity Member of the Committee on Labor and Human
Resources of the Senate, and the Committee on Edu-
cation and Workforce of the House of Representatives
30 days prior to any modifications to an agreement
under this section.
‘‘(d) TERMINATION.—At the expiration or early termi-
nation of an agreement under this section, the Secretary
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shall reinstate the guaranty agency’s prior agreements
under subsections (b) and (c) of section 428, subject only
to such additional requirements as the Secretary determines
to be necessary in order to ensure the efficient transfer of
responsibilities between the agreement under this section
and the agreements under subsections (b) and (c) of section
428, and including the guaranty agency’s compliance with
reserve requirements under sections 422 and 428.’’.
SEC. 428. FEDERAL PLUS LOANS.
Section 428B (20 U.S.C. 1078–2) is amended—
(1) by amending subsection (a) to read as fol-
lows:
‘‘(a) AUTHORITY TO BORROW.—
‘‘(1) AUTHORITY AND ELIGIBILITY.—Parents of a
dependent student shall be eligible to borrow funds
under this section in amounts specified in subsection
(b), if—
‘‘(A) the parents do not have an adverse
credit history as determined pursuant to regula-
tions promulgated by the Secretary; and
‘‘(B) the parents meet such other eligibility
criteria as the Secretary may establish by regu-
lation, after consultation with guaranty agen-
cies, eligible lenders, and other organizations in-
volved in student financial assistance.
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‘‘(2) TERMS, CONDITIONS, AND BENEFITS.—Ex-
cept as provided in subsections (c), (d), and (e), loans
made under this section shall have the same terms,
conditions, and benefits as all other loans made under
this part.
‘‘(3) SPECIAL
RULE.—Whenever necessary to
carry out the provisions of this section, the terms
‘‘student’’ and ‘‘borrower’’ as used in this part shall
include a parent borrower under this section.’’; and
(2) by adding at the end the following:
‘‘(f) VERIFICATION OF IMMIGRATION STATUS AND SO-
CIAL SECURITY NUMBER.—A parent who wishes to borrow
funds under this section shall be subject to verification of
the parent’s—
‘‘(1) immigration status in the same manner as
immigration status is verified for students under sec-
tion 484(g); and
‘‘(2) social security number in the same manner
as social security numbers are verified for students
under section 484(p).’’.
SEC. 429. FEDERAL CONSOLIDATION LOANS.
(a) IN GENERAL.—Section 428C(a)(3) (20 U.S.C.
1078–3(a)(3)) is amended—
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(1) by amending subparagraph (A) to read as
follows: ‘‘(A) For the purpose of this section, the term
‘eligible borrower’ means a borrower who—
‘‘(i) is not subject to a judgment secured
through litigation or an order for wage garnish-
ment under section 488A; or
‘‘(ii) at the time of application for a con-
solidation loan—
‘‘(I) is in repayment status;
‘‘(II) is in a grace period preceding re-
payment; or
‘‘(III) is a defaulted borrower who has
made arrangements to repay the obligation
on the defaulted loans satisfactory to the
holders of the defaulted loans.’’; and
(2) in subparagraph (B)(i)—
(A) in subclause (I), by striking ‘‘and’’ after
the semicolon;
(B) by redesignating subclause (II) as sub-
clause (III);
(C) by inserting after subclause (I) the fol-
lowing:
‘‘(II) with respect to eligible student loans
received prior to the date of consolidation that
the borrower may wish to include with eligible
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loans specified in subclause (I) in a later con-
solidation loan; and’’; and
(D) in subclause (III) (as redesignated by
subparagraph (B)—
(i) by striking ‘‘that loans’’ and insert-
ing ‘‘with respect to loans’’; and
(ii) by inserting ‘‘that’’ before ‘‘may be
added’’.
(b) DATE CHANGE.—Section 428C(e) (20 U.S.C.
1078–3(e)) is amended by striking ‘‘September 30, 2002’’
and inserting ‘‘September 30, 2004’’.
SEC. 430. REQUIREMENTS FOR DISBURSEMENTS OF STU-
DENT LOANS.
(a) IN GENERAL.—Section 428G (20 U.S.C. 1078G)
is amended—
(1) in subsection (a)(1), by striking ‘‘The pro-
ceeds’’ and inserting ‘‘Except for a loan made for the
final period of enrollment, that is less than an aca-
demic year, in a student’s baccalaureate program of
study, at an institution with a cohort default rate (as
calculated under section 435(m)) that is 5 percent or
less, the proceeds’’;
(2) in subsection (b)(1), by striking ‘‘The first’’
and inserting ‘‘Except for a loan made to a student
borrower entering an institution with a cohort default
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rate (as calculated under section 435(m)) of less than
5 percent, the first’’; and
(3) in subsection (e)—
(A) by striking ‘‘or made’’ and inserting ‘‘,
made’’; and
(B) by inserting ‘‘, or made to a student to
cover the cost of attendance in a program of
study abroad approved by the home eligible in-
stitution if the home eligible institution has a co-
hort default rate (as calculated under section
435(m)) of less than 5 percent’’ before the period.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a)(2) shall be effective during the period beginning
on October 1, 1998, and ending on September 30, 2002.
SEC. 431. DEFAULT REDUCTION PROGRAM.
The heading for subsection (b) of section 428F (20
U.S.C. 1078–6) is amended by striking ‘‘SPECIAL RULE’’
and inserting ‘‘SATISFACTORY
REPAYMENT
ARRANGE-
MENTS TO RENEW ELIGIBILITY’’.
SEC. 432. UNSUBSIDIZED LOANS.
(a) IN GENERAL.—Section 428H (20 U.S.C. 1078–8)
is amended—
(1) by amending subsection (b) to read as fol-
lows:
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‘‘(b) ELIGIBLE BORROWERS.—Any student meeting
the requirements for student eligibility under section 484
(including graduate and professional students as defined in
regulations promulgated by the Secretary) shall be entitled
to borrow an unsubsidized Stafford loan if the eligible insti-
tution at which the student has been accepted for enroll-
ment, or at which the student is in attendance, has—
‘‘(1) determined and documented the student’s
need for the loan based on the student’s estimated cost
of attendance (as determined under section 472) and
the student’s estimated financial assistance, including
a loan which qualifies for interest subsidy payments
under section 428; and
‘‘(2) provided the lender a statement—
‘‘(A) certifying the eligibility of the student
to receive a loan under this section and the
amount of the loan for which such student is eli-
gible, in accordance with subsection (c); and
‘‘(B) setting forth a schedule for disburse-
ment of the proceeds of the loan in installments,
consistent with the requirements of section
428G.’’;
(2) in subsection (d)—
(A) in paragraph (2)—
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(i) in the matter preceding subpara-
graph (A)—
(I) by inserting ‘‘, as defined in
section 481(d)(2),’’ after ‘‘academic
year’’; and
(II) by striking ‘‘or in any period
of 7 consecutive months, whichever is
longer,’’;
(ii) in subparagraph (C), by inserting
‘‘and’’ after the semicolon; and
(iii) by inserting before the matter fol-
lowing subparagraph (C) the following:
‘‘(D) in the case of a student enrolled in
coursework specified in sections 484(b)(3)(B) and
484(b)(4)(B)—
‘‘(i) $4,000 for coursework necessary
for enrollment in an undergraduate degree
or certificate program, and $5,000 for
coursework necessary for enrollment in a
graduate or professional program; and
‘‘(ii) $5,000 for coursework necessary
for a professional credential or certification
from a State required for employment as a
teacher in an elementary or secondary
school;’’; and
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(B) in paragraph (3), by adding at the end
the following: ‘‘The maximum aggregate amount
shall not include interest capitalized from an in-
school period.’’;
(3) in subsection (e)—
(A) by amending paragraph (2) to read as
follows:
‘‘(2) CAPITALIZATION OF INTEREST.—Interest on
loans made under this section for which payments of
principal are not required during the in-school and
grace periods or for which payments are deferred
under sections 427(a)(2)(C) and 428(b)(1)(M) shall, if
agreed upon by the borrower and the lender—
‘‘(A) be paid monthly or quarterly; or
‘‘(B) be added to the principal amount of
the loan by the lender only—
‘‘(i) when the loan enters repayment;
‘‘(ii) at the expiration of a grace pe-
riod, in the case of a loan that qualifies for
a grace period;
‘‘(iii) at the expiration of a period of
deferment; or
‘‘(iv) when the borrower defaults.’’; and
(B) in paragraph (6), by striking ‘‘10 year
repayment period under section 428(b)(1)(D)’’
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and inserting ‘‘repayment period under section
428(b)(9)’’.
(b) SENSE OF THE SENATE ON LOAN LIMIT FLEXIBIL-
ITY.—
(1) FINDINGS.—The Senate finds that—
(A) due to the annual borrowing ceilings on
the Federal student loan programs, increasing
numbers of needy students are borrowing from
more expensive private sector loan programs
than from the Federal loan programs;
(B) according to the College Board, in aca-
demic year 1996–1997, students borrowed ap-
proximately $1,200,000,000 from private sector
loan programs;
(C) the alternative private sector loan pro-
grams are not only more expensive, but the in-
terest rates are not capped, leaving students vul-
nerable to higher monthly payments when inter-
est rates increase; and
(D) with more flexible Federal annual loan
ceilings, students could be kept in Federal stu-
dent loan programs, thereby making available to
the students the debt management advantages of
loan consolidation and alternative repayment
options that are available under Federal student
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loan programs, and lowering the costs of month-
ly payments.
(2) SENSE OF THE SENATE.—It is the sense of
the Senate that Congress should consider the growing
problem described in paragraph (1) by continuing to
examine the potential for adding borrowing flexibility
to the annual, but not the aggregate, amounts that
both undergraduate and graduate students are al-
lowed to borrow under section 428H of the Higher
Education Act of 1965.
SEC. 433. LOAN FORGIVENESS FOR TEACHERS.
Section 428J (20 U.S.C. 1078–10) is amended to read
as follows:
‘‘SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.
‘‘(a) STATEMENT OF PURPOSE.—It is the purpose of
this section to encourage individuals to enter and continue
in the teaching profession.
‘‘(b) PROGRAM AUTHORIZED.—The Secretary is au-
thorized to carry out a program, through the holder of the
loan, of assuming the obligation to repay a qualifying loan
made under section 428 that is eligible for interest subsidy,
for any new borrower on or after October 1, 1998, who—
‘‘(1) has been employed as a full-time teacher for
3 consecutive complete school years—
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‘‘(A) in a school that qualifies under section
465(a)(2)(A) for loan cancellation for Perkins
loan recipients who teach in such schools;
‘‘(B) if employed as a secondary school
teacher, is teaching a subject area that is rel-
evant to the borrower’s academic major as cer-
tified by the chief administrative officer of the
public or nonprofit private secondary school in
which the borrower is employed; and
‘‘(C) if employed as an elementary school
teacher, has demonstrated, in accordance with
State teacher certification or licensing require-
ments and as certified by the chief administra-
tive officer of the public or nonprofit private ele-
mentary school in which the borrower is em-
ployed, knowledge and teaching skills in reading,
writing, mathematics and other areas of the ele-
mentary school curriculum; and
‘‘(2) is not in default on a loan for which the
borrower seeks forgiveness.
‘‘(c) QUALIFYING LOANS.—For purposes of this sec-
tion, a loan is a qualifying loan if—
‘‘(1) the loan was obtained to cover the cost of
instruction for an academic year after the first and
second years of undergraduate education; and
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‘‘(2) the loan did not cover the costs of instruc-
tion for more than 2 academic years, or 3 academic
years in the case of a program of instruction nor-
mally requiring 5 years to complete.
‘‘(d) REGULATIONS.—The Secretary is authorized to
issue such regulations as may be necessary to carry out the
provisions of this section.
‘‘(e) LOAN REPAYMENT DURING CONTINUING TEACH-
ING SERVICE.—
‘‘(1) IN GENERAL.—The Secretary shall assume
the obligation to repay through reimbursement to the
holder—
‘‘(A) 30 percent of the total outstanding
amount and applicable interest of subsidized
Federal Stafford loans that are qualifying loans
and are owed by the student borrower after the
completion of the fourth or fifth complete school
year of service described in subsection (b);
‘‘(B) 40 percent of such total amount after
the completion of the sixth complete school year
of such service; and
‘‘(C) a total amount for any borrower that
shall not exceed $8,000.
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‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to authorize any refunding of any
repayment of a loan.
‘‘(f) LIST.—If the list of schools in which a teacher
may perform service pursuant to subsection (b) is not avail-
able before May 1 of any year, the Secretary may use the
list for the year preceding the year for which the determina-
tion is made to make such service determination.
‘‘(g) CONTINUED ELIGIBILITY.—Any teacher who per-
forms service in a school that—
‘‘(1) meets the requirements of subsection
(b)(1)(A) in any year during such service; and
‘‘(2) in a subsequent year fails to meet the re-
quirements of such subsection, may continue to teach
in such school and shall be eligible for loan forgiveness
pursuant to subsection (b).’’.
SEC. 434. LOAN FORGIVENESS FOR CHILD CARE PROVID-
ERS.
Part B (20 U.S.C. 1071 et seq.) is amended by insert-
ing after section 428J (as added by section 433) (20 U.S.C.
1078–10) the following:
‘‘SEC. 428K. LOAN FORGIVENESS FOR CHILD CARE PROVID-
ERS.
‘‘(a) PURPOSE.—It is the purpose of this section—
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‘‘(1) to bring more highly trained individuals
into the early child care profession; and
‘‘(2) to keep more highly trained child care pro-
viders in the early child care field for longer periods
of time.
‘‘(b) DEFINITIONS.—In this section:
‘‘(1) CHILD
CARE
FACILITY.—The term ‘child
care facility’ means a facility, including a home,
that—
‘‘(A) provides child care services; and
‘‘(B) meets applicable State or local govern-
ment licensing, certification, approval, or reg-
istration requirements, if any.
‘‘(2) CHILD CARE SERVICES.—The term ‘child
care services’ means activities and services provided
for the education and care of children from birth
through age 5 by an individual who has a degree in
early childhood education.
‘‘(3) DEGREE.—The term ‘degree’ means an as-
sociate’s or bachelor’s degree awarded by an institu-
tion of higher education.
‘‘(4) EARLY CHILDHOOD EDUCATION.—The term
‘early childhood education’ means education in the
areas of early child education, child care, or any
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other educational area related to child care that the
Secretary determines appropriate.
‘‘(5) INSTITUTION OF HIGHER EDUCATION.—The
term ‘institution of higher education’ has the meaning
given the term in section 101.
‘‘(c) DEMONSTRATION PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary may carry out
a demonstration program of assuming the obligation
to repay, pursuant to subsection (d), a loan made, in-
sured or guaranteed under this part or part D (ex-
cluding loans made under sections 428B and 428C)
for any new borrower after the date of enactment of
the Higher Education Amendments of 1998, who—
‘‘(A) completes a degree in early childhood
education;
‘‘(B) obtains employment in a child care fa-
cility; and
‘‘(C) has worked full time for the 2 consecu-
tive years preceding the year for which the deter-
mination is made as a child care provider in a
low-income community.
‘‘(2) LOW-INCOME
COMMUNITY.—For the pur-
poses of this subsection, the term ‘low-income commu-
nity’ means a community in which 70 percent of
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households within the community earn less than 85
percent of the State median household income.
‘‘(3) AWARD BASIS; PRIORITY.—
‘‘(A) AWARD
BASIS.—Subject to subpara-
graph (B), loan repayment under this section
shall be on a first-come, first-served basis and
subject to the availability of appropriations.
‘‘(B) PRIORITY.—The Secretary shall give
priority in providing loan repayment under this
section for a fiscal year to student borrowers who
received loan repayment under this section for
the preceding fiscal year.
‘‘(4) REGULATIONS.—The Secretary is author-
ized to prescribe such regulations as may be necessary
to carry out the provisions of this section.
‘‘(d) LOAN REPAYMENT.—
‘‘(1) IN GENERAL.—The Secretary shall assume
the obligation to repay—
‘‘(A) after the second consecutive year of
employment described in subparagraphs (B) and
(C) of subsection (c)(1), 20 percent of the total
amount of all loans made after date of enactment
of the Higher Education Amendments of 1998, to
a student under this part or part D;
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‘‘(B) after the third consecutive year of such
employment, 20 percent of the total amount of
all such loans; and
‘‘(C) after each of the fourth and fifth con-
secutive years of such employment, 30 percent of
the total amount of all such loans.
‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to authorize the refunding of any
repayment of a loan made under this part or part D.
‘‘(3) INTEREST.—If a portion of a loan is repaid
by the Secretary under this section for any year, the
proportionate amount of interest on such loan which
accrues for such year shall be repaid by the Secretary.
‘‘(4) SPECIAL RULE.—In the case where a stu-
dent borrower who is not participating in loan repay-
ment pursuant to this section returns to an institu-
tion of higher education after graduation from an in-
stitution of higher education for the purpose of ob-
taining a degree in early childhood education, the
Secretary is authorized to assume the obligation to
repay the total amount of loans made under this part
or part D incurred for a maximum of two academic
years in returning to an institution of higher edu-
cation for the purpose of obtaining a degree in early
childhood education. Such loans shall only be repaid
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for borrowers who qualify for loan repayment pursu-
ant to the provisions of this section, and shall be re-
paid in accordance with the provisions of paragraph
(1).
‘‘(5) 
INELIGIBILITY
OF
NATIONAL
SERVICE
AWARD RECIPIENTS.—No student borrower may, for
the same volunteer service, receive a benefit under
both this section and subtitle D of title I of the Na-
tional and Community Service Act of 1990 (42
U.S.C. 12601 et seq.).
‘‘(e) REPAYMENT TO ELIGIBLE LENDERS.—The Sec-
retary shall pay to each eligible lender or holder for each
fiscal year an amount equal to the aggregate amount of
loans which are subject to repayment pursuant to this sec-
tion for such year.
‘‘(f) APPLICATION FOR REPAYMENT.—
‘‘(1) IN GENERAL.—Each eligible individual de-
siring loan repayment under this section shall submit
a complete and accurate application to the Secretary
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 year of qualifying employment. The
borrower shall receive forbearance while engaged in
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qualifying employment unless the borrower is in
deferment while so engaged.
‘‘(g) EVALUATION.—
‘‘(1) IN GENERAL.—The Secretary shall conduct,
by grant or contract, an independent national evalua-
tion of the impact of the demonstration program as-
sisted under this section on the field of early child-
hood education.
‘‘(2) COMPETITIVE
BASIS.—The grant or con-
tract described in subsection (b) shall be awarded on
a competitive basis.
‘‘(3) CONTENTS.—The evaluation described in
this subsection shall—
‘‘(A) determine the number of individuals
who were encouraged by the demonstration pro-
gram assisted under this section to pursue early
childhood education;
‘‘(B) determine the number of individuals
who remain employed in a child care facility as
a result of participation in the program;
‘‘(C) identify the barriers to the effectiveness
of the program;
‘‘(D) assess the cost-effectiveness of the pro-
gram in improving the quality of—
‘‘(i) early childhood education; and
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‘‘(ii) child care services;
‘‘(E) identify the reasons why participants
in the program have chosen to take part in the
program;
‘‘(F) identify the number of individuals
participating in the program who received an
associate’s degree and the number of such indi-
viduals who received a bachelor’s degree; and
‘‘(G) identify the number of years each in-
dividual participates in the program.
‘‘(4) INTERIM
AND
FINAL
EVALUATION
RE-
PORTS.—The Secretary shall prepare and submit to
the President and the Congress such interim reports
regarding the evaluation described in this subsection
as the Secretary deems appropriate, and shall prepare
and so submit a final report regarding the evaluation
by January 1, 2002.
‘‘(h) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section
$10,000,000 for fiscal year 1999, and such sums as may
be necessary for each of the 4 succeeding fiscal years.’’.
SEC. 435. NOTICE TO SECRETARY AND PAYMENT OF LOSS.
The third sentence of section 430(a) (20 U.S.C.
1080(a)) is amended by inserting ‘‘the institution was con-
tacted and other’’ after ‘‘submit proof that’’.
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SEC. 436. COMMON FORMS AND FORMATS.
Section 432 (20 U.S.C. 1082) is amended—
(1) in subsection (m)(1)—
(A) in subparagraph (A), by striking ‘‘a
common application form and promissory note’’
and inserting ‘‘common application forms and
promissory notes, or master promissory notes,’’;
(B) by striking subparagraph (C);
(C) by redesignating subparagraph (D) as
subparagraph (C); and
(D) in subparagraph (C) (as redesignated
by subparagraph (C))—
(i) by inserting ‘‘, application and
other’’ after ‘‘electronic’’; and
(ii) by adding at the end the following:
‘‘Guaranty agencies, borrowers, and lenders
may use electronically printed versions of
common forms approved for use by the Sec-
retary.’’; and
(2) in subsection (p), by striking ‘‘State post-
secondary reviewing entities designated under subpart
1 of part H,’’.
SEC. 437. STUDENT LOAN INFORMATION BY ELIGIBLE
LENDERS.
Section 433 (20 U.S.C. 1083) is amended—
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(1) in subsection (a), by amending the matter
preceding paragraph (1) to read as follows:
‘‘(a) REQUIRED DISCLOSURE BEFORE DISBURSE-
MENT.—Each eligible lender shall, at or prior to the time
such lender disburses a loan that is insured or guaranteed
under this part (other than a loan made under section
428C), provide thorough and accurate loan information on
such loan to the borrower. Any disclosure required by this
subsection may be made by an eligible lender by written
or electronic means, including as part of the application
material provided to the borrower, as part of the promissory
note evidencing the loan, or on a separate written form pro-
vided to the borrower. Each lender shall provide a telephone
number, and may provide an electronic address, to each
borrower through which additional loan information can
be obtained. The disclosure shall include—’’; and
(2) in subsection (b), by amending the matter
preceding paragraph (1) to read as follows:
‘‘(b) REQUIRED DISCLOSURE BEFORE REPAYMENT.—
Each eligible lender shall, at or prior to the start of the
repayment period of the student borrower on loans made,
insured, or guaranteed under this part, disclose to the bor-
rower by written or electronic means the information re-
quired under this subsection. Each eligible lender shall pro-
vide a telephone number, and may provide an electronic
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address, to each borrower through which additional loan in-
formation can be obtained. For any loan made, insured,
or guaranteed under this part, other than a loan made
under section 428B or 428C, such disclosure required by
this subsection shall be made not less than 30 days nor more
than 240 days before the first payment on the loan is due
from the borrower. The disclosure shall include—’’.
SEC. 438. DEFINITIONS.
(a) ELIGIBLE
INSTITUTION.—Section 435(a) (20
U.S.C. 1085(a)) is amended—
(1) in paragraph (2)—
(A) by adding after the matter following
subparagraph (A)(ii) the following:
‘‘If an institution continues to participate in a pro-
gram under this part, and the institution’s appeal of
the loss of eligibility is unsuccessful, the institution
shall be required to pay to the Secretary an amount
equal to the amount of interest, special allowance, re-
insurance, and any related payments made by the
Secretary (or which the Secretary is obligated to
make) with respect to loans made under this part to
students attending, or planning to attend, that insti-
tution during the pendency of such appeal. In order
to continue to participate during an appeal under
this paragraph, the institution shall provide a letter
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of credit in favor of the Secretary or other third-party
financial guarantees satisfactory to the Secretary in
an amount determined by the Secretary to be suffi-
cient to satisfy the institution’s potential liability on
such loans under the preceding sentence.’’; and
(B) by amending subparagraph (C) to read
as follows:
‘‘(C)(i) This paragraph shall not apply to any
institution described in clause (ii), and any such in-
stitution that exceeds the threshold percentage in sub-
paragraph (A)(ii) for 2 consecutive years shall submit
to the Secretary a default management plan satisfac-
tory to the Secretary and containing criteria de-
signed, in accordance with the regulations of the Sec-
retary, to demonstrate continuous improvement by the
institution in the institution’s cohort default rate. If
the institution fails to submit the required plan, or to
satisfy the criteria in the plan, the institution shall
be subject to a loss of eligibility in accordance with
this paragraph, except as the Secretary may otherwise
specify in regulations.
‘‘(ii) An institution referred to in clause (i) is—
‘‘(I) a part B institution within the mean-
ing of section 322(2);
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‘‘(II) a Tribally Controlled College or Uni-
versity within the meaning of section 2(a)(4) of
the Tribally Controlled College or University As-
sistance Act of 1978; or
‘‘(III) a Navajo Community College under
the Navajo Community College Act.’’;
(2) in the matter following subparagraph (C)—
(A) by inserting ‘‘for a reasonable period of
time, not to exceed 30 days,’’ after ‘‘access’’; and
(B) by striking ‘‘of the affected guaranty
agencies and loan servicers for a reasonable pe-
riod of time, not to exceed 30 days’’ and insert-
ing ‘‘used by a guaranty agency in determining
whether to pay a claim on a defaulted loan’’;
and
(3) by adding at the end the following:
‘‘(4) PARTICIPATION RATE INDEX.—
‘‘(A) IN
GENERAL.—An institution that
demonstrates to the Secretary that the institu-
tion’s participation rate index is equal to or less
than 0.0375 for any of the 3 applicable partici-
pation rate indices shall not be subject to para-
graph (2). The participation rate index shall be
determined by multiplying the institution’s co-
hort default rate for loans under part B or D,
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or weighted average cohort default rate for loans
under parts B and D, by the percentage of the
institution’s regular students, enrolled on at least
a half-time basis, who received a loan made
under part B or D for a 12-month period ending
during the 6 months immediately preceding the
fiscal year for which the cohort of borrowers used
to calculate the institution’s cohort default rate
is determined.
‘‘(B) DATA.—An institution shall provide
the Secretary with sufficient data to determine
the institution’s participation rate index within
30 days after receiving an initial notification of
the institution’s draft cohort default rate.
‘‘(C) NOTIFICATION.—Prior to publication
of a final cohort default rate for an institution
that provides the data described in subparagraph
(B), the Secretary shall notify the institution of
the institution’s compliance or noncompliance
with subparagraph (A).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a)(1)(B) shall be effective during the period begin-
ning on the date of enactment of this Act and ending on
September 30, 2002.
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(c) ELIGIBLE LENDER.—Section 435(d)(1)(A)(ii) (20
U.S.C. 1085(d)(1)(A)(ii) is amended—
(1) by striking ‘‘or’’ after ‘‘1992,’’; and
(2) by inserting before the semicolon the follow-
ing: ‘‘, or (III) it is a bank (as defined in section
3(a)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(a)(1)) that is a wholly owned subsidiary
of a nonprofit foundation, the foundation is described
in section 501(c)(3) of the Internal Revenue Code of
1986 and exempt from taxation under section 501(1)
of such Code, and the bank makes loans under this
part only to undergraduate students who are age 22
or younger and has a portfolio of such loans that is
not more than $5,000,000’’.
(d) DEFINITION OF DEFAULT.—
(1) AMENDMENT.—Section 435(l) (20 U.S.C.
1085l) is amended—
(A) by striking ‘‘180 days’’ and inserting
‘‘270 days’’; and
(B) by striking ‘‘240 days’’ and inserting
‘‘330 days’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply with respect to loans for
which the first day of delinquency occurs on or after
the date of enactment of this Act.
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(e) COHORT DEFAULT RATE.—Section 435(m)(1)(B)
(20 U.S.C. 1085(m)(1)(B)) is amended by striking ‘‘insur-
ance, and, in considering appeals with respect to cohort de-
fault rates pursuant to subsection (a)(3), exclude’’ and in-
serting ‘‘insurance. In considering appeals with respect to
cohort default rates pursuant to subsection (a)(3), the Sec-
retary shall exclude, from the calculation of the number of
students who entered repayment and from the calculation
of the number of students who default,’’.
(f) PUBLICATION
DATE.—Section 435(m)(4) (20
U.S.C. 1085(m)(4)) is amended by adding at the end the
following:
‘‘(D) The Secretary shall publish the report de-
scribed in subparagraph (C) by September 30 of each
year.’’.
SEC. 439. STUDY OF THE EFFECTIVENESS OF COHORT DE-
FAULT RATES FOR INSTITUTIONS WITH FEW
STUDENT LOAN BORROWERS.
Part A of title IV (20 U.S.C. 1071 et seq.) is amended
by adding after section 435 the following:
‘‘SEC. 435A. STUDY OF THE EFFECTIVENESS OF COHORT DE-
FAULT RATES FOR INSTITUTIONS WITH FEW
STUDENT LOAN BORROWERS.
‘‘(a) STUDY REQUIRED.—The Secretary shall conduct
a study of the effectiveness of cohort default rates as an indi-
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cator of administrative capability and program quality for
institutions of higher education at which less than 15 per-
cent of students eligible to borrow participate in the Federal
student loan programs under this title and fewer than 30
borrowers enter repayment in any fiscal year. At a mini-
mum, the study shall include—
‘‘(1) identification of the institutions included in
the study and of the student populations the institu-
tions serve;
‘‘(2) analysis of cohort default rates as indicators
of administrative shortcomings and program quality
at the institutions;
‘‘(3) analysis of the effectiveness of cohort default
rates as a means to prevent fraud and abuse in the
programs assisted under this title;
‘‘(4) analysis of the extent to which the institu-
tions with high cohort default rates are no longer par-
ticipants in the Federal student loan programs under
this title; and
‘‘(5) analysis of the costs incurred by the Depart-
ment for the calculation, publication, correction, and
appeal of cohort default rates for the institutions in
relation to any benefits to taxpayers.
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‘‘(b) CONSULTATION.—In conducting the study de-
scribed in subsection (a), the Secretary shall consult with
institutions of higher education.
‘‘(c) REPORT TO CONGRESS.—The Secretary shall re-
port to the Committee on Labor and Human Resources of
the Senate and the Committee on Education and the Work-
force of the House of Representatives not later than Septem-
ber 30, 1999, regarding the results of the study described
in subsection (a).’’.
SEC. 440. DELEGATION OF FUNCTIONS.
Section 436 (20 U.S.C. 1086) is amended to read as
follows:
‘‘SEC. 436. DELEGATION OF FUNCTIONS.
‘‘(a) IN GENERAL.—An eligible lender or guaranty
agency that contracts with another entity to perform any
of the lender’s or agency’s functions under this title, or oth-
erwise delegates the performance of such functions to such
other entity—
‘‘(1) shall not be relieved of the lender’s or agen-
cy’s duty to comply with the requirements of this
title; and
‘‘(2) shall monitor the activities of such other en-
tity for compliance with such requirements.
‘‘(b) SPECIAL RULE.—A lender that holds a loan made
under part B in the lender’s capacity as a trustee is respon-
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sible for complying with all statutory and regulatory re-
quirements imposed on any other holder of a loan made
under this part.’’.
SEC. 440A. SPECIAL ALLOWANCES.
(a) AMENDMENTS.—Section 438 (20 U.S.C. 1087–1)
is amended—
(1) in subsection (c), by amending paragraph
(1) to read as follows:
‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL
ALLOWANCE
SUBSIDIES.—(A) Notwithstanding sub-
section (b), the Secretary shall collect the amount the
lender is authorized to charge as an origination fee
in accordance with paragraph (2) of this subsection—
‘‘(i) by reducing the total amount of interest
and special allowance payable under section
428(a)(3)(A) and subsection (b) of this section,
respectively, to any holder; or
‘‘(ii) directly from the holder of the loan, if
the lender fails or is not required to bill the Sec-
retary for interest and special allowance or with-
draws from the program with unpaid loan origi-
nation fees.
‘‘(B) If the Secretary collects the origination fee
under this subsection through the reduction of interest
and special allowance, and the total amount of inter-
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est and special allowance payable under section
428(a)(3)(A) and subsection (b) of this section, respec-
tively, is less than the amount the lender was author-
ized to charge borrowers for origination fees in that
quarter, the Secretary shall deduct the excess amount
from the subsequent quarters’ payments until the total
amount has been deducted.’’;
(2) in subsection (d), by amending paragraph
(1) to read as follows:
‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL
ALLOWANCE SUBSIDIES.—
‘‘(A) IN
GENERAL.—Notwithstanding sub-
section (b), the Secretary shall collect a loan fee
in an amount determined in accordance with
paragraph (2)—
‘‘(i) by reducing the total amount of
interest and special allowance payable
under section 428(a)(3)(A) and subsection
(b), respectively, to any holder of a loan; or
‘‘(ii) directly from the holder of the
loan, if the lender—
‘‘(I) fails or is not required to bill
the Secretary for interest and special
allowance payments; or
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‘‘(II) withdraws from the program
with unpaid loan fees.
‘‘(B) SPECIAL RULE.—If the Secretary col-
lects loan fees under this subsection through the
reduction of interest and special allowance pay-
ments, and the total amount of interest and spe-
cial 
allowance 
payable 
under 
section
428(a)(3)(A) and subsection (b), respectively, is
less than the amount of such loan fees, then the
Secretary shall deduct the amount of the loan fee
balance from the amount of interest and special
allowance payments that would otherwise be
payable, in subsequent quarterly increments
until the balance has been deducted.’’; and
(3) in subsection (e)—
(A) by striking paragraphs (1) and (2); and
(B) by redesignating paragraphs (3) and
(4) as paragraphs (1) and (2), respectively.
(b) CONFORMING AMENDMENT.—Section 432(f)(1)(D)
is amended by striking ‘‘required to file a plan for doing
business under section 438(d)’’ and inserting ‘‘that meets
the requirements of section 438(e)’’.
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SEC. 440B. STUDY OF MARKET-BASED MECHANISMS FOR DE-
TERMINING 
STUDENT 
LOAN 
INTEREST
RATES.
(a) STUDY REQUIRED.—
(1) IN GENERAL.—The Secretary of the Treasury
shall conduct a study of the feasibility of employing
market-based mechanisms, including some form of
auction, for determining student loan interest rates
under title IV of the Higher Education Act of 1965
(20 U.S.C. 1070 et seq.). The study shall include—
(A) analysis of the potential impact of the
mechanisms on the delivery of student financial
aid;
(B) analysis of the implications of the
mechanisms with respect to student and institu-
tional access to student loan capital;
(C) analysis of the potential impact of the
mechanisms on the costs of the programs under
such title for students and the Federal Govern-
ment; and
(D) a plan for structuring and implement-
ing the mechanisms in such a manner that en-
sures the cost-effective availability of student
loans for students and their families.
(b) CONSULTATION.—In conducting the study de-
scribed in paragraph (1), the Secretary shall consult with
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lenders, secondary markets, guaranty agencies, institutions
of higher education, student loan borrowers, and other par-
ticipants in the student loan programs under title IV of
the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).
(c) REPORT
TO CONGRESS.—The Secretary of the
Treasury shall report to the Committee on Labor and
Human Resources of the Senate, and the Committee on
Education and the Workforce of the House of Representa-
tives not later than September 30, 1999, regarding the re-
sults of the study described in subsection (a).
PART C—FEDERAL WORK-STUDY PROGRAMS
SEC. 441. AUTHORIZATION OF APPROPRIATIONS; COMMU-
NITY SERVICES.
Section 441 (20 U.S.C. 2751) is amended—
(1) in subsection (b), by striking ‘‘$800,000,000
for fiscal year 1993’’ and inserting ‘‘$900,000,000 for
fiscal year 1999’’; and
(2) in subsection (c)—
(A) in paragraph (1), by inserting ‘‘(in-
cluding child care services provided on campus)’’
after ‘‘child care’’; and
(B) in paragraph (3), by inserting ‘‘, in-
cluding students with disabilities who are en-
rolled at the institution’’ before the semicolon.
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SEC. 442. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.
Section 443(b) (20 U.S.C. 2753(b)) is amended—
(1) in paragraph (1), by inserting ‘‘, including
internships or research assistanceships as determined
by the Secretary,’’ after ‘‘part-time employment’’;
(2) by amending paragraph (3) to read as fol-
lows:
‘‘(3) provide that in the selection of students for
employment under such work-study program, only
students who demonstrate financial need in accord-
ance with part F of this title and meet the require-
ments of section 484 will be assisted, except that if the
institution’s grant under this part is directly or indi-
rectly based in part on the financial need dem-
onstrated by students who are (A) attending the insti-
tution on less than a full-time basis, or (B) independ-
ent students, a reasonable portion of the allocation
shall be made available to such students;’’;
(3) in paragraph (5)—
(A) by striking ‘‘provide that’’ and insert-
ing ‘‘(A) provide that’’;
(B) by striking ‘‘1993–1994’’ and inserting
‘‘1999–2000’’; and
(C) by inserting ‘‘and (B) provide that the
Federal share of the compensation of students
employed in community service shall not exceed
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90 percent for academic years 1999–2000 and
succeeding academic years,’’ after ‘‘academic
years,’’; and
(4) in paragraph (6), by striking ‘‘, and to
make’’ and all that follows through ‘‘such employ-
ment’’.
SEC. 443. WORK COLLEGES.
Section 448 (20 U.S.C. 2756b) is amended—
(1) in subsection (b)(2)—
(A) in subparagraph (C), by striking ‘‘and’’
after the semicolon;
(B) in subparagraph (D)(ii), by striking the
period and inserting a semicolon; and
(C) by adding at the end the following:
‘‘(E) coordinate and carry out joint projects
and activities to promote work service learning;
and
‘‘(F) carry out a comprehensive, longitu-
dinal study of student academic progress and
academic and career outcomes, relative to stu-
dent self-sufficiency in financing their higher
education, repayment of student loans, continued
community service, kind and quality of service
performed, and career choice and community
service selected after graduation.’’; and
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(2) in subsection (f), by striking ‘‘$5,000,000 for
fiscal year 1993’’ and inserting ‘‘$7,000,000 for fiscal
year 1999’’.
PART D—WILLIAM D. FORD FEDERAL DIRECT
LOAN PROGRAM
SEC. 451. SELECTION OF INSTITUTIONS.
Section 453(c) (20 U.S.C. 1087c(c)) is amended—
(1) in paragraph (2)—
(A) in the paragraph heading, by striking
‘‘TRANSITION’’;
(B) by striking subparagraph (E); and
(C) by redesignating subparagraphs (F),
(G), and (H) as subparagraphs (E), (F), and
(G), respectively; and
(2) in paragraph (3)—
(A) in the paragraph heading, by striking
‘‘AFTER TRANSITION’’; and
(B) by striking ‘‘For academic year 1995–
1996 and subsequent academic years, the’’ and
inserting ‘‘The’’.
SEC. 452. TERMS AND CONDITIONS.
(a) DIRECT LOAN INTEREST RATES.—Section 455(b)
(20 U.S.C. 1087e(b)) is amended by amending paragraph
(5) to read as follows:
‘‘(5) INTEREST RATE PROVISION.—
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‘‘(A) RATES FOR FDSL AND FDUSL.—Not-
withstanding the preceding paragraphs of this
subsection, for Federal Direct Unsubsidized Staf-
ford/Ford Loans for which the first disbursement
is made on or after October 1, 1998, and before
July 1, 2003, the applicable rate of interest shall,
during any 12-month period beginning on July
1 and ending on June 30, be determined on the
preceding June 1 and be equal to—
‘‘(i) the bond equivalent rate of 91-day
Treasury bills auctioned at the final auc-
tion held prior to such June 1; plus
‘‘(ii) 2.3 percent,
except that such rate shall not exceed 8.25 per-
cent.
‘‘(B) IN
SCHOOL
AND
GRACE
PERIOD
RULES.—Notwithstanding the preceding para-
graphs of this subsection, with respect to any
Federal Direct Stafford/Ford Loan or Federal
Direct Unsubsidized Stafford/Ford Loan for
which the first disbursement is made on or after
October 1, 1998, and before July 1, 2003, the ap-
plicable rate of interest for interest which ac-
crues—
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‘‘(i) prior to the beginning of the re-
payment period of the loan; or
‘‘(ii) during the period in which prin-
cipal need not be paid (whether or not such
principal is in fact paid) by reason of a
provision described in section 428(b)(1)(M)
or 427(a)(2)(C),
shall be determined under subparagraph (A) by
substituting ‘1.7 percent’ for ‘2.3 percent’.
‘‘(C) PLUS LOANS.—Notwithstanding the
preceding paragraphs of this subsection, with re-
spect to Federal Direct PLUS Loan for which
the first disbursement is made on or after Octo-
ber 1, 1998, and before July 1, 2003, the appli-
cable rate of interest shall be determined under
subparagraph (A)—
‘‘(i) by substituting ‘3.1 percent’ for
‘2.3 percent’; and
‘‘(ii) by substituting ‘9.0 percent’ for
‘8.25 percent’.’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply with respect to any loan made under
part D of title IV of the Higher Education Act of 1965 for
which the first disbursement is made on or after October
1, 1998, and before July 1, 2003.
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(c) REPAYMENT INCENTIVES.—Section 455(b) (20
U.S.C. 1087e(b)) is amended further by adding at the end
the following:
‘‘(7) REPAYMENT INCENTIVES.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of this part, the Secretary is au-
thorized to prescribe by regulation such reduc-
tions in the interest rate paid by a borrower of
a loan made under this part as the Secretary de-
termines appropriate to encourage on-time re-
payment of the loan. Such reductions may be of-
fered only if the Secretary determines the reduc-
tions are cost neutral and in the best financial
interest of the Federal Government. Any increase
in subsidy costs resulting from such reductions
shall be completely offset by corresponding sav-
ings in funds available for the William D. Ford
Federal Direct Loan Program in that fiscal year
from section 458 and other administrative ac-
counts.
‘‘(B) 
ACCOUNTABILITY.—The 
Secretary
shall ensure the cost neutrality of such reductions
by obtaining an official report from the Director
of the Office of Management and Budget and the
Director of the Congressional Budget Office that
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any such reductions will be completely cost neu-
tral. The reports shall be transmitted to the Com-
mittee on Labor and Human Resources of the
Senate and the Committee on Education and the
Workforce of the House of Representatives not
less than 60 days prior to the publication of reg-
ulations proposing such reductions.’’.
SEC. 453. CONTRACTS.
Section 456(b) (20 U.S.C. 1087f(b)) is amended—
(1) in paragraph (3), by inserting ‘‘and’’ after
the semicolon;
(2) by striking paragraph (4); and
(3) by redesignating paragraph (5) as para-
graph (4).
SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.
Section 458 (20 U.S.C. 1087h) is amended—
(1) by amending subsection (a) to read as fol-
lows:
‘‘(a) ADMINISTRATIVE EXPENSES.—
‘‘(1) IN GENERAL.—Each fiscal year there shall
be available to the Secretary, from funds not other-
wise appropriated, funds to be obligated for—
‘‘(A) administrative costs under this part
and part B, including the costs of the direct stu-
dent loan programs under this part; and
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‘‘(B) account maintenance fees payable to
guaranty agencies under part B and calculated
in accordance with subsections (b) and (c),
not to exceed (from such funds not otherwise appro-
priated) 
$612,000,000 
in 
fiscal 
year 
1999,
$730,000,000 in fiscal year 2000, $765,000,000 in fis-
cal year 2001, $770,000,000 in fiscal year 2002, and
$785,000,000 in fiscal year 2003.
‘‘(2) ACCOUNT
MAINTENANCE
FEES.—Account
maintenance fees under paragraph (1)(B) shall be
paid quarterly and deposited in the Agency Operat-
ing Fund established under section 422B.
‘‘(3) CARRYOVER.—The Secretary may carry
over funds made available under this section to a sub-
sequent fiscal year.’’;
(2) by amending subsection (b) to read as fol-
lows:
‘‘(b) CALCULATION BASIS.—Except as provided in
subsection (c), account maintenance fees payable to guar-
anty agencies under paragraph (1)(B) shall be calculated—
‘‘(1) for fiscal years 1999 and 2000, on the basis
of 0.12 percent of the original principal amount of
outstanding loans on which insurance was issued
under part B; and
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‘‘(2) for fiscal year 2001, 2002, and 2003, on the
basis of 0.10 percent of the original principal amount
of outstanding loans on which insurance was issued
under part B.’’;
(3) by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively; and
(4) by inserting after subsection (b) the follow-
ing:
‘‘(c) SPECIAL RULES.—
‘‘(1) FEE
CAP.—The total amount of account
maintenance fees payable under this section—
‘‘(A) for fiscal year 1999, shall not exceed
$177,000,000;
‘‘(B) for fiscal year 2000, shall not exceed
$180,000,000;
‘‘(C) for fiscal year 2001, shall not exceed
$170,000,000;
‘‘(D) for fiscal year 2002, shall not exceed
$180,000,000; and
‘‘(E) for fiscal year 2003, shall not exceed
$195,000,000.
‘‘(2) INSUFFICIENT FUNDING.—
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 422A(d), if the amount made available
under subsection (a) is insufficient to pay the ac-
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count maintenance fees payable to guaranty
agencies under paragraph (1) for a fiscal year,
the Secretary shall pay the insufficiency by re-
quiring guaranty agencies to transfer funds from
the Federal Student Loan Reserve Funds under
section 422A to the Agency Operating Funds
under section 422B.
‘‘(B) ENTITLEMENT.—A guaranty agency
shall be deemed to have a contractual right
against the United States to receive payments
according to the provisions of subparagraph
(A).’’.
SEC. 455. LOAN CANCELLATION FOR TEACHERS.
Part D of title IV (20 U.S.C. 1087a et seq.) is amended
by adding at the end the following:
‘‘SEC. 459. LOAN CANCELLATION FOR TEACHERS.
‘‘(a) STATEMENT OF PURPOSE.—It is the purpose of
this section to encourage individuals to enter and continue
in the teaching profession.
‘‘(b) PROGRAM AUTHORIZED.—The Secretary is au-
thorized to carry out a program of canceling the obligation
to repay a Federal Direct Stafford/Ford Loan made under
this part that is eligible for an interest subsidy and is a
qualifying loan, for any new borrower on or after October
1, 1998, who—
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‘‘(1) has been employed as a full-time teacher for
3 consecutive complete school years—
‘‘(A) in a school that qualifies under section
465(a)(2)(A) for loan cancellation for Perkins
loan recipients who teach in such schools;
‘‘(B) if employed as a secondary school
teacher, is teaching a subject area that is rel-
evant to the borrower’s academic major as cer-
tified by the chief administrative officer of the
public or non-profit private secondary school in
which the borrower is employed; and
‘‘(C) if employed as an elementary school
teacher, has demonstrated, in accordance with
State teacher certification or licensing require-
ments and as certified by the chief administra-
tive officer of the public or nonprofit private ele-
mentary school in which the borrower is em-
ployed, knowledge and teaching skills in reading,
writing, mathematics and other areas of the ele-
mentary school curriculum; and
‘‘(2) is not in default on a loan for which the
borrower seeks forgiveness.
‘‘(c) QUALIFYING LOANS.—For purposes of this sec-
tion, a loan is a qualifying loan if—
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‘‘(1) the loan was obtained to cover the cost of
instruction for an academic year after the first and
second years of undergraduate education; and
‘‘(2) the loan did not cover the costs of instruc-
tion for more than 2 academic years, or 3 academic
years in the case of a program of instruction nor-
mally requiring 5 years to complete.
‘‘(d) REGULATIONS.—The Secretary is authorized to
issue such regulations as may be necessary to carry out the
provisions of this section.
‘‘(e) LOAN
CANCELLATION
DURING
CONTINUING
TEACHING SERVICE.—
‘‘(1) IN GENERAL.—The Secretary shall cancel
the obligation to repay—
‘‘(A) 30 percent of the total outstanding
amount and applicable interest of subsidized
Federal Direct Stafford/Ford loans that are
qualifying loans and are owed by the student
borrower after the completion of the fourth or
fifth complete school year of service described in
subsection (b);
‘‘(B) 40 percent of such total amount after
the completion of the sixth complete school year
of such service; and
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‘‘(C) a total amount for any borrower that
shall not exceed $8,000.
‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to authorize any refunding of any
canceled loan.
‘‘(f) LIST.—If the list of schools in which a teacher
may perform service pursuant to subsection (b) is not avail-
able before May 1 of any year, the Secretary may use the
list for the year preceding the year for which the determina-
tion is made to make such service determination.
‘‘(g) CONTINUED ELIGIBILITY.—Any teacher who per-
forms service in a school that—
‘‘(1) meets the requirements of subsection
(b)(1)(A) in any year during such service; and
‘‘(2) in a subsequent year fails to meet the re-
quirements of such subsection, may continue to teach
in such school and shall be eligible for loan cancella-
tion pursuant to subsection (b).’’.
PART E—FEDERAL PERKINS LOANS
SEC. 461. AUTHORIZATION OF APPROPRIATIONS.
Subsection (b) of section 461 (20 U.S.C. 1087aa) is
amended—
(1) in paragraph (1), by striking ‘‘1993’’ and in-
serting ‘‘1999’’; and
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(2) in paragraph (2), by striking ‘‘1997’’ each
place the term appears and inserting ‘‘2003’’.
SEC. 462. ALLOCATION OF FUNDS.
(a) AMENDMENTS.—Section 462 (20 U.S.C. 1087bb) is
amended—
(1) in the matter preceding subparagraph (A) of
subsection (d)(3), by striking ‘‘the Secretary, for’’ and
all that follows through ‘‘years,’’;
(2) by amending subsection (f) to read as follows:
‘‘(f) DEFAULT PENALTIES.—
‘‘(1) IN GENERAL.—For fiscal year 1998 and
any succeeding fiscal year, any institution with a co-
hort default rate (as defined under subsection (h))
that equals or exceeds 25 percent shall have a default
penalty of zero.
‘‘(2) INELIGIBILITY.—
‘‘(A) IN GENERAL.—For fiscal year 1998
and any succeeding fiscal year, any institution
with a cohort default rate (as defined in sub-
section (h)) that equals or exceeds 50 percent for
each of the 3 most recent years for which data
are available shall not be eligible to participate
in a program under this part for the fiscal year
for which the determination is made and the 2
succeeding fiscal years, unless, within 30 days of
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receiving notification from the Secretary of the
loss of eligibility under this paragraph, the insti-
tution appeals the loss of eligibility to the Sec-
retary. The Secretary shall issue a decision on
any such appeal within 45 days after the sub-
mission of the appeal. Such decision may permit
the institution to continue to participate in a
program under this part if—
‘‘(i) the institution demonstrates to the
satisfaction of the Secretary that the cal-
culation of the institution’s cohort default
rate is not accurate, and that recalculation
would reduce the institution’s cohort default
rate for any of the 3 fiscal years below 50
percent; or
‘‘(ii) there are, in the judgment of the
Secretary, 
exceptional 
mitigating 
cir-
cumstances such as a small number of bor-
rowers entering repayment, that would
make the application of this subparagraph
inequitable.
‘‘(B) CONTINUED PARTICIPATION.—During
an appeal under subparagraph (A), the Sec-
retary may permit the institution to continue to
participate in a program under this part.
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‘‘(C) DEFINITION.—For the purposes of sub-
paragraph (A), the term ‘loss of eligibility’ shall
be defined as the mandatory liquidation of an
institution’s student loan fund, and assignment
of the institution’s outstanding loan portfolio to
the Secretary.’’;
(3) by amending paragraph (1) of subsection (g)
to read as follows: ‘‘(1) For award year 1998 and
subsequent years, the maximum cohort default rate is
25 percent.’’; and
(4) in subsection (h)—
(A) in the subsection heading, by striking
‘‘DEFINITIONS OF DEFAULT RATE AND’’ and in-
serting ‘‘DEFINITION OF’’;
(B) by striking paragraphs (1) and (2);
(C) by redesignating paragraphs (3) and
(4) as paragraphs (1) and (2), respectively;
(D) in paragraph (1) (as redesignated by
subparagraph (C))—
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraphs
(C) through (G) as subparagraphs (B)
through (F), respectively; and
(E) in the matter preceding subparagraph
(A) of paragraph (2) (as redesignated by sub-
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paragraph (C)), by striking ‘‘A loan’’ and insert-
ing ‘‘For purposes of calculating the cohort de-
fault rate under this subsection, a loan’’.
(b) CONFORMING AMENDMENTS.—Section 462 (20
U.S.C. 1087bb) is amended—
(1) in the matter following paragraphs (1)(B)
and (2)(D)(ii) of subsection (a), by inserting ‘‘cohort’’
before ‘‘default’’ each place the term appears;
(2) in the matter following paragraphs (2)(B)
and (3)(C) of subsection (c), by inserting ‘‘cohort’’ be-
fore ‘‘default’’ each place the term appears;
(3) in subsection (e)(2), by inserting ‘‘cohort’’ be-
fore ‘‘default’’; and
(4) in subsection (h)(1)(F) (as redesignated by
subparagraphs (C) and (D)(ii) of subsection (a)(4)),
by inserting ‘‘cohort’’ before ‘‘default’’.
SEC. 463. AGREEMENTS WITH INSTITUTIONS OF HIGHER
EDUCATION.
Section 463 (20 U.S.C. 1087cc) is amended—
(1) by amending subparagraph (B) of subsection
(a)(2) to read as follows:
‘‘(B) a capital contribution by an institu-
tion in an amount equal to one-third of the Fed-
eral capital contributions described in subpara-
graph (A);’’;
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(2) in subsection (c)—
(A) in paragraph (2)—
(i) in the matter preceding subpara-
graph (A), by striking ‘‘by the Secretary’’
and all that follows through ‘‘of—’’ and in-
serting ‘‘by the Secretary or an institution,
as the case may be, to such organizations,
with respect to any loan held by the Sec-
retary or the institution, respectively,
of—’’;
(ii) by amending subparagraph (A) to
read as follows:
‘‘(A) the date of disbursement and the
amount of such loans made to any borrower
under this part at the time of disbursement of
the loan;’’;
(iii) in subparagraph (B)—
(I) by inserting ‘‘the repayment
and’’ after ‘‘concerning’’; and
(II) by striking ‘‘any defaulted’’
and inserting ‘‘such’’; and
(iv) in subparagraph (C), by inserting
‘‘, or upon cancellation or discharge of the
borrower’s obligation on the loan for any
reason’’ before the period;
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(B) in paragraph (3)—
(i) in the matter preceding subpara-
graph (A), by striking ‘‘until—’’ and in-
serting ‘‘until the loan is paid in full.’’; and
(ii) by striking subparagraphs (A) and
(B); and
(C) by amending paragraph (4) to read as
follows:
‘‘(4)(A) Except as provided in subparagraph
(B), an institution of higher education, after con-
sultation with the Secretary and pursuant to the
agreements entered into under paragraph (1), shall
disclose at least annually to any credit bureau orga-
nization with which the Secretary has such an agree-
ment the information set forth in paragraph (2), and
shall disclose promptly to such credit bureau organi-
zation any changes to the information previously dis-
closed.
‘‘(B) The Secretary may promulgate regulations
establishing criteria under which an institution of
higher education may cease reporting the information
described in paragraph (2) before a loan is paid in
full.’’.
SEC. 464. TERMS OF LOANS.
Section 464 (20 U.S.C. 1087dd) is amended—
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(1) in subsection (a), by amending paragraph
(2) to read as follows:
‘‘(2)(A) Except as provided in paragraph (4),
the total of loans made to a student in any academic
year or its equivalent by an institution of higher edu-
cation from a loan fund established pursuant to an
agreement under this part shall not exceed—
‘‘(i) $4,000, in the case of a student who has
not successfully completed a program of under-
graduate education; or
‘‘(ii) $6,000, in the case of a graduate or
professional student (as defined in regulations
issued by the Secretary).
‘‘(B) Except as provided in paragraph (4), the
aggregate of the loans for all years made to a student
by institutions of higher education from loan funds
established pursuant to agreements under this part
may not exceed—
‘‘(i) $40,000, in the case of any graduate or
professional student (as defined by regulations
issued by the Secretary, and including any loans
from such funds made to such person before such
person became a graduate or professional stu-
dent);
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‘‘(ii) $20,000, in the case of a student who
has successfully completed 2 years of a program
of education leading to a bachelor’s degree but
who has not completed the work necessary for
such a degree (determined under regulations
issued by the Secretary, and including any loans
from such funds made to such person before such
person became such a student); and
‘‘(iii) $8,000, in the case of any other stu-
dent.
‘‘(C)(i) The total of loans made to a student de-
scribed in clause (ii) in any academic year or its
equivalent by an institution of higher education from
loan funds established pursuant to agreements under
this part may not exceed—
‘‘(I) $8,000 for each of the third and fourth
years of the program of instruction leading to a
bachelor’s degree; or
‘‘(II) $10,000 for the first year of graduate
study (as defined in regulations issued by the
Secretary).
‘‘(ii) A student referred to in clause (i) is any
student—
‘‘(I) who is a junior in a program of in-
struction leading to a bachelor’s degree;
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‘‘(II) who states in writing that the student
will pursue a course of study to become an ele-
mentary or secondary school teacher; and
‘‘(III) who states in writing that the student
intends to become a full-time teacher in a school
which 
meets 
the 
requirements 
of 
section
465(a)(2)(A).
‘‘(iii) Each institution shall provide a report to
the Secretary annually containing the number of
loans under this subparagraph that are made, the
amount of each loan, and whether students benefiting
from the higher loan limits met the requirements for
receiving those loans.
‘‘(iv) If 3 years after the date of enactment of the
Higher Education Amendments of 1998, the Secretary
determines that an institution has engaged in a pat-
tern of abuse of this subparagraph, the Secretary may
reduce or terminate the institution’s Federal capital
contribution.’’;
(2) in subsection (b), by amending paragraph
(2) to read as follows:
‘‘(2) If the institution’s capital contribution
under section 462 is directly or indirectly based in
part on the financial need demonstrated by students
who are (A) attending the institution less than full
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time; or (B) independent students, a reasonable por-
tion of the loans made from the institution’s student
loan fund containing the contribution shall be made
available to such students.’’;
(3) in subsection (c)(1)—
(A) in subparagraph (D), by striking ‘‘(i) 3
percent’’ and all that follows through ‘‘or (iii)’’;
(B) by redesignating subparagraphs (H)
and (I) as subparagraphs (I) and (J), respec-
tively; and
(C) by inserting after subparagraph (G) the
following:
‘‘(H) shall provide that, in the case of a
loan made on or after July 1, 1999, the loan
shall be considered in default (except as other-
wise provided in section 462(h)) if the borrower
of a loan made under this part fails to make an
installment payment when due, or to meet any
other term of the promissory note or written re-
payment agreement, and such failure persists
for—
‘‘(i) 180 days in the case of a loan that
is repayable in monthly installments; or
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‘‘(ii) 240 days in the case of a loan
that is repayable in less frequent install-
ments;’’;
(4) in subsection (c), by adding at the end the
following:
‘‘(7) There shall be excluded from the 9-month period
that begins on the date on which a student ceases to carry
at least one-half the normal full-time academic workload
as described in paragraph (1)(A) any period not to exceed
3 years during which a borrower who is a member of a
reserve component of the Armed Forces named in section
10101 of title 10, United States Code, is called or ordered
to active duty for a period of more than 30 days (as defined
in section 101(d)(2) of such title). Such period of exclusion
shall include the period necessary to resume enrollment at
the borrower’s next available regular enrollment period.’’;
and
(5) by adding at the end the following:
‘‘(g) DISCHARGE.—
‘‘(1) IN GENERAL.—If a student borrower who
received a loan made under this part on or after Jan-
uary 1, 1986, is unable to complete the program in
which such student is enrolled due to the closure of the
institution, then the Secretary shall discharge the bor-
rower’s liability on the loan (including the interest
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and collection fees) by repaying the amount owed on
the loan and shall subsequently pursue any claim
available to such borrower against the institution and
the institution’s affiliates and principals, or settle the
loan obligation pursuant to the financial responsibil-
ity standards described in section 498(c).
‘‘(2) ASSIGNMENT.—A borrower whose loan has
been discharged pursuant to this subsection shall be
deemed to have assigned to the United States the right
to a loan refund in an amount that does not exceed
the amount discharged against the institution and the
institution’s affiliates and principals.
‘‘(3) ELIGIBILITY
FOR
ADDITIONAL
ASSIST-
ANCE.—The period during which a student was un-
able to complete a course of study due to the closing
of the institution shall not be considered for purposes
of calculating the student’s period of eligibility for ad-
ditional assistance under this title.
‘‘(4) SPECIAL RULE.—A borrower whose loan has
been discharged pursuant to this subsection shall not
be precluded, because of that discharge, from receiving
additional grant, loan, or work assistance under this
title for which the borrower would be otherwise eligi-
ble (but for the default on the discharged loan).
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‘‘(5) REPORTING.—The Secretary or institution,
as the case may be, shall report to credit bureaus with
respect to loans that have been discharged pursuant to
this subsection.
‘‘(h) REHABILITATION OF LOANS.—
‘‘(1) REHABILITATION.—
‘‘(A) IN
GENERAL.—If the borrower of a
loan made under this part who has defaulted on
the loan makes 12 ontime, consecutive, monthly
payments of amounts owed on the loan, as deter-
mined by the institution, the loan shall be con-
sidered rehabilitated, and the institution that
made that loan (or the Secretary, in the case of
a loan held by the Secretary) shall instruct any
credit bureau organization or credit reporting
agency to which the default was reported to re-
move the default from the borrower’s credit his-
tory.
‘‘(B) COMPARABLE
CONDITIONS.—As long
as the borrower continues to make scheduled re-
payments on a loan rehabilitated under this
paragraph, the rehabilitated loan shall be subject
to the same terms and conditions, and qualify
for the same benefits and privileges, as other
loans made under this part.
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‘‘(C) ADDITIONAL
ASSISTANCE.—The bor-
rower of a rehabilitated loan shall not be pre-
cluded by section 484 from receiving additional
grant, loan, or work assistance under this title
(for which the borrower is otherwise eligible) on
the basis of defaulting on the loan prior to such
rehabilitation.
‘‘(D) LIMITATIONS.—A borrower only once
may obtain the benefit of this paragraph with
respect to rehabilitating a loan under this part.
‘‘(2) RESTORATION OF ELIGIBILITY.—If the bor-
rower of a loan made under this part who has de-
faulted on that loan makes 6 ontime, consecutive,
monthly payments of amounts owed on such loan, the
borrower’s eligibility for grant, loan, or work assist-
ance under this title shall be restored. A borrower
only once may obtain the benefit of this paragraph
with respect to restored eligibility.
‘‘(i) INCENTIVE REPAYMENT PROGRAM.—
‘‘(1) IN GENERAL.—Each institution of higher
education may establish, with the approval of the Sec-
retary, an incentive repayment program designed to
reduce default and to replenish student loan funds es-
tablished under this part. Each such incentive repay-
ment program may—
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‘‘(A) offer a reduction of the interest rate on
a loan on which the borrower has made 48
ontime, consecutive, monthly repayments, but in
no event may the rate be reduced by more than
1 percent;
‘‘(B) provide for a discount on the balance
owed on a loan on which the borrower pays the
principal and interest in full prior to the end of
the applicable repayment period, but in no event
may the discount exceed 5 percent of the unpaid
principal balance due on the loan at the time the
early repayment is made; and
‘‘(C) include such other incentive repayment
options as the institution determines will carry
out the objectives of this subsection.
‘‘(2) LIMITATION.—No incentive repayment op-
tion under an incentive repayment program author-
ized by this subsection may be paid for with Federal
funds, including any Federal funds from the student
loan fund, nor can an incentive repayment option be
paid for with institutional funds from the student
loan fund.’’.
SEC. 465. DISTRIBUTION OF ASSETS FROM STUDENT LOAN
FUNDS.
Section 466 (20 U.S.C. 1087ff) is amended—
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(1) in subsection (a)—
(A) in the matter preceding paragraph
(1)—
(i) by striking ‘‘1996’’ and inserting
‘‘2003’’; and
(ii) by striking ‘‘1997’’ and inserting
‘‘2004’’; and
(B) in paragraph (1), by striking ‘‘1996’’
and inserting ‘‘2003’’;
(2) in subsection (b)—
(A) by striking ‘‘2005’’ and inserting
‘‘2012’’; and
(B) by striking ‘‘1996’’ and inserting
‘‘2003’’; and
(3) in subsection (c), by striking ‘‘1997’’ and in-
serting ‘‘2004’’.
SEC. 466. PERKINS LOAN REVOLVING FUND.
(a) REPEAL.—Subsection (c) of section 467 (20 U.S.C.
1087gg(c)) is repealed.
(b) TRANSFER OF BALANCE.—Any funds in the Per-
kins Loan Revolving Fund on the date of enactment of this
Act shall be transferred to and deposited in the Treasury.
PART F—NEED ANALYSIS
SEC. 471. COST OF ATTENDANCE.
Section 472 (20 U.S.C. 1087ll) is amended—
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(1) in paragraph (3)—
(A) in subparagraph (A), by striking ‘‘of
not less than $1,500’’ and inserting ‘‘determined
by the institution’’; and
(B) in subparagraph (C), by striking ‘‘, ex-
cept that the amount may not be less than
$2,500’’; and
(2) in paragraph (11), by striking ‘‘placed’’ and
inserting ‘‘engaged’’.
SEC. 472. FAMILY CONTRIBUTION FOR DEPENDENT STU-
DENTS.
Section 475 (20 U.S.C. 1087oo) is amended—
(1) in subsection (g)—
(A) in paragraph (2)—
(i) in subparagraph (D)—
(I) by striking ‘‘$1,750’’ and in-
serting ‘‘$2,200’’; and
(II) by striking ‘‘and’’ after the
semicolon;
(ii) in subparagraph (E), by striking
the period and inserting ‘‘; and’’; and
(iii) by adding at the end the follow-
ing:
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‘‘(F) an allowance for parents’ negative
available income, determined in accordance with
paragraph (6).’’; and
(B) by adding at the end the following:
‘‘(6) ALLOWANCE
FOR
PARENTS’ 
NEGATIVE
AVAILABLE INCOME.—The allowance for parents’ neg-
ative available income is the amount, if any, by
which the sum of the amounts deducted under sub-
paragraphs (A) through (F) of paragraph (1) exceeds
the parents’ total income (as defined in section
480).’’; and
(2) by adding at the end the following:
‘‘(j) ADJUSTMENTS TO STUDENTS CONTRIBUTION FOR
ENROLLMENT PERIODS OF LESS THAN NINE MONTHS.—
For periods of enrollment of less than 9 months, the stu-
dent’s contribution from adjusted available income (as de-
termined under subsection (g)) is determined, for purposes
other than subpart 2 of part A, by dividing the amount
determined under such subsection by 9, and multiplying the
result by the number of months in the period of enroll-
ment.’’.
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SEC. 473. FAMILY CONTRIBUTION FOR INDEPENDENT STU-
DENTS WITHOUT DEPENDENTS OTHER THAN
A SPOUSE.
Section 
476(b)(1)(A)(iv) 
(20 
U.S.C.
1087pp(b)(1)(A)(iv)) is amended—
(1) in subclause (I), by striking ‘‘$3,000’’ and
inserting ‘‘$4,250’’;
(2) in subclause (II), by striking ‘‘$3,000’’ and
inserting ‘‘$4,250’’; and
(3) in subclause (III), by striking ‘‘$6,000’’ and
inserting ‘‘$7,250’’.
SEC. 474. REGULATIONS; UPDATED TABLES AND AMOUNTS.
Section 478(b) (20 U.S.C. 1087rr(b)) is amended—
(1) by striking ‘‘For each academic year’’ and
inserting the following:
‘‘(1) REVISED
TABLES.—For each academic
year’’; and
(2) by adding at the end the following new para-
graph:
‘‘(2) REVISED
AMOUNTS.—For each academic
year after academic year 1999–2000, the Secretary
shall publish in the Federal Register revised income
protection allowances for the purpose of sections
475(g)(2)(D) and 476(b)(1)(A)(iv). Such revised al-
lowances shall be developed by increasing each of the
dollar amounts contained in such section by a per-
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centage equal to the estimated percentage increase in
the Consumer Price Index (as determined by the Sec-
retary) between December 1998 and the December
next preceding the beginning of such academic year,
and rounding the result to the nearest $10.’’.
SEC. 475. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAM-
ILY CONTRIBUTION.
Section 479 (20 U.S.C. 1087ss) is amended—
(1) in subsection (b)(3)—
(A) in subparagraph (A), by striking ‘‘or’’
after the semicolon;
(B) by redesignating subparagraph (B) as
subparagraph (C); and
(C) by inserting after subparagraph (A) the
following:
‘‘(B) a form 1040 (including any prepared
or electronic version of such form) required pur-
suant to the Internal Revenue Code of 1986, ex-
cept that such form shall be considered a form
described in this paragraph only if the student
or family files such form in order to take a tax
credit under section 25A of the Internal Revenue
Code of 1986, and would otherwise be eligible to
file a form described in subparagraph (A); or’’;
and
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(2) in subsection (c)—
(A) in paragraph (1), by amending sub-
paragraph (A) to read as follows:
‘‘(A)(i) the student’s parents file, or are eli-
gible to file, a form described in subsection
(b)(3), or the parents certify to the Secretary
that the parents are not required to file an in-
come tax return; and
‘‘(ii) the student files, or is eligible to file,
a form described in subsection (b)(3), or the stu-
dent certifies to the Secretary that the student is
not required to file an income tax return; and’’;
and
(B) in paragraph (2), by amending sub-
paragraph (A) to read as follows:
‘‘(A) the student (and the student’s spouse,
if any) files, or is eligible to file, a form de-
scribed in subsection (b)(3), or the student cer-
tifies to the Secretary that the student (and the
student’s spouse, if any) is not required to file
an income tax return; and’’.
SEC. 476. REFUSAL OR ADJUSTMENT OF LOAN CERTIFI-
CATIONS.
Section 479A (20 U.S.C. 1087tt) is amended—
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(1) in subsection (a), by inserting ‘‘Special cir-
cumstances may include tuition expenses at an ele-
mentary school or secondary school, medical or dental
expenses not covered by insurance, other changes in a
family’s income or assets, or changes in a student’s
status.’’ after ‘‘absence of special circumstances.’’; and
(2) by amending subsection (c) to read as fol-
lows:
‘‘(c) REFUSAL OR ADJUSTMENT OF LOAN CERTIFI-
CATIONS.—An eligible institution may refuse to certify a
statement that permits a student to receive a loan under
part B, or refuse to make a loan under part D, or may
certify a loan amount or make a loan that is less than the
student’s determination of need (as determined under this
part), if the reason for the action is documented and pro-
vided in written form to the student. No eligible institution
shall discriminate against any borrower or applicant in ob-
taining a loan on the basis of race, national origin, reli-
gion, sex, marital status, age, or disability status.’’.
SEC. 477. TREATMENT OF OTHER FINANCIAL ASSISTANCE.
Section 480(j)(3) (20 U.S.C. 1087vv(j)(3)) is amended
by inserting ‘‘educational assistance after discharge or re-
lease from service under chapter 30 of title 38, United
States Code, or’’ after ‘‘paragraph (1),’’.
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PART G—GENERAL PROVISIONS
SEC. 481. DEFINITION OF INSTITUTION OF HIGHER EDU-
CATION.
Subparagraph (A) of section 481(a)(2) (20 U.S.C.
1088(a)(2)) is amended—
(1) in the second sentence, by inserting ‘‘or vet-
erinary’’ after ‘‘case of a graduate medical’’;
(2) by striking ‘‘attending a graduate medical
school’’ and inserting ‘‘attending such school’’; and
(3) by amending clause (ii) to read as follows:
‘‘(ii) the institution has a clinical
training program that was approved by a
State as of January 1, 1992, or students en-
rolled in the institution complete their clini-
cal training at an approved veterinary
school located in the United States.’’.
SEC. 482. MASTER CALENDAR.
Section 482 (20 U.S.C. 1089) is amended—
(1) in subsection (a), by adding at the end the
following:
‘‘(3) To the extent feasible, the Secretary shall
notify eligible institutions and vendors by December
1 prior to the start of an award year of minimal
hardware and software requirements necessary to ad-
minister programs under this title.’’; and
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(2) by amending subsection (c) to read as fol-
lows:
‘‘(c) DELAY OF EFFECTIVE DATE OF LATE PUBLICA-
TIONS.—(1) Except as provided in paragraph (2), any reg-
ulatory changes initiated by the Secretary affecting the pro-
grams under this title that have not been published in final
form by November 1 prior to the start of the award year
shall not become effective until the beginning of the second
award year after such November 1 date.
‘‘(2)(A) The Secretary may designate any regulatory
provision that affects the programs under this title and is
published in final form after November 1 as one that an
entity subject to the provision may, in the entity’s discre-
tion, choose to implement prior to the effective date de-
scribed in paragraph (1). The Secretary may specify in the
designation when, and under what conditions, an entity
may implement the provision prior to that effective date.
The Secretary shall publish any designation under this sub-
paragraph in the Federal Register.
‘‘(B) If an entity chooses to implement a regulatory
provision prior to the effective date described in paragraph
(1), as permitted by subparagraph (A), the provision shall
be effective with respect to that entity in accordance with
the terms of the Secretary’s designation.’’.
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SEC. 483. FORMS AND REGULATIONS.
Section 483 (20 U.S.C. 1090) is amended—
(1) in subsection (a)—
(A) in the subsection heading, by striking
‘‘FORM’’ and inserting ‘‘FORM DEVELOPMENT’’;
(B) by amending paragraph (1) to read as
follows:
‘‘(1) SINGLE FORM REQUIREMENTS.—The Sec-
retary, in cooperation with representatives of agencies
and organizations involved in student financial as-
sistance, shall produce, distribute, and process free of
charge a common financial reporting form (which
shall include electronic versions of the form) to be
used—
‘‘(A) to determine the need (including the
expected family contribution and, if appropriate,
cost of attendance) and eligibility of a student
for financial assistance under parts A, C, D, and
E; and
‘‘(B) to determine the need (including the
expected family contribution and cost of attend-
ance) of a student for the purposes of part B.
‘‘(2) STATE DATA ITEMS.—The Secretary shall
include on the form developed under this subsection
such data items, selected in consultation with the
States to assist the States in awarding State student
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financial assistance, as the Secretary determines are
appropriate for inclusion.
‘‘(3) PARENT’S SOCIAL SECURITY NUMBER.—The
Secretary shall include on the form developed under
this paragraph space for the social security number
of parents of dependent students seeking financial as-
sistance under this title.
‘‘(4) USE.—The Secretary shall require that the
form developed under this paragraph be used for the
purpose of collecting eligibility and other data for
purposes of part B, including the applicant’s choice
of lender.’’; and
(C) in paragraph (3)—
(i) by striking ‘‘Institutions of higher
education and States shall receive’’ and in-
serting ‘‘The Secretary shall provide’’; and
(ii) by striking ‘‘by the Secretary’’;
and
(2) by adding at the end the following:
‘‘(g) PAYMENT FOR DATA.—The Secretary may pay
such charges as the Secretary determines are necessary to
obtain data that the Secretary considers essential to the effi-
cient administration of the programs under this title.
‘‘(h) MASTER PROMISSORY NOTE.—
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‘‘(1) IN GENERAL.—The Secretary shall develop
and require the use of a master promissory note, for
loans made under this title for periods of enrollment
beginning on or after July 1, 2000, that may be ap-
plicable to more than 1 academic year, or more than
1 type of loan made under this title. Prior to imple-
menting the master promissory note for all loans
made under this title, the Secretary may develop, test,
and require the use of such a master promissory note
on a limited or pilot basis.
‘‘(2) CONSULTATION.—In developing the master
promissory note under this subsection, the Secretary
shall consult with representatives of guaranty agen-
cies, eligible lenders, institutions of higher education,
students, and organizations involved in student fi-
nancial assistance.
‘‘(3) SALE; 
ASSIGNMENT; 
ENFORCEABILITY.—
Notwithstanding any other provision of law, each
loan made under a master promissory note under this
subsection may be sold or assigned independently of
any other loan made under the same promissory note
and each such loan shall be separately enforceable in
all Federal and State courts on the basis of an origi-
nal or copy of the master promissory note in accord-
ance with the terms of the master promissory note.’’.
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SEC. 484. STUDENT ELIGIBILITY.
(a) AMENDMENTS.—Section 484 (20 U.S.C. 1091) is
amended—
(1) in subsection (d)—
(A) in the matter preceding paragraph (1),
by striking ‘‘either’’; and
(B) by adding at the end the following:
‘‘(3) The student has completed a high school
education in a home school setting and has met any
State requirements with respect to such education in
a home school setting.’’;
(2) in subsection (l), by amending paragraph (1)
to read as follows:
‘‘(1) 
RELATION
TO
CORRESPONDENCE
COURSES.—
‘‘(A) IN GENERAL.—A student enrolled in a
course of instruction at an institution of higher
education that is offered in whole or in part
through telecommunications and leads to a recog-
nized certificate for a program of study of 1 year
or longer, or a recognized associate, bacca-
laureate, or graduate degree, conferred by such
institution, shall not be considered to be enrolled
in correspondence courses unless the total
amount of telecommunications and correspond-
ence courses at such institution equals or exceeds
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50 percent of the total amount of all courses at
the institution.
‘‘(B) REQUIREMENT.—An institution of
higher education referred to in subparagraph (A)
is an institution of higher education—
‘‘(i) that is not an institute or school
described in section 521(4)(C) of the Carl
D. Perkins Vocational and Applied Tech-
nology Education Act; and
‘‘(ii) for which at least 50 percent of
the programs of study offered by the institu-
tion lead to the award of a recognized asso-
ciate, baccalaureate, or graduate degree.’’;
and
(3) by adding at the end the following:
‘‘(q) VERIFICATION OF IRS RETURN INFORMATION.—
The Secretary shall verify the information reported by all
applicants for assistance on the form prescribed under sec-
tion 483 with the return information (as defined in section
6103 of the Internal Revenue Code of 1986) available to
the Secretary of the Treasury. Notwithstanding section 6103
of such Code the Secretary of the Treasury shall provide
the return information to the Secretary. In the case of a
dependent student the return information shall include the
return information of the parent of the student. The form
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prescribed by the Secretary under section 483 shall contain
a prominent notice of the verification of the information
and a warning to all the applicants of the penalties for
misrepresentation, with respect to the information, under
the United States Code.
‘‘(r) SUSPENSION OF ELIGIBILITY FOR DRUG-RELAT-
ED OFFENSES.—
‘‘(1) IN GENERAL.—A student who has been con-
victed of any offense under any Federal or State law
involving the possession or sale of a controlled sub-
stance shall not be eligible to receive any grant, loan,
or work assistance under this title during the period
beginning on the date of such conviction and ending
after the interval specified in the following table:
‘‘If convicted of an offense involving:
The possession of a con-
trolled substance:
Ineligibility period is:
First offense ..............................
1 year
Second offense ...........................
2 years
Third offense .............................
Indefinite.
The sale of a controlled
substance:
Ineligibility period is:
First offense ..............................
2 years
Second offense ...........................
Indefinite.
‘‘(2) REHABILITATION.—A student whose eligi-
bility has been suspended under paragraph (1) may
resume eligibility before the end of the ineligibility pe-
riod determined under such paragraph if—
‘‘(A) the student satisfactorily completes a
drug rehabilitation program that—
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‘‘(i) complies with such criteria as the
Secretary shall prescribe in regulations for
purposes of this paragraph; and
‘‘(ii) includes 2 unannounced drug
tests; or
‘‘(B) the conviction is expunged by pardon,
reversed, set aside, or otherwise rendered nuga-
tory.
‘‘(3) DEFINITIONS.—In this subsection, the term
‘controlled substance’ has the meaning given the term
in section 102(6) of the Controlled Substances Act (21
U.S.C. 802(6)).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a)(2) regarding suspension of eligibility for drug-
related offenses, shall apply with respect to financial assist-
ance to cover the costs of attendance for periods of enroll-
ment beginning after the date of enactment of this Act.
SEC. 485. INSTITUTIONAL REFUNDS.
Section 484B (20 U.S.C. 1091b) is amended to read
as follows:
‘‘SEC. 484B. INSTITUTIONAL REFUNDS.
‘‘(a) RETURN OF TITLE IV FUNDS.—
‘‘(1) IN GENERAL.—If a recipient of assistance
under this title withdraws from a payment period in
which the recipient began attendance, the amount of
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grant (other than assistance received under part C of
this title) or loan assistance to be returned to the title
IV programs is calculated according to paragraph (2)
and returned in accordance with subsection (b).
‘‘(2) CALCULATION OF AMOUNT OF TITLE IV AS-
SISTANCE EARNED.—
‘‘(A) IN GENERAL.—The amount of grant or
loan assistance under this title that is earned by
the recipient for purposes of this section is cal-
culated by—
‘‘(i) determining the percentage of
grant and loan assistance under this title
that has been earned by the student, as de-
scribed in subparagraph (B); and
‘‘(ii) applying such percentage to the
total amount of such grant and loan assist-
ance that was disbursed (and that could
have been disbursed) to the student, or on
the student’s behalf, for the payment period,
as of the day the student withdrew.
‘‘(B) PERCENTAGE EARNED.—For purposes
of subparagraph (A)(i), the percentage of grant
or loan assistance under this title that has been
earned by the student is—
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‘‘(i) equal to the percentage of the pay-
ment period completed (as determined in
accordance with subsection (d)) as of the
day the student withdrew, provided that
such date occurs on or before the completion
of 60 percent of the payment period; or
‘‘(ii) 100 percent, if the day the stu-
dent withdrew occurs after the student has
completed 60 percent of the payment period.
‘‘(C) PERCENTAGE NOT EARNED.—For pur-
poses of subsection (b), the amount of grant and
loan assistance awarded under this title that has
not been earned by the student shall be calculated
by—
‘‘(i) determining the complement of the
percentage of grant or loan assistance under
this title has been earned by the student de-
scribed in subparagraph (B); and
‘‘(ii) applying the percentage deter-
mined under clause (i) to the total amount
of such grant and loan assistance that was
disbursed (and that could have been dis-
bursed) to the student, or on the student’s
behalf, for the payment period, as of the day
the student withdrew.
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‘‘(3) DIFFERENCES BETWEEN AMOUNTS EARNED
AND AMOUNTS RECEIVED.—
‘‘(A) IN GENERAL.—If the student has re-
ceived less grant or loan assistance than the
amount earned, as calculated under paragraph
(2)(B), the institution of higher education shall
comply with the procedures for late disbursement
specified by the Secretary in regulations.
‘‘(B) RETURN.—If the student has received
more grant or loan assistance than the amount
earned, as calculated under paragraph (2)(B),
the unearned funds shall be returned by the in-
stitution or the student, or both, as may be re-
quired under paragraphs (1) and (2) of sub-
section (b), to the programs under this title in
the order specified in subsection (b)(3).
‘‘(b) RETURN OF TITLE IV PROGRAM FUNDS.—
‘‘(1) RESPONSIBILITY
OF
THE
INSTITUTION.—
The institution shall return, in the order specified in
paragraph (3), the lesser of—
‘‘(A) the amount of grant and loan assist-
ance awarded under this title that has not been
earned by the student, as calculated under sub-
section (a)(2)(C); or
‘‘(B) an amount equal to—
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‘‘(i) the total institutional charges for
the payment period; multiplied by
‘‘(ii) the percentage of grant and loan
assistance awarded under this title that has
not been earned by the student, as described
in subsection (a)(2)(C).
‘‘(2) RESPONSIBILITY OF THE STUDENT.—
‘‘(A) IN GENERAL.—The student shall re-
turn assistance that has not been earned by the
student as described in subsection (a)(2)(C) in
the order specified in paragraph (3) minus the
amount the institution is required to return
under paragraph (1).
‘‘(B) SPECIAL RULE.—The student shall re-
turn or repay, as appropriate, the amount deter-
mined under subparagraph (A) to—
‘‘(i) a loan program under this title in
accordance with the terms of the loan; and
‘‘(ii) a grant program under this title,
as an overpayment of such grant and shall
be subject to overpayment collection proce-
dures prescribed by the Secretary.
‘‘(3) ORDER OF RETURN OF TITLE IV FUNDS.—
‘‘(A) IN GENERAL.—Excess funds returned
by the institution or the student, as appropriate,
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in accordance with paragraph (1) or (2), respec-
tively, shall be credited to outstanding balances
on loans made under this title to the student or
on behalf of the student for the payment period
for which a return of funds is required. Such ex-
cess funds shall be credited in the following
order:
‘‘(i) To outstanding balances on loans
made under section 428H for the payment
period for which a return of funds is re-
quired.
‘‘(ii) To outstanding balances on loans
made under section 428 for the payment pe-
riod for which a return of funds is required.
‘‘(iii) To outstanding balances on un-
subsidized loans (other than parent loans)
made under part D for the payment period
for which a return of funds is required.
‘‘(iv) To outstanding balances on sub-
sidized loans made under part D for the
payment period for which a return of funds
is required.
‘‘(v) To outstanding balances on loans
made under part E for the payment period
for which a return of funds is required.
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‘‘(vi) To outstanding balances on loans
made under section 428B for the payment
period for which a return of funds is re-
quired.
‘‘(vii) To outstanding balances on par-
ent loans made under part D for the pay-
ment period for which a return of funds is
required.
‘‘(B) 
REMAINING
EXCESSES.—If 
excess
funds remain after repaying all outstanding
loan amounts, the remaining excess shall be cred-
ited in the following order:
‘‘(i) To awards under subpart 1 of
part A for the payment period for which a
return of funds is required.
‘‘(ii) To awards under subpart 3 of
part A for the payment period for which a
return of funds is required.
‘‘(iii) To other assistance awarded
under this title for which a return of funds
is required.
‘‘(c) WITHDRAWAL DATE.—
‘‘(1) IN GENERAL.—In this section, the term ‘day
the student withdrew’—
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‘‘(A) is the date that the institution deter-
mines—
‘‘(i) the student began the withdrawal
process prescribed by the institution;
‘‘(ii) the student otherwise provided of-
ficial notification to the institution of the
intent to withdraw; or
‘‘(iii) in the case of a student who does
not begin the withdrawal process or other-
wise notify the institution of the intent to
withdraw, the date that the payment period
ends for which aid under this title was dis-
bursed; or
‘‘(B) for schools required to take attendance,
is determined by the institution from such at-
tendance records.
‘‘(2) SPECIAL
RULE.—Notwithstanding para-
graph (1), if the institution determines that a student
was not able to begin the withdrawal process, or oth-
erwise notify the institution of the intent to with-
draw, due to illness, accident, grievous personal loss,
or other such circumstances beyond the student’s con-
trol, the institution may determine the appropriate
withdrawal date.
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‘‘(d) PERCENTAGE OF THE PAYMENT PERIOD COM-
PLETED.—For purposes of subsection (a)(2)(B)(i), the per-
centage of the payment period completed is determined—
‘‘(1) in the case of a program that is measured
in credit hours, by dividing the total number of cal-
endar days comprising the payment period into the
number of calendar days completed in that period as
of the day the student withdrew; and
‘‘(2) in the case of a program that is measured
in clock hours, by dividing the total number of clock
hours comprising the payment period into the number
of clock hours completed by the student in that pay-
ment period as of the day the student withdrew.’’.
SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE IN-
FORMATION FOR STUDENTS.
(a) INFORMATION DISSEMINATION ACTIVITIES.—Sec-
tion 485(a) (20 U.S.C. 1092(a)) is amended—
(1) in paragraph (1)—
(A) in the second sentence, by striking ‘‘,
through appropriate publications and mailings,
to all current students, and to any prospective
student upon request.’’ and inserting ‘‘upon re-
quest, through appropriate publications, mail-
ings, and electronic media to an enrolled stu-
dent, and to any prospective student.’’;
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(B) by inserting after the second sentence
the following: ‘‘Each eligible institution annually
shall provide to all students enrolled at the insti-
tution, a list of the information that is required
by this section, together with a statement of the
procedures required to obtain the information.’’;
(C) by amending subparagraph (F) to read
as follows:
‘‘(F) a statement of—
‘‘(i) the requirements of any refund
policy with which the institution is required
to comply;
‘‘(ii) the requirements under section
484B for the return of grant or loan assist-
ance provided under this title; and
‘‘(iii) the requirements for officially
withdrawing from the institution;’’;
(D) in subparagraph (M)(ii), by striking
‘‘and’’ after the semicolon; and
(E) in subparagraph (N), by striking the
period and inserting ‘‘; and’’;
(2) in paragraph (2), by inserting ‘‘an applica-
tion for’’ after ‘‘concerning’’; and
(3) in paragraph (3), by amending subpara-
graph (A) to read as follows:
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‘‘(A) shall be made available by July 1 each
year to current and prospective students prior to
enrolling or entering into any financial obliga-
tion; and’’.
(b) EXIT COUNSELING
FOR BORROWERS.—Section
485(b) (20 U.S.C. 1092(b)) is amended—
(1) in paragraph (1)(A), by striking ‘‘(individ-
ually or in groups)’’; and
(2) in paragraph (2), by adding at the end the
following:
‘‘(C) Nothing in this subsection shall be construed to
prohibit an institution of higher education from utilizing
electronic means to provide personalized exit counseling.’’.
(c) DISCLOSURES REQUIRED WITH RESPECT TO ATH-
LETICALLY RELATED STUDENT AID.—Section 485(e) (20
U.S.C. 1092(e)) is amended—
(1) by amending paragraph (2) to read as fol-
lows:
‘‘(2) When an institution described in paragraph
(1) offers a potential student athlete athletically relat-
ed student aid, such institution shall provide to the
student, the student’s parents, the student’s guidance
counselor, and the student’s coach the information
contained in the report submitted by such institution
pursuant to paragraph (1). If the institution is a
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member of a national collegiate athletic association
that compiles graduation rate data on behalf of its
member institutions, that the Secretary determines is
substantially comparable to the information described
in the previous sentence, the distribution of the com-
pilation to all secondary schools shall fulfill the re-
sponsibility of the institution to provide the informa-
tion to a prospective student athlete’s guidance coun-
selor and coach.’’; and
(2) by amending paragraph (9) to read as fol-
lows:
‘‘(9) The reports required by this subsection shall
be due each July 1 and shall cover the 1-year period
ending August 31 of the preceding year.’’.
(d) DISCLOSURE OF CAMPUS SECURITY POLICY AND
CAMPUS CRIME STATISTICS.—Section 485(f) (20 U.S.C.
1092(f)) is amended—
(1) by amending subparagraph (F) of paragraph
(1) to read as follows:
‘‘(F) Statistics concerning the occurrence on
campus, during the most recent calendar year,
and during the 2 preceding calendar years for
which data are available—
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‘‘(i) of the following criminal offenses
reported to campus security authorities or
local police agencies—
‘‘(I) homicide, including murder
or nonnegligent manslaughter or neg-
ligent manslaughter;
‘‘(II) sex offenses, forcible or non-
forcible;
‘‘(III) robbery;
‘‘(IV) aggravated assault;
‘‘(V) burglary;
‘‘(VI) motor vehicle theft; and
‘‘(VII) arson;
‘‘(ii) of the crimes described in sub-
clauses (I) through (VII), and vandalism
and simple assault, that manifest evidence
of prejudice based on actual or perceived
race, gender, religion, sexual orientation,
ethnicity, or disability that are reported to
campus security authorities or local police
agencies, which data shall be collected and
reported according to category of preju-
dice.’’;
(2) by redesignating paragraphs (4) through (7)
as paragraphs (5) through (8), respectively;
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(3) by inserting after paragraph (3) the follow-
ing:
‘‘(4)(A) Each institution participating in any
program under this title which maintains either a po-
lice or security department of any kind shall make,
keep, and maintain a daily log, written in a form
that can be easily understood, recording all crimes re-
ported to such police or security department, includ-
ing—
‘‘(i) the nature, date, time, and general lo-
cation of each crime; and
‘‘(ii) the disposition of the complaint, if
known.
‘‘(B)(i) All entries that are required pursuant to
this paragraph shall, except where disclosure of such
information is prohibited by law or such disclosure
would jeopardize the confidentiality of the victim, be
open to public inspection within 2 business days of
the initial report being made to the department or a
campus security authority.
‘‘(ii) If new information about an entry into a
log becomes available to a police or security depart-
ment, then the new information shall be recorded in
the log not later than 2 business days after the infor-
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mation becomes available to the police or security de-
partment.
‘‘(iii) Where there is clear and convincing evi-
dence that the release of such information would jeop-
ardize an ongoing criminal investigation or the safety
of an individual, cause a suspect to flee or evade de-
tection, or result in the destruction of evidence, such
information may be withheld until that damage is no
longer likely to occur from the release of such infor-
mation.
‘‘(iv) Notwithstanding clause (iii), an institution
of higher education shall record all criminal incidents
occurring on campus and shall make the reports open
to public inspection not later than 2 business days
after the requirements of clause (iii) are met.’’;
(4) in paragraph (6) (as redesignated by para-
graph (2)), by amending subparagraph (A) to read as
follows: ‘‘(A) For purposes of this section the term
‘campus’ means—
‘‘(i) any building or property owned or con-
trolled by an institution of higher education
within the same reasonably contiguous geo-
graphic area of the institution, including a
building or property owned by the institution,
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but controlled by another person, such as a food
or other retail vendor;
‘‘(ii) any building or property owned or
controlled by a student organization recognized
by the institution;
‘‘(iii) all public property that is within the
same reasonably contiguous geographic area of
the institution, such as a sidewalk, a street, other
thoroughfare, or parking facility, that is adjacent
to a facility owned or controlled by the institu-
tion;
‘‘(iv) any building or property (other than
a branch campus) owned or controlled by an in-
stitution of higher education that is used in di-
rect support of, or in relation to, the institution’s
educational purposes, is used by students, and is
not within the same reasonably contiguous geo-
graphic area of the institution; and
‘‘(v) all dormitories or other student resi-
dential facilities owned or controlled by the in-
stitution.’’;
(5) in paragraph (7) (as redesignated by sub-
paragraph (B)), by inserting at the end the following:
‘‘Such statistics shall not identify victims of crimes or
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persons accused of crimes, except as required by State
or local law.’’; and
(6) by adding at the end the following:
‘‘(9) STUDY.—
‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with the Attorney General, shall pro-
vide for a national study to examine procedures
undertaken after an institution of higher edu-
cation receives a report of sexual assault.
‘‘(B) REPORT.—The study required by sub-
paragraph (A) shall include an analysis of—
‘‘(i) the existence and publication of
the institution of higher education’s and
State’s definition of sexual assault;
‘‘(ii) the existence and publication of
the institution’s policy for campus sexual
assaults;
‘‘(iii) the individuals to whom reports
of sexual assault are given most often and—
‘‘(I) how the individuals are
trained to respond to the reports; and
‘‘(II) the extent to which the indi-
viduals are trained;
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‘‘(iv) the reporting options that are ar-
ticulated to the victim or victims of the sex-
ual assault regarding—
‘‘(I) on-campus reporting and
procedure options; and
‘‘(II) off-campus reporting and
procedure options;
‘‘(v) the resources available for victims’
safety, support, medical health, and con-
fidentiality, including—
‘‘(I) how well the resources are ar-
ticulated both specifically to the victim
of sexual assault and generally to the
campus at large; and
‘‘(II) the security of the resources
in terms of confidentiality or reputa-
tion;
‘‘(vi) policies and practices that may
prevent or discourage the reporting of cam-
pus sexual assaults to local crime authori-
ties, or that may otherwise obstruct justice
or interfere with the prosecution of per-
petrators of campus sexual assaults;
‘‘(vii) policies and practices found suc-
cessful in aiding the report and any ensu-
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ing investigation or prosecution of a cam-
pus sexual assault;
‘‘(viii) the on-campus procedures for
investigation and disciplining the perpetra-
tor of a sexual assault, including—
‘‘(I) the format for collecting evi-
dence; and
‘‘(II) the format of the investiga-
tion and disciplinary proceeding, in-
cluding the faculty responsible for run-
ning the disciplinary procedure and
the persons allowed to attend the dis-
ciplinary procedure; and
‘‘(ix) types of punishment for offenders,
including—
‘‘(I) whether the case is directed
outside for further punishment; and
‘‘(II) how the institution punishes
perpetrators.
‘‘(C) SUBMISSION OF REPORT.—The report
required by subparagraph (B) shall be submitted
to Congress not later than September 1, 1999.
‘‘(D) DEFINITION.—For purposes of this
section, the term ‘campus sexual assaults’ means
sexual assaults occurring at institutions of high-
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er education and sexual assaults committed
against or by students or employees of such insti-
tutions.
‘‘(E) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated
to carry out this section $1,000,000 for fiscal
year 1999.
‘‘(10)(A) The Secretary shall report to the appro-
priate committees of Congress each institution of
higher education that the Secretary determines is not
in compliance with the reporting requirements of this
subsection.
‘‘(B) The Secretary shall provide to an institu-
tion of higher education that the Secretary determines
is having difficulty, or is not in compliance, with the
reporting requirements of this subsection—
‘‘(i) data and analysis regarding successful
practices employed by institutions of higher edu-
cation to reduce campus crime; and
‘‘(ii) technical assistance.
‘‘(11) For purposes of reporting the statistics de-
scribed in paragraphs (1)(F) and (1)(H), an institu-
tion of higher education shall distinguish, by means
of separate categories, any criminal offenses that
occur—
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‘‘(A) on publicly owned sidewalks, streets,
or other thoroughfares, or in parking facilities,
that are adjacent to facilities owned by the insti-
tution; and
‘‘(B) in dormitories or other residential fa-
cilities for students on campus.
‘‘(12)(A) Upon determination, after reasonable
notice and opportunity for a hearing on the record,
that an institution of higher education—
‘‘(i) has violated or failed to carry out any
provision of this subsection or any regulation
prescribed under this subsection; or
‘‘(ii) has substantially misrepresented the
number, location, or nature of the crimes re-
quired to be reported under this subsection,
the Secretary shall impose a civil penalty upon the
institution of not to exceed $25,000 for each violation,
failure, or misrepresentation.
‘‘(B) Any civil penalty may be compromised by
the Secretary. In determining the amount of such
penalty, or the amount agreed upon in compromise,
the appropriateness of the penalty to the size of the
institution of higher education subject to the deter-
mination, and the gravity of the violation, failure, or
misrepresentation shall be considered. The amount of
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such penalty, when finally determined, or the amount
agreed upon in compromise, may be deducted from
any sums owing by the United States to the institu-
tion charged.
‘‘(13)(A) Nothing in this subsection may be con-
strued to—
‘‘(i) create a cause of action against any in-
stitution of higher education or any employee of
such an institution for any civil liability; or
‘‘(ii) establish any standard of care.
‘‘(B) Notwithstanding any other provision of
law, evidence regarding compliance or noncompliance
with this subsection shall not be admissible as evi-
dence in any proceeding of any court, agency, board,
or other entity, except with respect to an action to en-
force this subsection
‘‘(14) This subsection may be cited as the
‘Jeanne Clery Disclosure of Campus Security Policy
and Campus Crime Statistics Act’.’’.
(e) DATA REQUIRED.—Section 485(g) (20 U.S.C.
1092(g)) is amended—
(1) in paragraph (1), by adding at the end the
following:
‘‘(I)(i) The total revenues, and the revenues
from football, men’s basketball, women’s basket-
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ball, all other men’s sports combined, and all
other women’s sports combined, derived by the
institution from the institution’s intercollegiate
athletics activities.
‘‘(ii) For the purpose of clause (i) revenues
from intercollegiate athletics activities allocable
to a sport shall include, without limitation, gate
receipts, broadcast revenues, appearance guaran-
tees and options, concessions and advertising, ex-
cept that revenues such as student activities fees
or alumni contributions not so allocable shall be
included in the calculation of total revenues
only.
‘‘(J)(i) The total expenses, and the expenses
attributable to football, men’s basketball, wom-
en’s basketball, all other men’s sports combined
and all other women’s sports combined, made by
the institution for the institution’s intercollegiate
athletics activities.
‘‘(ii) For the purpose of clause (i) expenses
for intercollegiate athletics activities allocable to
a sport shall include without limitation grants-
in-aid, salaries, travel, equipment, and supplies,
except that expenses such as general and admin-
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istrative overhead not so allocable shall be in-
cluded in the calculation of total expenses only.’’.
(2) by striking paragraph (5);
(3) by redesignating paragraph (4) as para-
graph (5); and
(4) by inserting after paragraph (3) the follow-
ing:
‘‘(4) SUBMISSION; REPORT; INFORMATION AVAIL-
ABILITY.—(A) Each institution of higher education
described in paragraph (1) shall provide to the Sec-
retary, within 15 days of the date that the institution
makes available the report under paragraph (1), the
information contained in the report.
‘‘(B) The Secretary shall prepare a report re-
garding the information received under subparagraph
(A) for each year by April 1 of the year. The report
shall—
‘‘(i) summarize the information and iden-
tify trends in the information;
‘‘(ii) aggregate the information by divisions
of the National Collegiate Athletic Association;
and
‘‘(iii) contain information on each individ-
ual institution of higher education.
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‘‘(C) The Secretary shall ensure that the report
described in subparagraph (B) is made available on
the Internet within a reasonable period of time.
‘‘(D) The Secretary shall notify, not later than
180 days after the date of enactment of the Higher
Education Amendments of 1998, all secondary schools
in all States regarding the availability of the infor-
mation reported under subparagraph (B) and the in-
formation made available under paragraph (1), and
how such information may be accessed.’’.
(f) GEPA AMENDMENT.—Section 444(a)(4)(B) of the
General 
Education 
Provisions 
Act 
(20 
U.S.C.
1232g(a)(4)(B)) is amended—
(1) by redesignating clauses (iii) and (iv) as
clauses (iv) and (v), respectively; and
(2) by inserting after clause (ii) the following:
‘‘(iii) records that are maintained by
local police or campus security officers of an
educational agency or institution about—
‘‘(I) individuals who have been
found guilty of, or have pled guilty to,
committing or participating in any
criminal activity as defined in Fed-
eral, State, or local law that has oc-
curred while the individual was a stu-
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dent in attendance, including audit or
noncredit, at an educational institu-
tion; and
‘‘(II) findings of guilt of criminal
misconduct and related sanctions from
any previously attended educational
agencies or institutions where such
records were created on or after Sep-
tember 1, 1999;’’.
SEC. 487. NATIONAL STUDENT LOAN DATA BANK SYSTEM.
Section 485B (20 U.S.C. 1092b) is amended by adding
at the end the following:
‘‘(h) STUDENT STATUS CONFIRMATION REPORT.—In
order to reduce unnecessary paperwork and to increase the
efficient administration, the Secretary shall assure that bor-
rowers under part E are included in the Student Status
Confirmation Report in the same manner as borrowers
under parts B and D.’’.
SEC. 488. TRAINING IN FINANCIAL AID SERVICES.
Section 486 (20 U.S.C. 1093) is amended to read as
follows:
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‘‘SEC. 486. INFORMATION ON THE COSTS OF HIGHER EDU-
CATION.
‘‘(a) IN GENERAL.—For the purpose of providing com-
parative information to families about the costs of higher
education—
‘‘(1) the National Center for Education Statistics
shall—
‘‘(A) develop a standard definition for the
following data elements:
‘‘(i) Tuition and fees for a full-time
undergraduate student.
‘‘(ii) Cost of attendance for a full-time
undergraduate student, consistent with the
provisions of section 472.
‘‘(iii) Average amount of financial as-
sistance received by an undergraduate stu-
dent who attends an institution of higher
education, including—
‘‘(I) each type of assistance or
benefit 
described 
in 
section
428(a)(2)(C)(i);
‘‘(II) fellowships; and
‘‘(III) institutional and other as-
sistance.
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‘‘(iv) Percentage of students receiving
financial assistance described in each of
subclauses (I), (II), and (III) of clause (iii);
‘‘(B) report the definitions to each institu-
tion of higher education and the Committee on
Labor and Human Resources of the Senate and
the Committee on Education and the Workforce
of the House of Representatives not later than 90
days after the date of enactment of the Higher
Education Amendments of 1998;
‘‘(C) collect information regarding the data
elements described in subparagraph (A) with re-
spect to at least all institutions of higher edu-
cation participating in the program under this
title, and make available the information each
year in a timely fashion through the integrated
postsecondary education data system, beginning
with the information from the 1999–2000 aca-
demic year;
‘‘(D) provide the public notice when the in-
formation described in subparagraph (C) is
available for public inspection; and
‘‘(E) publish in a timely fashion a report
after the third year of collection of the informa-
tion described in subparagraph (C) that com-
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pares the information described in subparagraph
(C) longitudinally by institution, which infor-
mation shall be presented in a form that is eas-
ily understandable, including clear definitions of
the data elements described in subparagraph (A),
to allow parents and students to make informed
decisions about attending college; and
‘‘(2) institutions of higher education shall pro-
vide information regarding each data element de-
scribed in paragraph (1)(A) to the National Center
for Education Statistics by March 1 of each year, be-
ginning in the year 2000.
‘‘(b) STUDY.—
‘‘(1) IN GENERAL.—In consultation with the Bu-
reau of Labor Statistics, the National Center for Edu-
cation Statistics shall conduct a national study of ex-
penditures at institutions of higher education. Such
study shall include information about—
‘‘(A) expenditures for—
‘‘(i) faculty salaries and benefits;
‘‘(ii) administrative salaries, benefits,
and expenses;
‘‘(iii) academic support services;
‘‘(iv) research;
‘‘(v) operations and maintenance;
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‘‘(vi) construction; and
‘‘(vii) technology;
‘‘(B) the replacement cost of instructional
buildings and equipment;
‘‘(C) how the expenditures described in sub-
paragraph (A) change over time; and
‘‘(D) how the expenditures described in sub-
paragraph (A) and the replacement cost de-
scribed in subparagraph (B) relate to college
costs.
‘‘(2) FINAL REPORT.—The National Center for
Education Statistics shall submit a report regarding
the findings of the study required by paragraph (1)
to the Committee on Labor and Human Resources of
the Senate and the Committee on Education and the
Workforce of the House of Representatives not later
than September 30, 2001.
‘‘(c) HIGHER EDUCATION MARKET BASKET.—In con-
sultation with the Bureau of Labor Statistics, the National
Center for Education Statistics shall develop a Higher Edu-
cation Market Basket that identifies the items that comprise
the costs of higher education. The National Center for Edu-
cation Statistics shall provide a report on the market basket
to the Committee on Labor and Human Resources of the
Senate and the Committee on Education and the Workforce
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of the House of Representatives not later than September
30, 2002.
‘‘(d) FINES.—In addition to the actions authorized in
section 487(c), the Secretary may impose a fine in an
amount not to exceed $25,000 on an institution of higher
education for failure to provide the information described
in subsection (a)(2) in a timely or accurate manner, or for
failure to otherwise cooperate with the National Center for
Education Statistics regarding efforts to obtain data on the
cost of higher education under such subsection.’’.
SEC. 489. PROGRAM PARTICIPATION AGREEMENTS.
(a) IN GENERAL.—Section 487 (20 U.S.C. 1094) is
amended—
(1) in subsection (a)—
(A) in paragraph (3)—
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraphs
(C) and (D) as subparagraphs (B) and (C),
respectively;
(B) in paragraph (9), by striking ‘‘part B’’
and inserting ‘‘part B or D’’;
(C) in paragraph (14)—
(i) in subparagraph (A), by striking
‘‘part B’’ and inserting ‘‘part B or D’’; and
(ii) in subparagraph (B)—
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(I) by inserting ‘‘for-profit’’ after
‘‘Any’’;
(II) by striking ‘‘and any eligible
institution which’’ and inserting ‘‘or’’;
and
(III) by striking ‘‘part B’’ and in-
serting ‘‘part B or D’’;
(D) in paragraph (15), by striking ‘‘State
review entities’’ and inserting ‘‘the State agen-
cies’’;
(E) by striking paragraph (18);
(F) by redesignating paragraphs (19)
through (22) as paragraphs (18) through (21),
respectively; and
(G) by amending paragraph (20) (as redes-
ignated by subparagraph (F)) to read as follows:
‘‘(20) The institution will meet the requirements
established by the Secretary and accrediting agencies
or associations, and will provide evidence to the Sec-
retary that the institution has the authority to oper-
ate within a State.’’; and
(2) in subsection (c)—
(A) in paragraph (1)(A)—
(i) in clause (i)—
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(I) by striking ‘‘clause (ii)’’ and
inserting ‘‘clauses (ii) and (iii)’’;
(II) by striking ‘‘State review en-
tities referred to in’’ and inserting
‘‘appropriate State agency notifying
the Secretary under’’; and
(III) by striking ‘‘or’’ after the
semicolon;
(ii) in clause (ii), by inserting ‘‘or’’
after the semicolon; and
(iii) by adding at the end the follow-
ing:
‘‘(iii) with regard to an eligible institution
(other than an eligible institution described in section
481(a)(1)(C)) that has obtained less than $200,000 in
funds under this title during each of the 2 award
years that precede the audit period and submits a let-
ter of credit payable to the Secretary equal to not less
than 1⁄2 of the annual potential liabilities of such in-
stitution as determined by the Secretary, deeming an
audit conducted every 3 years to satisfy the require-
ments of clause (i), except for the award year imme-
diately preceding renewal of the institution’s eligi-
bility under section 498(g);’’;
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(B) in paragraph (4), by striking ‘‘, after
consultation with each State review entity des-
ignated under subpart 1 of part H,’’; and
(C) in paragraph (5), by striking ‘‘State re-
view entities designated’’ and inserting ‘‘State
agencies notifying the Secretary’’.
(b) PROVISION OF VOTER REGISTRATION FORMS.—
(1) PROGRAM PARTICIPATION REQUIREMENT.—
Section 487(a) (20 U.S.C. 1094(a)) is amended by
adding at the end the following:
‘‘(23) The institution, if located in a State to
which section 113 applies, will make a good faith ef-
fort to provide a mail voter registration form, re-
ceived from such State, to each student enrolled in a
degree or certificate program and in attendance at the
institution and to make such forms widely available
to students at the institution.’’.
(2) REGULATION PROHIBITED.—No officer of the
executive branch is authorized to instruct the State in
the manner in which the amendment made by this
subsection is carried out.
SEC. 490. REGULATORY RELIEF AND IMPROVEMENT.
Section 487A (20 U.S.C. 1094a) is amended to read
as follows:
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‘‘SEC. 487A. REGULATORY RELIEF AND IMPROVEMENT.
‘‘(a) QUALITY ASSURANCE PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to select institutions for voluntary participation in a
Quality Assurance Program that provides participat-
ing institutions with an alternative management ap-
proach through which individual schools develop and
implement their own comprehensive systems, includ-
ing processing and disbursement of student financial
aid, verification of student financial aid application
data, and entrance and exit interviews, thereby en-
hancing program integrity within the student aid de-
livery system. The Quality Assurance Program au-
thorized by this section shall be based on criteria that
include demonstrated institutional performance, as
determined by the Secretary, and shall take into con-
sideration current quality assurance goals, as deter-
mined by the Secretary.
‘‘(2) WAIVER.—The Secretary is authorized to
waive for any institution participating in the Qual-
ity Assurance Program any regulations dealing with
reporting or verification requirements in this title
that are addressed by the institution’s alternative
management system, and may substitute such quality
assurance reporting as the Secretary determines nec-
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essary to ensure accountability and compliance with
the purposes of the programs under this title.
‘‘(3) DETERMINATION.—The Secretary is author-
ized to determine—
‘‘(A) when an institution that is unable to
administer the Quality Assurance Program shall
be removed from such program; and
‘‘(B) when institutions desiring to cease
participation in such program will be required
to complete the current award year under the re-
quirements of the Quality Assurance Program.
‘‘(4) REVIEW AND EVALUATION.—The Secretary
shall review and evaluate the Quality Assurance Pro-
gram conducted by each participating institution
and, on the basis of that evaluation, make rec-
ommendations regarding amendments to this Act that
will streamline the administration and enhance the
integrity of Federal student assistance programs.
Such recommendations shall be submitted to the Com-
mittee on Labor and Human Resources of the Senate
and the Committee on Education and the Workforce
of the House of Representatives.
‘‘(b) REGULATORY IMPROVEMENT AND STREAMLINING
EXPERIMENTS.—
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‘‘(1) IN GENERAL.—The Secretary shall review
and evaluate the experience of institutions participat-
ing as experimental sites during the period of 1993
through 1998 under this section (as such section was
in effect on the day before the date of enactment of
the Higher Education Amendments of 1998), and
shall submit a report based on this review and eval-
uation to the Committee on Labor and Human Re-
sources of the Senate and the Committee on Edu-
cation and the Workforce of the House of Representa-
tives not later than 6 months after the enactment of
the Higher Education Amendments of 1998. Such re-
port shall include—
‘‘(A) a list of participating institutions and
the specific statutory or regulatory waivers
granted to each institution;
‘‘(B) the findings and conclusions reached
regarding each of the experiments conducted; and
‘‘(C) recommendations for amendments to
improve and streamline this Act, based on the
results of the experiment.
‘‘(2) SELECTION.—
‘‘(A) IN GENERAL.—The Secretary is au-
thorized to select a limited number of institu-
tions for voluntary participation as experi-
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mental sites to provide recommendations to the
Secretary on the impact and effectiveness of pro-
posed regulations or new management initia-
tives, except that additional institutions may not
be selected by the Secretary until the report re-
quired by subsection (b)(1) has been submitted to
Congress.
‘‘(B) CONSULTATION.—Prior to approving
any additional experimental sites, the Secretary
shall consult with the Committee on Labor and
Human Resources of the Senate and the Com-
mittee on Education and the Workforce of the
House of Representatives and shall provide—
‘‘(i) a list of institutions proposed for
participation in the experiment and the
specific statutory or regulatory waivers pro-
posed to be granted to each institution;
‘‘(ii) the objectives to be achieved
through the experiment; and
‘‘(iii) the period of time over which the
experiment is to be conducted.
‘‘(C) WAIVERS.—The Secretary is author-
ized to waive, for any institution participating
as an experimental site under subparagraph (A),
any requirements in this title, or regulations