H. R. 6—123
(i) by striking ‘‘The form’’ and inserting ‘‘The
forms’’;
(ii) by striking clause (iii); and
(C) by amending subparagraph (C) to read as follows:
‘‘(C) FREE
APPLICATION
FORM.—For academic year
1999–2000 and succeeding academic years, the Secretary
shall prescribe the form developed under section 483 as
the application form under this part, other than for loans
under sections 428B and 428C.’’;
(D) by amending subparagraph (D) to read as follows:
‘‘(D) MASTER PROMISSORY NOTE.—
‘‘(i) IN GENERAL.—The Secretary shall develop and
require the use of master promissory note forms for
loans made under this part and part D. Such forms
shall be available for periods of enrollment beginning
not later than July 1, 2000. Each form shall allow
eligible borrowers to receive, in addition to initial loans,
additional loans for the same or subsequent periods
of enrollment through a student confirmation process
approved by the Secretary. Such forms shall be used
for loans made under this part or part D as directed
by the Secretary.
‘‘(ii) CONSULTATION.—In developing the master
promissory note under this subsection, the Secretary
shall consult with representatives of guaranty agencies,
eligible lenders, institutions of higher education, stu-
dents, and organizations involved in student financial
assistance.
‘‘(iii) SALE; ASSIGNMENT; ENFORCEABILITY.—Not-
withstanding any other provision of law, each loan
made under a master promissory note under this sub-
section 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 original
or copy of the master promissory note in accordance
with the terms of the master promissory note.
‘‘(iv) PERFECTION OF SECURITY INTERESTS IN STU-
DENT LOANS.—Notwithstanding the provisions of any
State law to the contrary, including the Uniform
Commercial Code as in effect in any State, a security
interest in loans made under this part created on
behalf of any eligible lender as defined in section 435(d)
may be perfected either through the taking of posses-
sion of such loans (which can be through taking posses-
sion of an original or copy of the master promissory
note) or by the filing of notice of such security interest
in such loans in the manner provided by such State
law for perfection of security interests in accounts.’’;
and
(2) by adding at the end the following:
‘‘(4) ELECTRONIC FORMS.—Nothing in this section shall be
construed to limit the development and use of electronic forms
and procedures.’’.
(d) DEFAULT
REDUCTION
MANAGEMENT.—Section 432(n) is
amended—
H. R. 6—124
(1) in paragraph (1), by striking ‘‘1993’’ and inserting
‘‘1999’’; and
(2) in paragraph (3), by striking ‘‘and Labor’’ and inserting
‘‘and the Workforce’’.
(e) REPORTING REQUIREMENT.—Section 432(p) is amended by
striking ‘‘State postsecondary reviewing entities designated under
subpart 1 of part H,’’.
SEC. 428. STUDENT LOAN INFORMATION BY ELIGIBLE LENDERS.
(a) REQUIRED DISCLOSURE BEFORE DISBURSEMENT.—Section
433(a) (20 U.S.C. 1083(a)) is amended by amending the matter
preceding paragraph (1) to read as follows:
‘‘(a) REQUIRED
DISCLOSURE
BEFORE
DISBURSEMENT.—Each
eligible lender, 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), shall provide thorough and
accurate loan information on such loan to the borrower in simple
and understandable terms. Any disclosure required by this sub-
section 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 provided to the borrower. Each
lender shall provide to each borrower a telephone number, and
may provide an electronic address, through which additional loan
information can be obtained. The disclosure shall include—’’.
(b) REQUIRED DISCLOSURE BEFORE REPAYMENT.—Section 433(b)
is amended 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 borrower by written or electronic means
the information required under this subsection in simple and under-
standable terms. Each eligible lender shall provide to each borrower
a telephone number, and may provide an electronic address, through
which additional loan information 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. 429. DEFINITIONS.
(a) COHORT DEFAULT RATE.—Section 435(a) (20 U.S.C. 1085(a))
is amended—
(1) in paragraph (2)—
(A) in subparagraph (A)—
(i) by striking ‘‘or’’ at the end of clause (i);
(ii) by striking clause (ii) and inserting the follow-
ing:
‘‘(ii) there are exceptional mitigating circumstances
within the meaning of paragraph (4); or
‘‘(iii) there are, in the judgment of the Secretary, other
exceptional mitigating circumstances that would make the
application of this paragraph inequitable.’’; and
(iii) by adding after the matter following clause
(iii) (as added by clause (ii)) the following:
H. R. 6—125
‘‘If an institution continues to participate in a program 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, reinsurance, 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 attend-
ing, or planning to attend, that institution during the pendency
of such appeal.’’; and
(B) in subparagraph (C), by striking ‘‘July 1, 1998,’’
and inserting ‘‘July 1, 1999,’’;
(2) in the matter following subparagraph (C) of para-
graph (3)—
(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 period of time, not to exceed
30 days’’ and inserting ‘‘used by a guaranty agency in
determining whether to pay a claim on a defaulted loan
or by the Department in determining an institution’s
default rate in the loan program under part D of this
title’’; and
(3) by adding at the end the following new paragraphs:
‘‘(4) DEFINITION OF MITIGATING CIRCUMSTANCES.—(A) For
purposes of paragraph (2)(A)(ii), an institution of higher edu-
cation shall be treated as having exceptional mitigating cir-
cumstances that make application of that paragraph inequitable
if such institution, in the opinion of an independent auditor,
meets the following criteria:
‘‘(i) For a 12-month period that ended 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, at least two-thirds of
the students enrolled on at least a half-time basis at the
institution—
‘‘(I) are eligible to receive a Federal Pell Grant
award that is at least equal to one-half the maximum
Federal Pell Grant award for which a student would
be eligible based on the student’s enrollment status;
or
‘‘(II) have an adjusted gross income that when
added with the adjusted gross income of the student’s
parents (unless the student is an independent student),
of less than the poverty level, as determined by the
Department of Health and Human Services.
‘‘(ii) In the case of an institution of higher education
that offers an associate, baccalaureate, graduate or profes-
sional degree, 70 percent or more of the institution’s regular
students who were initially enrolled on a full-time basis
and were scheduled to complete their programs during
the same 12-month period described in clause (i)—
‘‘(I) completed the educational programs in which
the students were enrolled;
‘‘(II) transferred from the institution to a higher
level educational program;
H. R. 6—126
‘‘(III) at the end of the 12-month period, remained
enrolled and making satisfactory progress toward
completion of the student’s educational programs; or
‘‘(IV) entered active duty in the Armed Forces of
the United States.
‘‘(iii)(I) In the case of an institution of higher education
that does not award a degree described in clause (ii), had
a placement rate of 44 percent or more with respect to
the institution’s former regular students who—
‘‘(aa) remained in the program beyond the point
the students would have received a 100 percent tuition
refund from the institution;
‘‘(bb) were initially enrolled on at least a half-
time basis; and
‘‘(cc) were originally scheduled, at the time of
enrollment, to complete their educational programs
during the same 12-month period described in clause
(i).
‘‘(II) The placement rate shall not include students
who are still enrolled and making satisfactory progress
in the educational programs in which the students were
originally enrolled on the date following 12 months after
the date of the student’s last date of attendance at the
institution.
‘‘(III) The placement rate is calculated by determining
the percentage of all those former regular students who—
‘‘(aa) are employed, in an occupation for which
the institution provided training, on the date following
12 months after the date of their last day of attendance
at the institution;
‘‘(bb) were employed, in an occupation for which
the institution provided training, for at least 13 weeks
before the date following 12 months after the date
of their last day of attendance at the institution; or
‘‘(cc) entered active duty in the Armed Forces of
the United States.
‘‘(IV) The placement rate shall not include as place-
ments a student or former student for whom the institution
is the employer.
‘‘(B) For purposes of determining a rate of completion and
a placement rate under this paragraph, a student is originally
scheduled, at the time of enrollment, to complete the edu-
cational program on the date when the student will have been
enrolled in the program for the amount of time normally
required to complete the program. The amount of time normally
required to complete the program for a student who is initially
enrolled full-time is the period of time specified in the institu-
tion’s enrollment contract, catalog, or other materials, for
completion of the program by a full-time student. For a student
who is initially enrolled less than full-time, the period is the
amount of time it would take the student to complete the
program if the student remained enrolled at that level of enroll-
ment throughout the program.
‘‘(5) REDUCTION OF DEFAULT RATES AT CERTAIN MINORITY
INSTITUTIONS.—
H. R. 6—127
‘‘(A) BENEFICIARIES OF EXCEPTION REQUIRED TO ESTAB-
LISH MANAGEMENT PLAN.—After July 1, 1999, any institu-
tion that has a cohort default rate that equals or exceeds
25 percent for each of the three most recent fiscal years
for which data are available and that relies on the exception
in subparagraph (B) to continue to be an eligible institution
shall—
‘‘(i) submit to the Secretary a default management
plan which the Secretary, in the Secretary’s discretion,
after 
consideration 
of 
the 
institution’s 
history,
resources, dollars in default, and targets for default
reduction, determines is acceptable and provides
reasonable assurance that the institution will, by July
1, 2002, have a cohort default rate that is less than
25 percent;
‘‘(ii) engage an independent third party (which may
be paid with funds received under section 317 or part
B of title III) to provide technical assistance in
implementing such default management plan; and
‘‘(iii) provide to the Secretary, on an annual basis
or at such other intervals as the Secretary may require,
evidence of cohort default rate improvement and
successful implementation of such default management
plan.
‘‘(B) DISCRETIONARY
ELIGIBILITY
CONDITIONED
ON
IMPROVEMENT.—Notwithstanding the expiration of the
exception in paragraph (2)(C), the Secretary may, in the
Secretary’s discretion, continue to treat an institution
described in subparagraph (A) of this paragraph as an
eligible institution for each of the 1-year periods beginning
on July 1 of 1999, 2000, and 2001, only if the institution
submits by the beginning of such period evidence satisfac-
tory to the Secretary that—
‘‘(i) such institution has complied and is continuing
to comply with the requirements of subparagraph (A);
and
‘‘(ii) 
such 
institution 
has 
made 
substantial
improvement, during each of the preceding 1-year peri-
ods, in the institution’s cohort default rate.
‘‘(6) PARTICIPATION RATE INDEX.—
‘‘(A) IN GENERAL.—An institution that demonstrates
to the Secretary that the institution’s participation rate
index is equal to or less than 0.0375 for any of the 3
most recent fiscal years for which data is available shall
not be subject to paragraph (2). The participation rate
index shall be determined by multiplying the institution’s
cohort default rate for loans under part B or D, 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.
H. R. 6—128
‘‘(B) DATA.—An institution shall provide the Secretary
with sufficient data to determine the institution’s participa-
tion 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 non-
compliance with subparagraph (A).’’.
(b) ELIGIBLE LENDER.—Section 435(d) (20 U.S.C. 1085(d)) is
amended—
(1) in paragraph (1)—
(A) in subparagraph (A)(ii)—
(i) by striking ‘‘or’’ after ‘‘1992,’’; and
(ii) by inserting before the semicolon the following:
‘‘, 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 non-
profit 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’’;
(B) by striking ‘‘and’’ at the end of subparagraph (I);
(C) by striking the period at the end of subparagraph
(J) and inserting ‘‘; and’’; and
(D) by adding at the end the following new subpara-
graph:
‘‘(K) a consumer finance company subsidiary of a
national bank which, as of the date of enactment of this
subparagraph, through one or more subsidiaries: (i) acts
as a small business lending company, as determined under
regulations of the Small Business Administration under
section 120.470 of title 13, Code of Federal Regulations
(as such section is in effect on the date of enactment
of this subparagraph); and (ii) participates in the program
authorized by this part pursuant to subparagraph (C), pro-
vided the national bank and all of the bank’s direct and
indirect subsidiaries taken together as a whole, do not
have, as their primary consumer credit function, the mak-
ing or holding of loans made to students under this part.’’;
and
(2) in paragraph (5), by adding at the end the following
new sentence:
‘‘It shall not be a violation of this paragraph for a lender
to provide assistance to institutions of higher education com-
parable to the kinds of assistance provided to institutions of
higher education by the Department of Education.’’.
(c) DEFINITION OF DEFAULT.—
(1) AMENDMENT.—Section 435(l) 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
H. R. 6—129
of delinquency occurs on or after the date of enactment of
this Act.
(d) COHORT DEFAULT RATE.—Section 435(m) is amended—
(1) in paragraph (1)(B), by striking ‘‘insurance, and, in
considering appeals with respect to cohort default rates pursu-
ant to subsection (a)(3), exclude’’ and inserting ‘‘insurance. In
considering appeals with respect to cohort default rates pursu-
ant to subsection (a)(3), the Secretary shall exclude, from the
calculation of the number of students who entered repayment
and from the calculation of the number of students who
default,’’; and
(2) in paragraph (2)(C), by adding at the end the following:
‘‘The Secretary may require guaranty agencies to collect data
with respect to defaulted loans in a manner that will permit
the identification of any defaulted loan for which (i) the bor-
rower is currently making payments and has made not less
than 6 consecutive on-time payments by the end of such follow-
ing fiscal year, and (ii) a guaranty agency has renewed the
borrower’s title IV eligibility as provided in section 428F(b).’’;
and
(3) in paragraph (4), by adding at the end the following:
‘‘(D) The Secretary shall publish the report described in
subparagraph (C) by September 30 of each year.’’.
SEC. 430. 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 otherwise delegates the
performance of such functions to such other entity—
‘‘(1) shall not be relieved of the lender’s or agency’s duty
to comply with the requirements of this title; and
‘‘(2) shall monitor the activities of such other entity 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 responsible for
complying with all statutory and regulatory requirements imposed
on any other holder of a loan made under this part.’’.
SEC. 431. DISCHARGE.
Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended—
(1) by inserting after ‘‘falsely certified by the eligible institu-
tion,’’ the following: ‘‘or if the institution failed to make a
refund of loan proceeds which the institution owed to such
student’s lender,’’; and
(2) by adding at the end the following new sentences:
‘‘In the case of a discharge based upon a failure to refund,
the amount of the discharge shall not exceed that portion
of the loan which should have been refunded. The Secretary
shall report to the Committee on Education and the Workforce
of the House of Representatives and the Committee on Labor
and Human Resources of the Senate annually as to the dollar
amount of loan discharges attributable to failures to make
refunds.’’.
H. R. 6—130
SEC. 432. DEBT MANAGEMENT OPTIONS.
Section 437A (20 U.S.C. 1087–0) is repealed.
SEC. 433. SPECIAL ALLOWANCES.
(a) DEDUCTION
FROM
INTEREST
AND
SPECIAL
ALLOWANCE
SUBSIDIES.—Paragraph (1) of section 438(c) (20 U.S.C. 1087–1) is
amended to read as follows:
‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.—(A) Notwithstanding subsection (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 sub-
section (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 Secretary for interest
and special allowance or withdraws from the program with
unpaid loan origination fees.
‘‘(B) If the Secretary collects the origination fee under this
subsection through the reduction of interest and special allow-
ance, and the total amount of interest and special allowance
payable under section 428(a)(3)(A) and subsection (b) of this
section, respectively, is less than the amount the lender was
authorized 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.’’.
(b) ORIGINATION FEES.—Section 438(c) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘(other than’’ and inserting ‘‘(including
loans made under section 428H, but excluding’’; and
(B) by adding at the end the following new sentence:
‘‘Except as provided in paragraph (8), a lender that charges
an origination fee under this paragraph shall assess the
same fee to all student borrowers.’’; and
(2) by adding at the end the following new paragraph:
‘‘(8) EXCEPTION.—Notwithstanding paragraph (2), a lender
may assess a lesser origination fee for a borrower demonstrating
greater financial need as determined by such borrower’s
adjusted gross family income.’’.
(c) COLLECTION OF FEES.—Paragraph (1) of section 438(d) is
amended to read as follows:
‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.—
‘‘(A) IN GENERAL.—Notwithstanding subsection (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
H. R. 6—131
‘‘(II) withdraws from the program with unpaid
loan fees.
‘‘(B) SPECIAL RULE.—If the Secretary collects loan fees
under this subsection through the reduction of interest
and special allowance payments, and the total amount
of interest and special 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.’’.
(d) LENDING FROM PROCEEDS OF TAX-EXEMPT OBLIGATIONS.—
(1) AMENDMENT.—Subsection (e) of section 438 is amended
to read as follows:
‘‘(e) NONDISCRIMINATION.—In order for the holders of loans
which were made or purchased with funds obtained by the holder
from an Authority issuing obligations, the income from which is
exempt from taxation under the Internal Revenue Code of 1986,
to be eligible to receive a special allowance under subsection (b)(2)
on any such loans, the Authority shall not engage in any pattern
or practice which results in a denial of a borrower’s access to
loans under this part because of the borrower’s race, sex, color,
religion, national origin, age, disability status, income, attendance
at a particular eligible institution within the area served by the
Authority, length of the borrower’s educational program, or the
borrower’s academic year in school.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall be effective as of the date the plan required by section
438(e)(1) (as such section was in effect prior to such amend-
ment) was approved by the Secretary or the Governor (which-
ever was the case). No Authority shall have a right or cause
of action against the Secretary for any amounts paid to or
offset by the Secretary pursuant to a final settlement agreement
entered into prior to July 1, 1998, resolving any audit or pro-
gram review findings alleging violations of any provision of
section 438(e) (as in effect prior to such amendment).
SEC. 434. FEDERAL FAMILY EDUCATION LOAN INSURANCE FUND.
Any funds in the insurance fund, as established under section
431 of the Higher Education Act of 1965 (20 U.S.C. 1081), on
the date of enactment of this Act shall be transferred to and
deposited in the Treasury. All funds received by the Secretary
of Education under subsection (a) of such section after the date
of enactment of this Act shall be deposited into the fund in accord-
ance with such subsection.
PART C—FEDERAL WORK-STUDY PROGRAMS
SEC. 
441. 
AUTHORIZATION 
OF 
APPROPRIATIONS; 
COMMUNITY
SERVICES.
(a) AUTHORIZATION
OF APPROPRIATIONS.—Section 441(b) (42
U.S.C. 2751(b)) is amended by striking ‘‘$800,000,000 for fiscal
year 1993’’ and inserting ‘‘$1,000,000,000 for fiscal year 1999’’.
(b) DEFINITION
OF COMMUNITY SERVICES.—Section 441(c) is
amended—
H. R. 6—132
(1) in paragraph (1), by inserting ‘‘(including child care
services provided on campus that are open and accessible to
the community)’’ after ‘‘child care’’; and
(2) in paragraph (3), by inserting ‘‘, including students
with disabilities who are enrolled at the institution’’ before
the semicolon.
SEC. 442. ALLOCATION OF FUNDS.
(a) UPDATING THE BASE PERIOD.—Section 442(a) (20 U.S.C.
2752(a)) is amended—
(1) in paragraph (1), by striking ‘‘received and used under
this part for fiscal year 1985’’ and inserting ‘‘received under
subsections (a) and (b) for fiscal year 1999 (as such subsections
were in effect with respect to allocations for such fiscal year)’’;
(2) in paragraph (2)—
(A) in subparagraphs (A) and (B), by striking ‘‘1985’’
each place the term appears and inserting ‘‘1999’’; and
(B) in subparagraph (C)(i), by striking ‘‘1986’’ and
inserting ‘‘2000’’.
(b) ELIMINATION
OF
PRO
RATA
SHARE.—Section 442 is
amended—
(1) by striking subsection (b);
(2) by redesignating subsections (c) through (f ) as sub-
sections (b) through (e), respectively;
(3) in subsection (b)(1) (as redesignated by paragraph (2)),
by striking ‘‘three-quarters of’’;
(4) in subsection (b)(2)(A)(i) (as so redesignated), by striking
‘‘subsection (d)’’ and inserting ‘‘subsection (c)’’;
(5) in subsection (c)(3) (as so redesignated), by striking
‘‘the Secretary, for academic year 1988–1989 shall use the
procedures employed for academic year 1986–1987, and, for
any subsequent academic years,’’; and
(6) in subsection (d)(1) (as so redesignated)—
(A) by striking ‘‘10 percent’’ and inserting ‘‘5 percent’’;
(B) by striking ‘‘in community service’’ and inserting
‘‘in tutoring in reading and family literacy activities’’; and
(C) by striking ‘‘subsection (c)’’ and inserting ‘‘sub-
section (b)’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to allocations of amounts appropriated
pursuant to section 441(b) for fiscal year 2000 or any succeeding
fiscal year.
SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS.
(a) ELIGIBLE
EMPLOYMENT.—Section 443(b)(1) (42 U.S.C.
2753(b)(1)) is amended by inserting ‘‘, including internships,
practica, or research assistantships as determined by the Secretary,’’
after ‘‘part-time employment’’.
(b) COMMUNITY SERVICE.—Section 443(b)(2)(A) is amended—
(1) by striking ‘‘in fiscal year 1994 and succeeding fiscal
years,’’ and inserting ‘‘for fiscal year 1999,’’; and
(2) by inserting ‘‘(including a reasonable amount of time
spent in travel or training directly related to such community
service)’’ after ‘‘community service’’.
(c) TUTORING
AND
LITERACY
ACTIVITIES.—Section 443 is
amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘and’’ at the end of subparagraph (A);
H. R. 6—133
(B) by redesignating subparagraph (B) as subpara-
graph (C); and
(C) by inserting after subparagraph (A) the following:
‘‘(B) for fiscal year 2000 and succeeding fiscal years,
an institution shall use at least 7 percent of the total
amount of funds granted to such institution under this
section for such fiscal year to compensate students
employed in community service, and shall ensure that not
less than 1 tutoring or family literacy project (as described
in subsection (d)) is included in meeting the requirement
of this subparagraph, except that the Secretary may waive
this subparagraph if the Secretary determines that enforc-
ing this subparagraph would cause hardship for students
at the institution; and’’; and
(2) by adding at the end the following new subsection:
‘‘(d) TUTORING AND LITERACY ACTIVITIES.—
‘‘(1) USE OF FUNDS.—In any academic year to which sub-
section (b)(2)(B) applies, an institution shall ensure that funds
granted to such institution under this section are used in
accordance with such subsection to compensate (including com-
pensation for time spent in training and travel directly related
to tutoring in reading and family literacy activities) students—
‘‘(A) employed as reading tutors for children who are
preschool age or are in elementary school; or
‘‘(B) employed in family literacy projects.
‘‘(2) PRIORITY FOR SCHOOLS.—To the extent practicable, an
institution shall—
‘‘(A) give priority to the employment of students in
the provision of tutoring in reading in schools that are
participating in a reading reform project that—
‘‘(i) is designed to train teachers how to teach
reading on the basis of scientifically-based research
on reading; and
‘‘(ii) is funded under the Elementary and Second-
ary Education Act of 1965; and
‘‘(B) ensure that any student compensated with the
funds described in paragraph (1) who is employed in a
school participating in a reading reform project described
in subparagraph (A) receives training from the employing
school in the instructional practices used by the school.
‘‘(3) FEDERAL SHARE.—The Federal share of the compensa-
tion of work-study students compensated under this subsection
may exceed 75 percent.’’.
(d) USE OF FUNDS FOR INDEPENDENT AND LESS THAN FULL-
TIME STUDENTS.—Paragraph (3) of section 443(b) is amended to
read as follows:
‘‘(3) provide that in the selection of students for employment
under such work-study program, only students who dem-
onstrate financial need in accordance with part F and meet
the requirements of section 484 will be assisted, except that
if the institution’s grant under this part is directly or indirectly
based in part on the financial need demonstrated by students
who are (A) attending the institution on less than a full-time
basis, or (B) independent students, a reasonable portion of
the grant shall be made available to such students;’’.
(e) FEDERAL
SHARE.—Paragraph (5) of section 443(b) is
amended to read as follows:
H. R. 6—134
‘‘(5) provide that the Federal share of the compensation
of students employed in the work-study program in accordance
with the agreement shall not exceed 75 percent, except that—
‘‘(A) the Federal share may exceed 75 percent, but
not exceed 90 percent, if, consistent with regulations of
the Secretary—
‘‘(i) the student is employed at a nonprofit private
organization or a government agency that—
‘‘(I) is not a part of, and is not owned, operated,
or controlled by, or under common ownership, oper-
ation, or control with, the institution;
‘‘(II) is selected by the institution on an
individual case-by-case basis for such student; and
‘‘(III) would otherwise be unable to afford the
costs of such employment; and
‘‘(ii) not more than 10 percent of the students
compensated through the institution’s grant under this
part during the academic year are employed in posi-
tions for which the Federal share exceeds 75 percent;
and
‘‘(B) the Federal share may exceed 75 percent if the
Secretary determines, pursuant to regulations promulgated
by the Secretary establishing objective criteria for such
determinations, that a Federal share in excess of such
amounts is required in furtherance of the purpose of this
part;’’.
(f ) 
AVAILABILITY
OF
EMPLOYMENT.—Section 
443(b)(6) 
is
amended by striking ‘‘, and to make’’ and all that follows through
‘‘such employment’’.
(g) ACADEMIC RELEVANCE.—Section 443(c)(4) is amended by
inserting before the semicolon at the end the following: ‘‘, to the
maximum extent practicable’’.
SEC. 444. FLEXIBLE USE OF FUNDS.
Section 445 (42 U.S.C. 2755) is amended by adding at the
end the following:
‘‘(c) FLEXIBLE USE OF FUNDS.—An eligible institution may, upon
the request of a student, make payments to the student under
this part by crediting the student’s account at the institution or
by making a direct deposit to the student’s account at a depository
institution. An eligible institution may only credit the student’s
account at the institution for (1) tuition and fees, (2) in the case
of institutionally owned housing, room and board, and (3) other
institutionally provided goods and services.’’.
SEC. 445. WORK COLLEGES.
Section 448 (42 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 activi-
ties to promote work service learning; and
‘‘(F) carry out a comprehensive, longitudinal study of
student academic progress and academic and career out-
comes, relative to student self-sufficiency in financing their
H. R. 6—135
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
(2) in subsection (f ), by striking ‘‘1993’’ and inserting
‘‘1999’’.
PART D—WILLIAM D. FORD FEDERAL DIRECT
LOAN PROGRAM
SEC. 451. SELECTION OF INSTITUTIONS.
(a) GENERAL AUTHORITY.—Section 453(a) (20 U.S.C. 1087c(a))
is amended—
(1) by striking ‘‘PHASE-IN’’ and everything that follows
through ‘‘GENERAL
AUTHORITY.—’’ and inserting ‘‘GENERAL
AUTHORITY.—’’; and
(2) by striking paragraphs (2), (3), and (4).
(b) SELECTION CRITERIA.—Section 453(b)(2) is amended by strik-
ing ‘‘prescribe,’’ and everything that follows through the end of
subparagraph (B) and inserting ‘‘prescribe.’’.
(c) ORIGINATION.—Section 453(c) is amended—
(1) in paragraph (2)—
(A) in the heading, by striking ‘‘TRANSITION SELECTION
CRITERIA’’ and inserting ‘‘SELECTION CRITERIA’’;
(B) by striking ‘‘For academic year 1994–1995, the
Secretary’’ and inserting ‘‘The Secretary’’;
(C) by striking subparagraph (A);
(D) by striking subparagraph (E); and
(E) by redesignating subparagraphs (B), (C), (D), (F),
(G), and (H) as subparagraphs (A) through (F), 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.—
(1) AMENDMENT.—Section 455(b) (20 U.S.C. 1087e(b)) is
amended by adding at the end the following:
‘‘(6) INTEREST RATE PROVISION FOR NEW LOANS ON OR AFTER
OCTOBER 1, 1998, AND BEFORE JULY 1, 2003.—
‘‘(A) RATES FOR FDSL AND FDUSL.—Notwithstanding the
preceding paragraphs of this subsection, for Federal Direct
Stafford Loans and Federal Direct Unsubsidized Stafford
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 auction held prior to such
June 1; plus
‘‘(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
H. R. 6—136
‘‘(B) IN SCHOOL AND GRACE PERIOD RULES.—Notwith-
standing the preceding paragraphs of this subsection, with
respect to any Federal Direct Stafford Loan or Federal
Direct Unsubsidized Stafford Loan for which the first
disbursement is made on or after October 1, 1998, and
before July 1, 2003, the applicable rate of interest for
interest which accrues—
‘‘(i) prior to the beginning of the repayment period
of the loan; or
‘‘(ii) during the period in which principal 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 substitut-
ing ‘1.7 percent’ for ‘2.3 percent’.
‘‘(C) PLUS LOANS.—Notwithstanding the preceding
paragraphs of this subsection, with respect to Federal
Direct PLUS Loan for which the first disbursement is
made on or after October 1, 1998, and before July 1, 2003,
the applicable 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’.
‘‘(D) CONSOLIDATION
LOANS.—Notwithstanding the
preceding paragraphs of this subsection, any Federal Direct
Consolidation loan for which the application is received
on or after February 1, 1999, and before July 1, 2003,
shall bear interest at an annual rate on the unpaid prin-
cipal balance of the loan that is equal to the lesser of—
‘‘(i) the weighted average of the interest rates on
the loans consolidated, rounded to the nearest higher
one-eighth of one percent; or
‘‘(ii) 8.25 percent.
‘‘(E) TEMPORARY RULES FOR CONSOLIDATION LOANS.—
Notwithstanding the preceding paragraphs of this sub-
section, any Federal Direct Consolidation loan for which
the application is received on or after October 1, 1998,
and before February 1, 1999, shall bear interest at an
annual rate on the unpaid principal balance of the loan
that is equal to—
‘‘(i) the bond equivalent rate of 91-day Treasury
bills auctioned at the final auction held prior to such
June 1; plus
‘‘(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.’’.
(2) LIMITATION
ON
CONSOLIDATION
LOANS
DURING
TEM-
PORARY INTEREST RATE.—Notwithstanding section 455(g) of the
Higher Education Act of 1965, a borrower who is enrolled
or accepted for enrollment in an institution of higher education
may not consolidate loans under such section during the period
beginning October 1, 1998, and ending February 1, 1999, unless
the borrower certifies that the borrower has no outstanding
loans made, insured, or guaranteed under title IV of such
Act other than loans made under part D of such title.
(b) 
REPAYMENT
INCENTIVES.—Section 
455(b) 
(20 
U.S.C.
1087e(b)) is further amended by adding at the end the following:
H. R. 6—137
‘‘(7) REPAYMENT INCENTIVES.—
‘‘(A) IN GENERAL.—Notwithstanding any other provi-
sion of this part, the Secretary is authorized to prescribe
by regulation such reductions in the interest rate paid
by a borrower of a loan made under this part as the
Secretary determines appropriate to encourage on-time
repayment of the loan. Such reductions may be offered
only if the Secretary determines the reductions 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
savings in funds available for the William D. Ford Federal
Direct Loan Program in that fiscal year from section 458
and other administrative accounts.
‘‘(B) ACCOUNTABILITY.—Prior to publishing regulations
proposing repayment incentives, the Secretary shall ensure
the cost neutrality of such reductions. The Secretary shall
not prescribe such regulations in final form unless an offi-
cial report from the Director of the Office of Management
and Budget to the Secretary and a comparable report from
the Director of the Congressional Budget Office to the
Congress each certify that any such reductions will be
completely cost neutral. Such reports shall be transmitted
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 less than 60 days
prior to the publication of regulations proposing such reduc-
tions.’’.
(c) CONSOLIDATION LOANS.—The first sentence of section 455(g)
is amended by striking everything after ‘‘section 428C(a)(4)’’ and
inserting a period.
(d) EFFECTIVE DATE.—The amendments made by subsection
(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, except that such amendments shall apply with respect
to a Federal Direct Consolidation Loan for which the application
is received on or after October 1, 1998, and before July 1, 2003.
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 paragraph (4).
SEC. 454. FUNDS FOR ADMINISTRATIVE EXPENSES.
Section 458 (20 U.S.C. 1087h) is amended—
(1) by amending subsection (a) to read as follows:
‘‘(a) ADMINISTRATIVE EXPENSES.—
‘‘(1) IN GENERAL.—Each fiscal year there shall be available
to the Secretary, from funds not otherwise appropriated, funds
to be obligated for—
‘‘(A) administrative costs under this part and part B,
including the costs of the direct student loan programs
under this part; and
‘‘(B) account maintenance fees payable to guaranty
agencies under part B and calculated in accordance with
subsections (b) and (c),
H. R. 6—138
not to exceed (from such funds not otherwise appropriated)
$617,000,000 in fiscal year 1999, $735,000,000 in fiscal year
2000, $770,000,000 in fiscal year 2001, $780,000,000 in fiscal
year 2002, and $795,000,000 in fiscal year 2003.
‘‘(2) ACCOUNT MAINTENANCE FEES.—Account maintenance
fees under paragraph (1)(B) shall be paid quarterly and depos-
ited in the Agency Operating Fund established under section
422B.
‘‘(3) CARRYOVER.—The Secretary may carry over funds
made available under this section to a subsequent fiscal year.’’;
(2) by amending subsection (b) to read as follows:
‘‘(b) CALCULATION BASIS.—Except as provided in subsection (c),
account maintenance fees payable to guaranty agencies under para-
graph (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
‘‘(2) for fiscal years 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 striking subsection (d);
(4) by redesignating subsection (c) as subsection (d); and
(5) by inserting after subsection (b) the following:
‘‘(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.—If the amounts set forth in para-
graph (1) are insufficient to pay the account maintenance
fees payable to guaranty agencies pursuant to subsection
(b) for a fiscal year, the Secretary shall pay the insufficiency
by requiring 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. AUTHORITY TO SELL LOANS.
Part D of title IV (20 U.S.C. 1087a et seq.) is amended by
adding at the end the following:
‘‘SEC. 459. AUTHORITY TO SELL LOANS.
‘‘The Secretary, in consultation with the Secretary of the Treas-
ury, is authorized to sell loans made under this part on such
terms as the Secretary determines are in the best interest of the
United States, except that any such sale shall not result in any
cost to the Federal Government. Notwithstanding any other provi-
sion of law, the proceeds of any such sale may be used by the
Secretary to offer reductions in the interest rate paid by a borrower
H. R. 6—139
of a loan made under this part as the Secretary determines appro-
priate to encourage on-time repayment in accordance with section
455(b)(7). Such reductions may be offered only if the Secretary
determines the reductions are in the best financial interests of
the Federal Government.’’.
SEC. 456. LOAN CANCELLATION FOR TEACHERS.
Part D of title IV (20 U.S.C. 1087a et seq.) is further amended
by adding after section 459 (as added by section 455) the following:
‘‘SEC. 460. 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.—
‘‘(1) IN GENERAL.—The Secretary shall carry out a program
of canceling the obligation to repay a qualified loan amount
in accordance with subsection (c) for Federal Direct Stafford
Loans and Federal Direct Unsubsidized Stafford Loans made
under this part for any new borrower on or after October
1, 1998, who—
‘‘(A) has been employed as a full-time teacher for 5
consecutive complete school years—
‘‘(i) in a school that qualifies under section
465(a)(2)(A) for loan cancellation for Perkins loan
recipients who teach in such schools;
‘‘(ii) if employed as a secondary school teacher,
is teaching a subject area that is relevant to the
borrower’s academic major as certified by the chief
administrative officer of the public or non-profit private
secondary school in which the borrower is employed;
and
‘‘(iii) if employed as an elementary school teacher,
has demonstrated, as certified by the chief administra-
tive officer of the public or nonprofit private elementary
school in which the borrower is employed, knowledge
and teaching skills in reading, writing, mathematics
and other areas of the elementary school curriculum;
and
‘‘(B) is not in default on a loan for which the borrower
seeks forgiveness.
‘‘(2) SPECIAL RULE.—No borrower may obtain a reduction
of loan obligations under both this section and section 428J.
‘‘(c) QUALIFIED LOAN AMOUNTS.—
‘‘(1) IN
GENERAL.—The Secretary shall cancel not more
than $5,000 in the aggregate of the loan obligation on a Federal
Direct Stafford Loan or a Federal Direct Unsubsidized Stafford
Loan that is outstanding after the completion of the fifth com-
plete school year of teaching described in subsection (b)(1)(A).
‘‘(2) TREATMENT OF CONSOLIDATION LOANS.—A loan amount
for a Federal Direct Consolidation Loan may be a qualified
loan amount for the purposes of this subsection only to the
extent that such loan amount was used to repay a Federal
Direct Stafford Loan, a Federal Direct Unsubsidized Stafford
Loan, or a loan made under section 428 or 428H, for a borrower
who meets the requirements of subsection (b), as determined
in accordance with regulations prescribed by the Secretary.
H. R. 6—140
‘‘(d) REGULATIONS.—The Secretary is authorized to issue such
regulations as may be necessary to carry out the provisions of
this section.
‘‘(e) 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 available before May 1
of any year, the Secretary may use the list for the year preceding
the year for which the determination is made to make such service
determination.
‘‘(g) ADDITIONAL ELIGIBILITY PROVISIONS.—
‘‘(1) CONTINUED ELIGIBILITY.—Any teacher who performs
service in a school that—
‘‘(A) meets the requirements of subsection (b)(1)(A) in
any year during such service; and
‘‘(B) in a subsequent year fails to meet the require-
ments of such subsection, may continue to teach in such
school and shall be eligible for loan cancellation pursuant
to subsection (b).
‘‘(2) PREVENTION OF DOUBLE BENEFITS.—No borrower may,
for the same volunteer service, receive a benefit under both
this section and subtitle D of title I of the National and Commu-
nity Service Act of 1990 (42 U.S.C. 12571 et seq.).
‘‘(h) DEFINITION.—For the purpose of this section, the term
‘year’ where applied to service as a teacher means an academic
year as defined by the Secretary.’’.
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 inserting
‘‘1999’’; and
(2) in paragraph (2), by striking ‘‘1997’’ each place the
term appears and inserting ‘‘2003’’.
SEC. 462. ALLOCATION OF FUNDS.
(a) CHANGES IN ALLOCATION FORMULA.—
(1) UPDATING THE BASE PERIOD.—Section 462(a) (20 U.S.C.
1087bb(a)) is amended—
(A) in paragraph (1)(A), by striking ‘‘the amount of
the Federal capital contribution allocated to such institu-
tion under this part for fiscal year 1985’’ and inserting
‘‘the amount received under subsections (a) and (b) of this
section for fiscal year 1999 (as such subsections were in
effect with respect to allocations for such fiscal year)’’;
(B) in paragraph (2)—
(i) in subparagraphs (A) and (B), by striking ‘‘1985’’
each place the term appears and inserting ‘‘1999’’; and
(ii) in subparagraph (C)(i), by striking ‘‘1986’’ and
inserting ‘‘2000’’.
(2) ELIMINATION OF PRO RATA SHARE.—Section 462 is fur-
ther amended—
(A) in subsection (a)—
(i) in paragraph (1)(B), by striking ‘‘subsection (f )’’
and inserting ‘‘subsection (e)’’;
H. R. 6—141
(ii) in the matter following paragraph (1)(B), by
striking ‘‘subsection (g)’’ and inserting ‘‘subsection (f)’’;
(iii) in paragraph (2)(D)(ii), by striking ‘‘subsection
(f)’’ and inserting ‘‘subsection (e)’’; and
(iv) in the matter following paragraph (2)(D)(ii),
by striking ‘‘subsection (g)’’ and inserting ‘‘subsection
(f)’’;
(B) by striking subsection (b);
(C) in subsection (c)(1), by striking ‘‘three-quarters of
the remainder’’ and inserting ‘‘the remainder’’;
(D) in the matter following subsection (c)(2)(B), by
striking ‘‘subsection (g)’’ and inserting ‘‘subsection (f )’’;
(E) in subsection (c)(3)—
(i) in subparagraph (A), by striking ‘‘subsection
(d)’’ and inserting ‘‘subsection (c)’’;
(ii) in subparagraph (C), by striking ‘‘subsection
(f )’’ and inserting ‘‘subsection (e)’’; and
(iii) in the matter following subparagraph (C), by
striking ‘‘subsection (g)’’ and inserting ‘‘subsection (f )’’;
(F) in subsection ( j)(1)(B)(i), by striking ‘‘1985’’ and
inserting ‘‘1999’’;
(G) in subsection ( j)(2)—
(i) in subparagraph (A), by striking ‘‘paragraph
(3) of subsection (c)’’ and inserting ‘‘subsection (b)(3)’’;
and
(ii) in subparagraph (B), by striking ‘‘subsection
(c) of section 462’’ and inserting ‘‘subsection (b)’’; and
(H) by redesignating subsections (c) through ( j) as
subsections (b) through (i), respectively.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply with respect to allocations of amounts appro-
priated pursuant to section 461(b) for fiscal year 2000 or any
succeeding fiscal year.
(b) SELF-HELP NEED.—The matter preceding subparagraph (A)
of section 462(c)(3) (as redesignated by subsection (a)(2)(G)) is
amended by striking ‘‘the Secretary, for’’ and all that follows through
‘‘years,’’.
(c) DEFAULT PENALTIES.—Subsections (e) and (f ) of section 462
(as redesignated by subsection (a)(2)(G)) are amended to read as
follows:
‘‘(e) DEFAULT PENALTIES.—
‘‘(1) YEARS PRECEDING FISCAL YEAR 2000.—For any fiscal
year preceding fiscal year 2000, any institution with a cohort
default rate that—
‘‘(A) equals or exceeds 15 percent, shall establish a
default reduction plan pursuant to regulations prescribed
by the Secretary, except that such plan shall not be
required with respect to an institution that has a default
rate of less than 20 percent and that has less than 100
students who have loans under this part in such academic
year;
‘‘(B) equals or exceeds 20 percent, but is less than
25 percent, shall have a default penalty of 0.9;
‘‘(C) equals or exceeds 25 percent, but is less than
30 percent, shall have a default penalty of 0.7; and
‘‘(D) equals or exceeds 30 percent shall have a default
penalty of zero.
H. R. 6—142
‘‘(2) YEARS FOLLOWING FISCAL YEAR 2000.—For fiscal year
2000 and any succeeding fiscal year, any institution with a
cohort default rate (as defined under subsection (g)) that equals
or exceeds 25 percent shall have a default penalty of zero.
‘‘(3) INELIGIBILITY.—
‘‘(A) IN
GENERAL.—For fiscal year 2000 and any
succeeding fiscal year, any institution with a cohort default
rate (as defined in subsection (g)) 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 receiving notification from
the Secretary of the loss of eligibility under this paragraph,
the institution appeals the loss of eligibility to the Sec-
retary. The Secretary shall issue a decision on any such
appeal within 45 days after the submission 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 calculation of the institution’s
cohort default rate is not accurate, and that recalcula-
tion 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,
such a small number of borrowers entering repayment
that the application of this subparagraph would be
inequitable.
‘‘(B) CONTINUED
PARTICIPATION.—During an appeal
under subparagraph (A), the Secretary may permit the
institution to continue to participate in a program under
this part.
‘‘(C) RETURN OF FUNDS.—Within 90 days after the date
of any termination pursuant to subparagraph (A), or the
conclusion of any appeal pursuant to subparagraph (B),
whichever is later, the balance of the student loan fund
established under this part by the institution that is the
subject of the termination shall be distributed as follows:
‘‘(i) The Secretary shall first be paid an amount
which bears the same ratio to such balance (as of
the date of such distribution) as the total amount of
Federal capital contributions to such fund by the Sec-
retary under this part bears to the sum of such Federal
capital contributions and the capital contributions to
such fund made by the institution.
‘‘(ii) The remainder of such student loan fund shall
be paid to the institution.
‘‘(D) USE OF RETURNED FUNDS.—Any funds returned
to the Secretary under this paragraph shall be reallocated
to institutions of higher education pursuant to subsection
(i).
‘‘(E) DEFINITION.—For the purposes of subparagraph
(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 port-
folio to the Secretary.
‘‘(f ) APPLICABLE MAXIMUM COHORT DEFAULT RATE.—
H. R. 6—145
reporting the information described in paragraph (2) before a loan
is paid in full.’’; and
(4) by inserting after paragraph (4) the following:
‘‘(5) Each institution of higher education shall notify the appro-
priate credit bureau organizations whenever a borrower of a loan
that is made and held by the institution and that is in default
makes 6 consecutive monthly payments on such loan, for the pur-
pose of encouraging such organizations to update the status of
information maintained with respect to that borrower.’’.
(c) 
CONFORMING
AMENDMENT.—Section 
463(d) 
is
amended by striking ‘‘subsection (a)(10)’’ and inserting ‘‘subsection
(a)(9)’’.
SEC. 464. TERMS OF LOANS.
(a) TERMS AND CONDITIONS; ANNUAL LIMITS.—Paragraph (2)
of section 464(a) (20 U.S.C. 1087dd(a)) is amended 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 education from a loan fund established pursu-
ant 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 undergraduate 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 unpaid
principal amount for all loans made to a student by institutions
of higher education from loan funds established pursuant to agree-
ments 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 student);
‘‘(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 student.’’.
(b) NEED AND ELIGIBILITY.—Section 464(b) is amended—
(1) in paragraph (1), by adding at the end the following:
‘‘A student who is in default on a loan under this part shall
not be eligible for an additional loan under this part unless
such loan meets one of the conditions for exclusion under section
462(g)(1)(E).’’; and
(2) 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 dem-
onstrated by students who are (A) attending the institution less
than full time, or (B) independent students, then a reasonable
portion of the loans made from the institution’s student loan fund
containing the contribution shall be made available to such stu-
dents.’’.
(c) CONTENTS
OF
LOAN
AGREEMENT.—Section 464(c) is
amended—
H. R. 6—146
(1) in paragraph (1)(D)—
(A) by striking ‘‘(i) 3 percent’’ and all that follows
through ‘‘or (iii)’’; and
(B) by striking ‘‘subparagraph (A)(i)’’ and inserting
‘‘paragraph (2)(A)(i)’’;
(2) in the matter following clause (iv) of paragraph (2)(A),
by striking ‘‘subparagraph (B)’’ and inserting ‘‘subparagraph
(A) of paragraph (1)’’;
(3) by adding at the end of paragraph (2) the following:
‘‘(C) An individual with an outstanding loan balance who meets
the eligibility criteria for a deferment described in subparagraph
(A) as in effect on the date of enactment of this subparagraph
shall be eligible for deferment under this paragraph notwithstand-
ing any contrary provision of the promissory note under which
the loan or loans were made, and notwithstanding any amendment
(or effective date provision relating to any amendment) to this
section made prior to the date of such deferment.’’; and
(4) 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.’’.
(d) DISCHARGE; REHABILITATION; INCENTIVE
REPAYMENT.—
Section 464 is amended 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 January 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 borrower’s liability on the loan (including
the interest and collection fees) 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 responsibility standards
described in section 498(c).
‘‘(2) ASSIGNMENT.—A borrower whose loan has been dis-
charged 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 ASSISTANCE.—The period
during which a student was unable to complete a course of
study due to the closing of the institution shall not be consid-
ered for purposes of calculating the student’s period of eligibility
for additional assistance under this title.
‘‘(4) SPECIAL RULE.—A borrower whose loan has been dis-
charged 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
H. R. 6—147
would be otherwise eligible (but for the default on the dis-
charged loan). The amount discharged under this subsection
shall be treated as an amount canceled under section 465(a).
‘‘(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 determined by the institution, or by the
Secretary in the case of a loan held by the Secretary,
the loan shall be considered rehabilitated, and the institu-
tion that made that loan (or the Secretary, in the case
of a loan held by the Secretary) shall request that any
credit bureau organization or credit reporting agency to
which the default was reported remove the default from
the borrower’s credit history.
‘‘(B) COMPARABLE
CONDITIONS.—As long as the bor-
rower continues to make scheduled repayments 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.
‘‘(C) ADDITIONAL
ASSISTANCE.—The borrower of a
rehabilitated loan shall not be precluded 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 borrower of a
loan made under this part who has defaulted on that loan
makes 6 ontime, consecutive, monthly payments of amounts
owed on such loan, the borrower’s eligibility for grant, loan,
or work assistance under this title shall be restored to the
extent that the borrower is otherwise eligible. 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 Secretary, an incentive
repayment program designed to reduce default and to replenish
student loan funds established under this part. Each such
incentive repayment program may—
‘‘(A) offer a reduction of the interest rate on a loan
on which the borrower has made 48 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
H. R. 6—148
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 option under an
incentive repayment program authorized by this subsection
may be paid for with Federal funds, including any Federal
funds from the student loan fund, or with institutional funds
from the student loan fund.’’.
SEC. 465. CANCELLATION FOR PUBLIC SERVICE.
Section 465 (20 U.S.C. 1087ee) is amended—
(1) in subsection (a)—
(A) in paragraph (2)(C), by striking ‘‘section 676(b)(9)’’
and inserting ‘‘section 635(a)(10)’’;
(B) in the last sentence of paragraph (2), by striking
‘‘section 602(a)(1)’’ and inserting ‘‘section 602’’; and
(C) by adding at the end the following new paragraph:
‘‘(7) An individual with an outstanding loan obligation under
this part who performs service of any type that is described in
paragraph (2) as in effect on the date of enactment of this paragraph
shall be eligible for cancellation under this section for such service
notwithstanding any contrary provision of the promissory note
under which the loan or loans were made, and notwithstanding
any amendment (or effective date provision relating to any amend-
ment) to this section made prior to the date of such service.’’;
and
(2) in subsection (b), by adding at the end the following
new sentence: ‘‘To the extent feasible, the Secretary shall pay
the amounts for which any institution qualifies under this
subsection not later than 3 months after the institution files
an institutional application for campus-based funds.’’.
SEC. 466. DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS.
Section 466 (20 U.S.C. 1087ff) is amended—
(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 inserting
‘‘2004’’.
SEC. 467. 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 Perkins Loan
Revolving Fund on the date of enactment of this Act shall be
transferred to and deposited in the Treasury.
H. R. 6—149
PART F—NEED ANALYSIS
SEC. 471. COST OF ATTENDANCE.
Section 472 (20 U.S.C. 1087ll) is amended—
(1) in paragraph (2), by inserting after ‘‘personal expenses’’
the following: ‘‘, including a reasonable allowance for the docu-
mented rental or purchase of a personal computer,’’;
(2) 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 ‘‘, except that
the amount may not be less than $2,500’’;
(3) in paragraph (10), by striking everything after ‘‘deter-
mining costs’’ and inserting a semicolon; and
(4) in paragraph (11), by striking ‘‘placed’’ and inserting
‘‘engaged’’.
SEC. 472. DATA ELEMENTS.
Section 474(b)(3) (20 U.S.C. 1087nn(b)(3)) is amended by
inserting ‘‘, excluding the student’s parents,’’ after ‘‘family of the
student’’.
SEC. 473. FAMILY CONTRIBUTION FOR DEPENDENT STUDENTS.
(a) PARENTS’ CONTRIBUTION
FROM
ADJUSTED
AVAILABLE
INCOME.—Section 475(b)(3) (20 U.S.C. 1087oo(b)(3)) is amended by
inserting ‘‘, excluding the student’s parents,’’ after ‘‘number of family
members’’.
(b) STUDENT CONTRIBUTION FROM AVAILABLE INCOME.—Section
475(g) is amended—
(1) in paragraph (2)—
(A) in subparagraph (D), by striking ‘‘$1,750; and’’ and
inserting ‘‘$2,200 (or a successor amount prescribed by
the Secretary under section 478);’’;
(B) by striking the period at the end of subparagraph
(E) and inserting ‘‘; and’’; and
(C) by inserting after subparagraph (E) the following
new subparagraph:
‘‘(F) an allowance for parents’ negative available
income, determined in accordance with paragraph (6).’’;
and
(2) by adding at the end the following new paragraph:
‘‘(6) ALLOWANCE
FOR
PARENTS’ 
NEGATIVE
AVAILABLE
INCOME.—The allowance for parents’ negative available income
is the amount, if any, by which the sum of the amounts
deducted under subparagraphs (A) through (F) of subsection
(c)(1) exceeds the sum of the parents’ total income (as defined
in section 480) and the parents’ contribution from assets (as
determined in accordance with subsection (d)).’’.
(c) ADJUSTMENTS TO STUDENT’S CONTRIBUTION FOR ENROLL-
MENT PERIODS OTHER THAN NINE MONTHS.—Section 475 is amend-
ed by adding at the end the following:
‘‘( j) ADJUSTMENTS TO STUDENT’S CONTRIBUTION FOR ENROLL-
MENT PERIODS OF LESS THAN NINE MONTHS.—For periods of enroll-
ment of less than 9 months, the student’s contribution from adjusted
available income (as determined under subsection (g)) is determined,
for purposes other than subpart 2 of part A, by dividing the amount
H. R. 6—151
the December next preceding the beginning of such academic
year, and rounding the result to the nearest $10.’’.
SEC. 477. SIMPLIFIED NEEDS TEST; ZERO EXPECTED FAMILY CON-
TRIBUTION.
Section 479 (20 U.S.C. 1087ss) is amended—
(1) in subsection (b)(3)—
(A) in the matter preceding subparagraph (A), by strik-
ing ‘‘this paragraph’’ and inserting ‘‘this subsection, or sub-
section (c), as the case may be,’’;
(B) in subparagraph (A), by striking ‘‘or’’ at the end
thereof;
(C) by redesignating subparagraph (B) as subpara-
graph (C); and
(D) by inserting after subparagraph (A) the following
new subparagraph:
‘‘(B) a form 1040 (including any prepared or electronic
version of such form) required pursuant to the Internal
Revenue Code of 1986, except that such form shall be
considered a qualifying form 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 subpara-
graph (A); or’’;
(2) in subsection (c)—
(A) by amending paragraph (1)(A) to read as follows:
‘‘(A) the student’s parents file, or are eligible to file,
a form described in subsection (b)(3), or certify that the
parents are not required to file an income tax return and
the student files, or is eligible to file, such a form, or
certifies that the student is not required to file an income
tax return; and’’; and
(B) by amending paragraph (2)(A) to read as follows:
‘‘(A) the student (and the student’s spouse, if any)
files, or is eligible to file, a form described in subsection
(b)(3), or certifies that the student (and the student’s
spouse, if any) is not required to file an income tax return;
and’’.
SEC. 478. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.
Section 479A (20 U.S.C. 1087tt) is amended—
(1) in subsection (a), by inserting after the second sentence
the following: ‘‘Special circumstances may include tuition
expenses at an elementary or secondary school, medical or
dental expenses not covered by insurance, unusually high child
care costs, recent unemployment of a family member, the num-
ber of parents enrolled at least half-time in a degree, certificate,
or other program leading to a recognized educational credential
at an institution with a program participation agreement under
section 487, or other changes in a family’s income, a family’s
assets, or a student’s status.’’; and
(2) by amending subsection (c) to read as follows:
‘‘(c) REFUSAL OR ADJUSTMENT OF LOAN CERTIFICATIONS.—On
a case-by-case basis, an eligible institution may refuse to certify
a statement that permits a student to receive a loan under part
B or 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 provided
H. R. 6—152
in written form to the student. No eligible institution shall discrimi-
nate against any borrower or applicant in obtaining a loan on
the basis of race, national origin, religion, sex, marital status,
age, or disability status.’’.
SEC. 479. TREATMENT OF OTHER FINANCIAL ASSISTANCE.
Section 480( j) (20 U.S.C. 1087vv( j)) is amended—
(1) in paragraph (1), by inserting before the period at
the end the following: ‘‘, and national service educational
awards or post-service benefits under title I of the National
and Community Service Act of 1990 (42 U.S.C. 12571 et seq.)’’;
(2) by striking paragraph (3); and
(3) by redesignating paragraph (4) as paragraph (3).
SEC. 480. CLERICAL AMENDMENTS.
(a) AMOUNT
OF NEED.—Section 471 (20 U.S.C. 1087kk) is
amended by striking ‘‘or 4’’ and inserting ‘‘or 2’’.
(b) FAMILY CONTRIBUTION.—Section 473 (20 U.S.C. 1087mm)
is amended by striking ‘‘subpart 4’’ and inserting ‘‘subpart 2’’.
SEC. 480A. EFFECTIVE DATES.
(a) IN GENERAL.—Except as provided in subsection (b), the
amendments made by this part are effective on the date of enact-
ment of this Act.
(b) PROVISIONS EFFECTIVE FOR ACADEMIC YEAR 2000–2001, AND
THEREAFTER.—The amendments made by sections 472, 473, 474,
and 475 shall apply with respect to determinations of need under
part F of title IV of the Higher Education Act of 1965 for academic
years beginning on or after July 1, 2000.
PART G—GENERAL PROVISIONS
SEC. 481. MASTER CALENDAR.
(a) REQUIRED SCHEDULE.—Section 482(a) (20 U.S.C. 1089(a))
is amended by adding at the end the following:
‘‘(3) The Secretary shall, to the extent practicable, notify
eligible institutions, guaranty agencies, lenders, interested soft-
ware providers, and, upon request, other interested parties,
by December 1 prior to the start of an award year of minimal
hardware and software requirements necessary to administer
programs under this title.
‘‘(4) The Secretary shall attempt to conduct training activi-
ties for financial aid administrators and others in an expedi-
tious and timely manner prior to the start of an award year
in order to ensure that all participants are informed of all
administrative requirements.’’.
(b) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS.—Sub-
section (c) of section 482 is amended to read as follows:
‘‘(c) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS.—(1)
Except as provided in paragraph (2), any regulatory changes initi-
ated by the Secretary affecting the programs 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 discretion, choose to implement prior
H. R. 6—153
to the effective date described 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 subpara-
graph 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.’’.
SEC. 482. FORMS AND REGULATIONS.
(a) COMMON FINANCIAL AID FORM DEVELOPMENT.—Section
483(a) (20 U.S.C. 1090(a)) is amended—
(1) in the subsection heading, by striking ‘‘FORM’’ and
inserting ‘‘FORM DEVELOPMENT’’;
(2) in paragraph (1)—
(A) by striking ‘‘A, C, D, and E’’ and inserting ‘‘A
through E’’;
(B) by striking ‘‘and to determine the need of a student
for the purpose of part B of this title’’;
(C) by striking the second sentence and inserting the
following: ‘‘The Secretary shall include on the form devel-
oped under this subsection such data items as the Secretary
determines are appropriate for inclusion. Such items shall
be selected in consultation with States to assist in the
awarding of State financial assistance. In no case shall
the number of such data items be less than the number
included on the form on the date of enactment of the
Higher Education Amendments of 1998.’’; and
(D) by striking the last sentence;
(3) in paragraph (2)—
(A) by striking ‘‘A, C, D, and E’’ each place the term
appears and inserting ‘‘A through E’’;
(B) by striking ‘‘and the need of a student for the
purpose of part B of this title,’’; and
(C) by striking ‘‘or have the student’s need established
for the purpose of part B of this title’’;
(4) by amending paragraph (3) to read as follows:
‘‘(3) DISTRIBUTION OF DATA.—Institutions of higher edu-
cation, guaranty agencies, and States shall receive, without
charge, the data collected by the Secretary using the form
developed pursuant to this section for the purposes of processing
loan applications and determining need and eligibility for
institutional and State financial aid awards. Entities designated
by institutions of higher education, guaranty agencies, or States
to receive such data shall be subject to all the requirements
of this section, unless such requirements are waived by the
Secretary.’’;
(5) by adding at the end the following:
‘‘(5) ELECTRONIC FORMS.—(A) The Secretary, in cooperation
with representatives of agencies and organizations involved
in student financial assistance, including private computer soft-
ware providers, shall develop an electronic version of the form
described in paragraph (1). As permitted by the Secretary,
such an electronic version shall not require a signature to
be collected at the time such version is submitted, if a signature
H. R. 6—154
is subsequently submitted by the applicant. The Secretary shall
prescribe such version not later than 120 days after the date
of enactment of the Higher Education Amendments of 1998.
‘‘(B) Nothing in this section shall be construed to prohibit
the use of the form developed by the Secretary pursuant to
subparagraph (A) by an eligible institution, eligible lender,
guaranty agency, State grant agency, private computer software
providers, a consortium thereof, or such other entities as the
Secretary may designate.
‘‘(C) No fee shall be charged to students in connection
with the use of the electronic version of the form, or of any
other electronic forms used in conjunction with such form in
applying for Federal or State student financial assistance.
‘‘(D) The Secretary shall ensure that data collection com-
plies with section 552a of title 5, United States Code, and
that any entity using the electronic version of the form devel-
oped by the Secretary pursuant to subparagraph (A) shall main-
tain reasonable and appropriate administrative, technical, and
physical safeguards to ensure the integrity and confidentiality
of the information, and to protect against security threats,
or unauthorized uses or disclosures of the information provided
on the electronic version of the form. Data collected by such
version of the form shall be used only for the application,
award, and administration of aid awarded under this title,
State aid, or aid awarded by eligible institutions or such entities
as the Secretary may designate. No data collected by such
version of the form shall be used for making final aid awards
under this title until such data have been processed by the
Secretary or a contractor or designee of the Secretary.
‘‘(6) THIRD
PARTY
SERVICERS
AND
PRIVATE
SOFTWARE
PROVIDERS.—To the extent practicable and in a timely manner,
the Secretary shall provide, to private organizations and consor-
tia that develop software used by eligible institutions for the
administration of funds under this title, all the necessary speci-
fications that the organizations and consortia must meet for
the software the organizations and consortia develop, produce,
and distribute (including any diskette, modem, or network
communications) which are so used. The specifications shall
contain record layouts for required data. The Secretary shall
develop in advance of each processing cycle an annual schedule
for providing such specifications. The Secretary, to the extent
practicable, shall use means of providing such specifications,
including conferences and other meetings, outreach, and tech-
nical support mechanisms (such as training and printed ref-
erence materials). The Secretary shall, from time to time, solicit
from such organizations and consortia means of improving the
support provided by the Secretary.
‘‘(7) PARENT’S SOCIAL SECURITY NUMBER AND BIRTH DATE.—
The Secretary is authorized to include on the form developed
under this subsection space for the social security number
and birth date of parents of dependent students seeking finan-
cial assistance under this title.’’.
(b) STREAMLINED REAPPLICATION PROCESS.—Section 483(b)(1)
is amended by striking ‘‘, within 240 days’’ and all that follows
through ‘‘of 1992,’’.
(c) INFORMATION TO COMMITTEES.—Section 483(c) is amended
by striking ‘‘and Labor’’ and inserting ‘‘and the Workforce’’.