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(i) by striking ‘‘and’’ at the end of 
clause (ii); and 
(ii) by striking clause (iii) and insert-
ing the following new clauses: 
‘‘(iii) 25 percent for fiscal year 1994 
through fiscal year 2011; and 
‘‘(iv) 30 percent for fiscal year 2012 
and any succeeding fiscal year.’’; 
(2) by redesignating paragraph (6) as para-
graph (8), and redesignating paragraphs (3) through 
(5) as paragraphs (4) through (6), respectively; 
(3) by inserting after paragraph (2) the fol-
lowing new paragraph: 
‘‘(3) APPEALS FOR REGULATORY RELIEF.—An 
institution whose cohort default rate, calculated in 
accordance with subsection (m), is equal to or great-
er than the threshold percentage specified in para-
graph (2)(B)(iv) of this subsection, for two consecu-
tive fiscal years may, within 30 days of receiving no-
tification from the Secretary, file an appeal dem-
onstrating exceptional mitigating circumstances, as 
defined in paragraph (5). The Secretary shall issue 
a decision on any such appeal within 45 days after 
its submission. If the Secretary determines that the 
institution demonstrates exceptional mitigating cir-
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cumstances, the Secretary shall not subject the insti-
tution to provisional certification based solely on the 
institution’s cohort default rate.’’; 
(4) in paragraph (5)(A) (as redesignated by 
paragraph (2) of this subsection), by striking ‘‘For 
the purposes of paragraph (2)(A)(ii)’’ and all that 
follows through ‘‘following criteria:’’, and inserting 
‘‘For purposes of this subsection, an institution of 
higher education shall be treated as having excep-
tional mitigating circumstances that make applica-
tion of paragraph (2) inequitable, and that provide 
for regulatory relief under paragraph (3), if such in-
stitution, in the opinion of an independent auditor, 
meets the following criteria:’’; 
(5) by inserting after paragraph (6) (as redesig-
nated by paragraph (2) of this subsection) the fol-
lowing new paragraph: 
‘‘(7) DEFAULT PREVENTION AND ASSESSMENT 
OF ELIGIBILITY BASED ON HIGH DEFAULT RATES.— 
‘‘(A) FIRST
YEAR.—(i) An institution 
whose cohort default rate is equal to or greater 
than the threshold percentage specified in para-
graph (2)(B)(iv) in any fiscal year shall estab-
lish a default prevention task force to prepare 
a plan to— 
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‘‘(I) identify the factors causing 
the institution’s cohort default rate to 
exceed such threshold; 
‘‘(II) establish measurable objec-
tives to improve the institution’s co-
hort default rate; and 
‘‘(III) specify actions that the in-
stitution can take to improve student 
loan repayment, including enhanced 
use of professional judgment and dis-
cretion of student financial aid admin-
istrators. 
‘‘(ii) Each institution subject to this sub-
paragraph shall submit the plan under clause 
(i) to the Secretary, who shall review the plan 
and offer technical assistance to the institution 
to promote improved student loan repayment. 
‘‘(B) SECOND CONSECUTIVE YEAR.—(i) An 
institution whose cohort default rate is equal to 
or greater than the threshold percentage speci-
fied in paragraph (2)(B)(iv) for two consecutive 
fiscal years shall require the institution’s de-
fault prevention task force established under 
subparagraph (A) to review and revise the plan 
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required under such subparagraph, and shall 
submit such revised plan to the Secretary. 
‘‘(ii) The Secretary shall review each re-
vised plan submitted in accordance with this 
subparagraph, and may direct that such a plan 
be amended to include actions, with measurable 
objectives, that the Secretary determines, based 
on available data and analyses of student loan 
defaults, will promote student loan repayment. 
‘‘(C) COHORT
DEFAULT
RATES
PUB-
LISHED.—The Secretary shall make available to 
the public on the College Navigator web site the 
cohort default rate and the plan of the default 
prevention task force of each institution that is 
subject to this paragraph.’’; and 
(6) in paragraph (8)(A) (as redesignated by 
paragraph (2) of this subsection), by striking 
‘‘0.0375’’ and inserting ‘‘0.0625’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(6) is effective for fiscal years beginning on 
or after October 1, 2011. 
SEC. 434. DEFINITION OF ELIGIBLE LENDER. 
Section 
435(d)(1)(A)(ii) 
(20 
U.S.C. 
1085(d)(1)(A)(ii)) is amended— 
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(1) by striking ‘‘part, or (III)’’ and inserting 
‘‘part, (III)’’; and 
(2) by inserting before the semicolon at the end 
the following: ‘‘, or (IV) it is a National or State 
chartered 
bank 
with 
assets 
of 
less 
than 
$1,000,000,000’’. 
SEC. 435. COHORT DEFAULT RATES. 
(a) AMENDMENTS.—Section 435(m) (20 U.S.C. 
1085(m)) is amended— 
(1) in the first sentence of paragraph (1)(A), by 
striking ‘‘end of the following fiscal year’’ and in-
serting ‘‘end of the second fiscal year following the 
fiscal year in which the students entered repay-
ment’’; 
(2) in paragraph (1)(B), by striking ‘‘such fis-
cal year’’ and inserting ‘‘such second fiscal year’’; 
(3) in paragraph (1)(C), by striking ‘‘end of the 
fiscal year immediately following the year in which 
they entered repayment’’ and inserting ‘‘end of the 
second fiscal year following the year in which they 
entered repayment’’; 
(4) in paragraph (2)(C)— 
(A) by striking ‘‘end of such following fis-
cal year is not considered as in default for the 
purposes of this subsection’’ and inserting ‘‘end 
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of the second fiscal year following the year in 
which the loan entered repayment is not consid-
ered as in default for purposes of this sub-
section’’; and 
(B) by striking ‘‘such fiscal year’’ and in-
serting ‘‘such second fiscal year’’; and 
(5) in paragraph (4)— 
(A) by amending the header to read as fol-
lows: ‘‘COLLECTION
AND
REPORTING
OF
CO-
HORT DEFAULT RATES AND LIFE OF COHORT 
DEFAULT RATES.—’’; and 
(B) by amending subparagraph (A) to read 
as follows: 
‘‘(A) The Secretary shall collect data from all 
insurers under this part and shall publish not less 
often than once every fiscal year a report showing 
cohort default data and life of cohort default rate for 
each category of institution, including: (i) 4-year 
public institutions; (ii) 4-year private nonprofit insti-
tutions; (iii) 2-year public institutions; (iv) 2-year 
private institutions; (v) 4-year proprietary institu-
tions; (vi) 2-year proprietary institutions; and (vii) 
less than 2-year proprietary institutions. For pur-
poses of this subparagraph, the life of cohort default 
rate means, for any fiscal year in which 1 or more 
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SEC. 436. DISABILITY DETERMINATIONS. 
Section 437(a) (20 U.S.C. 1087(a)) is amended by 
adding at the end the following new sentence: ‘‘A borrower 
who receives a permanent total disability rating from the 
Secretary of Veterans Affairs, and who provides docu-
mentation of such rating to the Secretary of Education, 
shall be considered permanently and totally disabled for 
the purpose of discharging such borrower’s loans under 
this subsection, and such borrower shall not be required 
to present additional documentation for purposes of this 
subsection.’’. 
PART C—COLLEGE WORK/STUDY 
SEC. 441. REAUTHORIZATION. 
(a) EXTENSION OF AUTHORITY.—Section 441 (42 
U.S.C. 2751) is amended— 
(1) 
in 
subsection 
(b), 
by 
striking 
‘‘$1,000,000,000 for fiscal year 1999’’ and inserting 
‘‘$1,500,000,000 for fiscal year 2009’’; and 
(2) in subsection (c)— 
(A) by striking ‘‘and’’ at the end of para-
graph (3); 
(B) by striking the period at the end of 
paragraph (4) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
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‘‘(5) responding to the needs of the community, 
which may include activities in preparation for and 
during emergencies and natural disasters.’’. 
(b) ALLOWANCE FOR BOOKS AND SUPPLIES.—Sec-
tion 442(c)(4)(D) (42 U.S.C. 2752(c)(4)(D)) is amended 
by striking ‘‘$450’’ and inserting ‘‘$600’’. 
(c) GRANTS
FOR
FEDERAL
WORK-STUDY
PRO-
GRAMS.—Section 443 (42 U.S.C. 2753) is amended— 
(1) in subsection (b)(2)(B), strike ‘‘(as de-
scribed in subsection (d)), is’’ insert the following: 
‘‘(as described in subsection (d)), and not less than 
1 civic education and participation project (as de-
scribed in subsection (e)), are’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(e) CIVIC EDUCATION AND PARTICIPATION ACTIVI-
TIES.— 
‘‘(1) USE OF FUNDS.—In any academic year to 
which subsection (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 compensation 
for time spent in training and travel directly related 
to civic education and participation activities) stu-
dents employed in projects that— 
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‘‘(A) teach civics in schools; 
‘‘(B) raise awareness of government func-
tions or resources; or 
‘‘(C) increase civic participation such as in 
voting or running for elected office. 
‘‘(2) PRIORITY FOR SCHOOLS.—To the extent 
practicable, an institution shall— 
‘‘(A) give priority to the employment of 
students participating in projects that educate 
or train the public about evacuation, emergency 
response, and injury prevention strategies relat-
ing to natural disasters, acts of terrorism, and 
other emergency situations; and 
‘‘(B) ensure that any student compensated 
with the funds described in paragraph (1) re-
ceives appropriate training to carry out the edu-
cational services required. 
‘‘(3) FEDERAL SHARE.—The Federal share of 
the compensation of work-study students com-
pensated under this subsection may exceed 75 per-
cent.’’. 
(d) FLEXIBLE USE OF FUNDS.—Section 445 (42 
U.S.C. 2755) is amended by adding at the end the fol-
lowing new subsection: 
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‘‘(d) FLEXIBILITY IN THE EVENT OF A MAJOR DIS-
ASTER.— 
‘‘(1) In the event of a major disaster, an eligi-
ble institution located in any area affected by such 
major disaster, as determined by the Secretary, may 
make payments under this part to disaster-affected 
students as follows: 
‘‘(A) For any academic year during which 
a major disaster occurs, such an eligible institu-
tion may pay wages under this part to disaster- 
affected students in an amount equal to or less 
than the amount of wages such students would 
have been paid under this part had the students 
been able to complete the work obligation nec-
essary to receive work study funds for such aca-
demic year. 
‘‘(B) Wages shall not be awarded to any 
student who, for the academic year during 
which a major disaster occurs, was not eligible 
for work study or was not completing the work 
obligation necessary to receive work study funds 
under this part prior to the occurrence of the 
major disaster. 
‘‘(C) Any wages awarded to disaster-af-
fected students under this subsection shall meet 
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the matching requirements outlined in section 
443. 
‘‘(2) DEFINITIONS.—In this subsection: 
‘‘(A) The term ‘disaster-affected students’ 
means students enrolled at an eligible institu-
tion who— 
‘‘(i) were receiving Federal work study 
payments from such eligible institution for 
an academic year prior to the occurrence 
of a major disaster during such academic 
year; and 
‘‘(ii) were prevented from fulfilling 
their work-study obligations for such aca-
demic year due to such major disaster, as 
determined by the Secretary. 
‘‘(B) The term ‘major disaster’ has the 
meaning given such term in section 102(2) of 
the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act.’’. 
SEC. 442. ADDITIONAL FUNDS FOR OFF-CAMPUS COMMU-
NITY SERVICE. 
Section 447 (42 U.S.C. 2756a) is amended— 
(1) by striking ‘‘Each institution participating’’ 
and inserting ‘‘(a) COMMUNITY SERVICE-LEARN-
ING.—Each institution participating’’; and 
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(2) by adding at the end the following new sub-
section: 
‘‘(b) OFF-CAMPUS COMMUNITY SERVICE.— 
‘‘(1) GRANTS
AUTHORIZED.—In addition to 
funds made available under section 443(b)(2)(B), 
the Secretary is authorized to award grants to insti-
tutions participating under this part to supplement 
off-campus community service employment. 
‘‘(2) USE OF FUNDS.—In any year in which 
section 443(b)(2)(B) applies, an institution shall en-
sure that funds granted to such institution under 
this subsection are used in accordance with such sec-
tion 443 to recruit and compensate students (includ-
ing compensation for time spent in training and for 
travel directly related to such community service). 
‘‘(3) PRIORITY.—In awarding grants under this 
subsection, the Secretary shall give priority to appli-
cations that support postsecondary students assist-
ing with early childhood education activities and ac-
tivities in preparation for and during emergencies 
and natural disasters. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this subsection such sums as may be necessary for 
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fiscal year 2009 and each of the 4 succeeding fiscal 
years.’’. 
SEC. 443. WORK COLLEGES. 
(a) WORK-LEARNING-SERVICE.—Section 448 (42 
U.S.C. 2756b) is amended by striking ‘‘work-learning’’ 
each place it appears and inserting ‘‘work-learning-serv-
ice’’. 
(b) DEFINITION.—Section 448(e) is amended to read 
as follows: 
‘‘(e) DEFINITIONS.—For the purpose of this sec-
tion— 
‘‘(1) the term ‘work college’ means an eligible 
institution that— 
‘‘(A) has been a public or private non-
profit, four-year, degree granting institution 
with a commitment to community service; 
‘‘(B) has operated a comprehensive work- 
learning-service program for at least 2 years; 
‘‘(C) requires all resident students, includ-
ing at least one-half of all students who are en-
rolled on a full-time basis, to participate in a 
comprehensive work-learning-service program 
for at least 5 hours each week, or at least 80 
hours during each period of enrollment, except 
summer school, unless the student is engaged in 
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an institutionally organized or approved study 
abroad or externship program; and 
‘‘(D) provides students participating in the 
comprehensive work-learning-service program 
with the opportunity to contribute to their edu-
cation and to the welfare of the community as 
a whole; and 
‘‘(2) the term ‘comprehensive student work- 
learning-service program’ means a student work- 
learning-service program that— 
‘‘(A) is an integral and stated part of the 
institution’s educational philosophy and pro-
gram; 
‘‘(B) requires participation of all resident 
students for enrollment and graduation; 
‘‘(C) includes learning objectives, evalua-
tion, and a record of work performance as part 
of the student’s college record; 
‘‘(D) provides programmatic leadership by 
college personnel at levels comparable to tradi-
tional academic programs; 
‘‘(E) recognizes the educational role of 
work-learning-service supervisors; and 
‘‘(F) 
includes 
consequences 
for 
non-
performance or failure in the work-learning- 
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service program similar to the consequences for 
failure in the regular academic program.’’. 
(c) AUTHORIZATION.—Section 448(f) is amended— 
(1) by striking ‘‘$5,000,000’’ and inserting 
‘‘such sums as may be necessary’’; and 
(2) by striking ‘‘1999’’ and inserting ‘‘2009’’. 
PART D—FEDERAL DIRECT STUDENT LOANS 
SEC. 451. REAUTHORIZATION. 
Section 458(a) (20 U.S.C. 1087h(a)) is amended— 
(1) in paragraph (2)— 
(A) in the heading of such paragraph, by 
striking ‘‘2011’’ and inserting ‘‘2013’’; and 
(B) by striking ‘‘2011’’ and inserting 
‘‘2013’’; and 
(2) in paragraph (3), by striking ‘‘2011’’ and 
inserting ‘‘2013’’. 
SEC. 452. PUBLIC SERVICE JOB DEFINITION. 
Section 455(m)(3)(B) (20 U.S.C. 1087e(m)(3)(B)) is 
amended to read as follows: 
‘‘(B) PUBLIC
SERVICE
JOB.—The term 
‘public service job’ means— 
‘‘(i) a full-time job in emergency man-
agement, 
government 
(excluding 
time 
served as a member of Congress), military 
service, public safety, law enforcement, 
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public health (including nurses, nurse 
practitioners, nurses in a clinical setting, 
and full-time professionals engaged in 
health care practitioner occupations and 
health care support occupations, as such 
terms are defined by the Bureau of Labor 
Statistics), public education, social work in 
a public child or family service agency, 
public interest law services (including pros-
ecution or public defense or legal advocacy 
on behalf of low-income communities at a 
nonprofit organization), early childhood 
education (including licensed or regulated 
childcare, Head Start, and State funded 
prekindergarten), public service for individ-
uals with disabilities, public service for the 
elderly, public library sciences, school- 
based library sciences and other school- 
based services, or at an organization that 
is described in section 501(c)(3) of the In-
ternal Revenue Code of 1986 and exempt 
from taxation under section 501(a) of such 
Code; or 
‘‘(ii) teaching as a full-time faculty 
member at a Tribal College or University 
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as defined in section 316(b) and other fac-
ulty teaching in high-needs subject areas 
or areas of shortage (including nurse fac-
ulty, foreign language faculty and part- 
time faculty at community colleges), as de-
termined by the Secretary.’’. 
SEC. 453. IDENTITY FRAUD PROTECTION. 
Section 455 (20 U.S.C. 1087e) is further amended 
by adding at the end the following new subsection: 
‘‘(n) IDENTITY FRAUD PROTECTION.—The Secretary 
of Education shall take such steps as may be necessary 
to ensure that monthly Direct Loan statements and other 
publications of the Department of Education do not con-
tain more than 4 digits of the Social Security number of 
any individual.’’. 
SEC. 454. NO ACCRUAL OF INTEREST FOR ACTIVE DUTY 
SERVICE MEMBERS. 
(a) AMENDMENT.—Section 455 (20 U.S.C. 1087e) is 
further amended by adding at the end the following: 
‘‘(o) NO ACCRUAL OF INTEREST FOR ACTIVE DUTY 
SERVICE MEMBERS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this part, and except as provided in 
paragraph (3), interest shall not accrue for an eligi-
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ble borrower on a loan made under this part that is 
disbursed on or after October 1, 2008. 
‘‘(2) CONSOLIDATION LOANS.—In the case of 
any consolidation loan made under this part that is 
disbursed on or after October 1, 2008, interest shall 
not accrue pursuant to this subsection only on such 
portion of such loan as was used to repay a loan 
made under this part that was disbursed on or after 
October 1, 2008. 
‘‘(3) ELIGIBLE BORROWER.—In this subsection, 
the term ‘eligible borrower’ means an individual 
who— 
‘‘(A)(i) is serving on active duty during a 
war or other military operation or national 
emergency; or 
‘‘(ii) is performing qualifying National 
Guard duty during a war or other military op-
eration or national emergency; and 
‘‘(B) is serving in an area of hostilities in 
which service qualifies for special pay under 
section 310 of title 37, United States Code. 
‘‘(4) LIMITATION.—An individual who qualifies 
as an eligible borrower under this subsection may re-
ceive the benefit of this subsection for not more than 
60 months.’’. 
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(b) CONSOLIDATION LOANS.—Section 428C(b)(5) 
(20 U.S.C. 1078–3(b)(5)) is amended by inserting after 
the first sentence the following: ‘‘In addition, in the event 
that a borrower chooses to obtain a consolidation loan for 
the purposes of using the no accrual of interest for active 
duty service members program offered under section 
455(o), the Secretary shall offer a Federal Direct Consoli-
dation loan to any such borrower who applies for partici-
pation in such program.’’. 
SEC. 455. DIRECT LOAN PROGRAM AUDIT AND REPORTING 
REQUIREMENTS. 
(a) AUDIT OF DIRECT LOAN SERVICING PORTFOLIO 
AND DIRECT LOAN SERVICING CONTRACTS.—Section 458 
(20 U.S.C. 1087h) is amended by adding at the end the 
following: 
‘‘(d) AUDIT OF DIRECT LOAN SERVICING PORTFOLIO 
AND DIRECT LOAN SERVICING CONTRACTS.—The Sec-
retary shall have a financial and compliance audit of all 
loans owned by the Department of Education and made 
under the William D. Ford Federal Direct Loan Program 
and all contracts for the origination, servicing, collection, 
and related activities of such loans, conducted annually by 
a qualified independent organization from a list of quali-
fied organizations promulgated by the Secretary in accord-
ance with standards established by the Comptroller Gen-
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eral. The standards shall measure the servicer’s compli-
ance with the due diligence standards and shall include 
a defined statistical sampling technique designed to meas-
ure the performance rating of the servicer for the purpose 
of this section. The Secretary shall submit the audit to 
Congress within 60 days of its completion and shall at 
the same time make the results of the audit publicly avail-
able.’’. 
(b) QUARTERLY REPORTING
OF ADMINISTRATIVE 
EXPENSES.—Section 458 (20 U.S.C. 1087h) is further 
amended by adding at the end the following: 
‘‘(e) BUDGET JUSTIFICATION AND QUARTERLY RE-
PORTS.—In addition to the requirements of subsection (c), 
and as a prerequisite to expending funds under this sec-
tion, the Secretary shall— 
‘‘(1) make publicly available immediately upon 
providing to Congress, its annual budget justifica-
tion referenced in the last sentence of subsection (c), 
including the detailed descriptions of activities and 
the costs for each such activity; and 
‘‘(2) make publicly available within 30 days of 
the close of each calendar quarter, an interim report 
with at least the same level of detail as the annual 
report referred to above, showing the detailed de-
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scriptions of activities and the costs for each such 
activity, for the quarter, which shall include— 
‘‘(A) amendments to any contracts entered 
into by the Department for the purposes of 
servicing, origination, consolidating, or other-
wise providing administrative support for the 
Direct Loan program; 
‘‘(B) a complete listing of all milestones 
for upgrades and improvements in any of the 
contracts referenced in section 458(d)(1) and 
the progress towards meeting such milestones; 
‘‘(C) with respect to each of the guaranty 
agencies operating under a guaranty agreement 
under section 428(c)— 
‘‘(i) un-reconciled balances in held 
loans by year of origination; 
‘‘(ii) status and number of defaulted 
loans by length of default in 30-day incre-
ments; and 
‘‘(iii) status and number of delinquent 
loans by length of delinquency in 30-day 
increments; 
‘‘(D) information technology purchases 
made under this section; and 
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‘‘(E) costs and terms of all contracts with 
external consultants and employees of institu-
tions of higher education carrying out activities 
under this part.’’. 
(c) AUDIT OF FEDERAL FAMILY EDUCATION LOAN 
PROGRAM PORTFOLIO AND GUARANTY AGENCIES.—The 
Secretary of Education shall have a financial and compli-
ance audit of all guaranty agencies participating in the 
loan programs under part B of title IV of the Higher Edu-
cation Act of 1965 (including each guaranty agencies’ con-
tract for the servicing, collecting, and related activities of 
such loans), conducted annually by a qualified inde-
pendent organization from a list of qualified organizations 
promulgated by the Secretary in accordance with the 
standards established by the Comptroller General. The 
standards shall measure the guaranty agency’s compliance 
with the due diligence standards and shall include a de-
fined statistical sampling technique designed to measure 
the performance rating of the guaranty agency for the 
purpose of this subsection. The Secretary shall submit the 
audit to Congress within 60 days of its completion and 
shall at the same time make the results of the audit pub-
licly available. 
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PART E—PERKINS LOANS 
SEC. 461. EXTENSION OF AUTHORITY. 
Section 461(b) (20 U.S.C. 1087aa(b)) is amended— 
(1) 
in 
paragraph 
(1), 
by 
striking 
‘‘$250,000,000 for fiscal year 1999’’ and inserting 
‘‘$350,000,000 for fiscal year 2009’’; and 
(2) in paragraph (2), by striking ‘‘2003’’ each 
place it appears and inserting ‘‘2014’’. 
SEC. 462. ALLOWANCE FOR BOOKS AND SUPPLIES. 
Section 462(c)(4)(D) (20 U.S.C. 1087bb(c)(4)(D)) is 
amended by striking ‘‘$450’’ and inserting ‘‘$600’’. 
SEC. 463. AGREEMENTS WITH INSTITUTIONS. 
(a) 
TRANSFERS
FOR
COLLECTION.—Section 
463(a)(4)(B) (20 U.S.C. 1087cc(a)(4)(B)) is amended to 
read as follows: 
‘‘(B) if the institution is not one described 
in subparagraph (A), the Secretary may allow 
such institution to refer such note or agreement 
to the Secretary, without recompense, except 
that any sums collected on such a loan (less an 
amount not to exceed 30 percent of any such 
sums collected to cover the Secretary’s collec-
tion costs) shall be repaid to such institution no 
later than 180 days after collection by the Sec-
retary and treated as an additional capital con-
tribution under section 462;’’. 
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(A) in the matter preceding paragraph (1), 
by striking ‘‘, upon written request,’’ and in-
serting ‘‘, as documented in accordance with 
paragraph (2),’’; 
(B) 
by 
redesignating 
paragraphs 
(1) 
through (3) as subparagraphs (A) through (C), 
respectively; 
(C) by inserting ‘‘(1)’’ after ‘‘FORBEAR-
ANCE.—’’; and 
(D) by adding at the end the following: 
‘‘(2) For the purpose of paragraph (1), the terms of 
forbearance agreed to by the parties shall be documented 
by— 
‘‘(A) confirming the agreement of the borrower 
by notice to the borrower from the institution of 
higher education; and 
‘‘(B) recording the terms in the borrower’s 
file.’’; 
(2) in subsection (h)(1)(A), by striking ‘‘12 
ontime’’ and inserting ‘‘9 on-time’’; and 
(3) in subsection (j)(2), by striking ‘‘(e)(3)’’ 
and inserting ‘‘(e)(1)(C)’’. 
SEC. 465. CANCELLATION FOR PUBLIC SERVICE. 
Section 465(a) (20 U.S.C. 1087ee(a)) is amended— 
(1) in paragraph (2)— 
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(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) as a full-time teacher for service in an 
academic year in a high-need school;’’; 
(B) in subparagraph (B), by striking 
‘‘Head Start Act which’’ and inserting ‘‘Head 
Start Act, or in a prekindergarten or child care 
program that is licensed or regulated by the 
State, that’’; 
(C) in subparagraph (H), by striking ‘‘or’’ 
after the semicolon; 
(D) in subparagraph (I), by striking the 
period and inserting a semicolon; and 
(E) by inserting before the matter fol-
lowing subparagraph (I) the following: 
‘‘(J) as a full-time fire fighter for service to a 
local, State, or Federal fire department or fire dis-
trict; 
‘‘(K) as a full-time faculty member at a Tribal 
College or University, as that term is defined in sec-
tion 316; 
‘‘(L) as a librarian, if the librarian has a mas-
ter’s degree in library science and is employed in— 
‘‘(i) an elementary school or secondary 
school that is eligible for assistance under title 
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I of the Elementary and Secondary Education 
Act of 1965; or 
‘‘(ii) a public library that serves a geo-
graphic area that contains 1 or more schools el-
igible for assistance under title I of the Elemen-
tary and Secondary Education Act of 1965; or 
‘‘(M) as a full-time speech language therapist, 
if the therapist has a master’s degree and is working 
exclusively with schools that are eligible for assist-
ance under title I of the Elementary and Secondary 
Education Act of 1965.’’; and 
(2) in paragraph (3)(A)— 
(A) in clause (i)— 
(i) by inserting ‘‘(D),’’ after ‘‘(C),’’; 
and 
(ii) by striking ‘‘or (I)’’ and inserting 
‘‘(I), (J), (K), (L), or (M)’’; 
(B) in clause (ii), by inserting ‘‘or’’ after 
the semicolon; 
(C) by striking clause (iii); and 
(D) by redesignating clause (iv) as clause 
(iii). 
SEC. 466. SENSE OF CONGRESS REGARDING PERKINS 
LOANS. 
It is the sense of Congress that— 
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(1) the Federal Perkins Loan Program, which 
provides low-interest loans to help needy students fi-
nance the costs of postsecondary education, is an 
important part of Federal student aid, and should 
remain a campus-based aid program at colleges and 
universities; and 
(2) in order to strengthen the Federal Perkins 
Loan Program, the Federal Government should sup-
port increased funds to the Program and restore the 
capital contribution funds for the Program, to pro-
vide more low-income students with affordable bor-
rowing options. 
PART F—NEED ANALYSIS 
SEC. 471. COST OF ATTENDANCE. 
(a) AMENDMENTS.—Section 472(3) (20 U.S.C. 
1087kk(3)) is amended— 
(1) in subparagraph (B), by striking ‘‘and’’ 
after the semicolon; 
(2) by redesignating subparagraph (C) as sub-
paragraph (D); and 
(3) by inserting after subparagraph (B), as 
amended by paragraph (1), the following: 
‘‘(C) for students who live in housing lo-
cated on a military base or for which a basic al-
lowance is provided under section 403(b) of title 
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37, United States Code, shall be an allowance 
based on the expenses reasonably incurred by 
such students for board but not for room; and’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on July 1, 2009. 
SEC. 472. DISCRETION TO MAKE ADJUSTMENTS FOR NURS-
ING HOME EXPENSES. 
Section 479A(a) (20 U.S.C. 1087tt) is amended by 
striking ‘‘medical or dental expenses’’ and inserting ‘‘med-
ical, dental, or nursing home expenses’’. 
SEC. 473. DEFINITIONS. 
(a) TOTAL INCOME.—Section 480(a) (20 U.S.C. 
1087vv(a)) is amended by adding at the end the following 
new paragraph: 
‘‘(3) Notwithstanding paragraph (1), with respect to 
dislocated workers (as defined in section 101 of the Work-
force Investment Act of 1998 (29 U.S.C. 2801)), the term 
‘total income’ is equal to estimated adjusted gross income 
plus estimated untaxed income and benefits for the cur-
rent tax year minus estimated excludable income (as de-
fined in subsection (e)) in for the current tax year.’’. 
(b) UNTAXED INCOME
AND BENEFITS.—Section 
480(b)(6) (20 U.S.C. 1087vv(b)(6)) is amended by insert-
ing ‘‘, except that the value of on-base military housing 
or the value of basic allowance for housing determined 
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under section 403(b) of title 37, United States Code, re-
ceived by the parents, in the case of a dependent student, 
or the student or student’s spouse, in the case of an inde-
pendent student, shall be excluded’’ before the semicolon. 
(c) TREATMENT
OF
COOPERATIVE
EDUCATION 
WORK INCOME.—Section 480(e) (20 U.S.C. 1087vv(e)) is 
amended— 
(1) by redesignating paragraphs (2) through 
(4) as paragraphs (3) through (5), respectively; and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) any income earned from work under a co-
operative education program offered by an institu-
tion of higher education;’’. 
(d) TREATMENT OF VETERANS’ EDUCATION BENE-
FITS IN ESTIMATED FINANCIAL ASSISTANCE CALCULA-
TION.—Section 480(j) (20 U.S.C. 1087vv(j)) is amended 
by adding at the end the following new paragraph: 
‘‘(4) Notwithstanding paragraph (1), for the first 
year a student receives veterans’ education benefits under 
chapter 30 of title 38, United States Code, the amount 
of such veterans’ education benefits that is treated as esti-
mated financial assistance not received under this title for 
the purposes of section 471(3) shall be calculated by sub-
tracting the amount that the student’s basic pay was re-
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duced under section 3011(b) or 3012(c) of such title in 
order to be eligible to receive such benefits from the 
amount of such veterans’ education benefits.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section are effective on July 1, 2009. 
SEC. 474. USE OF MOST RECENT TAX INFORMATION IN 
NEED ANALYSIS. 
Section 480(a)(1) of the Higher Education Act of 
1965 (20 U.S.C. 1087vv(a)(1)), as amended by section 
473 of this Act, is further amended by adding at the end 
the following new sentence: ‘‘Notwithstanding the pre-
ceding sentence, the Secretary shall, by regulation, provide 
for the use of the second preceding tax year when and 
to the extent necessary to carry out the simplification of 
applications used for the estimation and determination of 
financial aid eligibility through the sharing of data with 
the Internal Revenue Service with the consent of the tax-
payer.’’. 
PART G—GENERAL PROVISIONS 
SEC. 481. COMPLIANCE CALENDAR. 
Section 482 (20 U.S.C. 1089) is amended by adding 
at the end the following: 
‘‘(e) COMPLIANCE CALENDAR.—Prior to the begin-
ning of each award year, the Secretary shall provide to 
institutions of higher education a list of all the reports 
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and disclosures required under this Act. The list shall in-
clude— 
‘‘(1) the date each report or disclosure is re-
quired to be completed and to be submitted, made 
available, or disseminated; 
‘‘(2) the required recipients of each report or 
disclosure; 
‘‘(3) any required method for transmittal or 
dissemination of each report or disclosure; 
‘‘(4) a description of the content of each report 
or disclosure sufficient to allow the institution to 
identify the appropriate individuals to be assigned 
the responsibility for such report or disclosure; 
‘‘(5) references to the statutory authority, ap-
plicable regulations, and current guidance issued by 
the Secretary regarding each report or disclosure; 
and 
‘‘(6) any other information which is pertinent to 
the content or distribution of the report or disclo-
sure.’’. 
SEC. 482. IMPROVEMENTS TO PAPER AND ELECTRONIC 
FORMS AND PROCESSES. 
(a) COMMON FINANCIAL AID FORM DEVELOPMENT 
AND PROCESSING.—Section 483 (20 U.S.C. 1090) is 
amended— 
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(1) in subsection (a)— 
(A) by striking paragraphs (1), (2), and 
(5); 
(B) by redesignating paragraphs (3), (4), 
(6), and (7), as paragraphs (9), (10), (11), and 
(12), respectively; and 
(C) by inserting before paragraph (9), as 
redesignated by subparagraph (B), the fol-
lowing: 
‘‘(1) IN GENERAL.—The Secretary, in coopera-
tion with representatives of agencies and organiza-
tions involved in student financial assistance, shall 
produce, distribute, and process free of charge com-
mon financial reporting forms as described in this 
subsection to be used for application and reapplica-
tion to determine the need and eligibility of a stu-
dent for financial assistance under parts A through 
E (other than subpart 4 of part A). These forms 
shall be made available to applicants in both paper 
and electronic formats and shall be referred to as 
the ‘Free Application for Federal Student Aid’ or 
the ‘FAFSA’. The Secretary shall work to make the 
FAFSA consumer-friendly and to make questions on 
the FAFSA easy for students and parents to read 
and understand, and shall ensure that the FAFSA 
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is available in formats accessible to individuals with 
disabilities. 
‘‘(2) 
EARLY
ESTIMATES.—The 
Secretary 
shall— 
‘‘(A) permit applicants to enter data in 
such forms as described in this subsection in 
the years prior to enrollment in order to obtain 
a non-binding estimate of the applicant’s family 
contribution (as defined in section 473); 
‘‘(B) permit applicants to update informa-
tion submitted on forms described in this sub-
section, without needing to re-enter previously 
submitted information; 
‘‘(C) develop a means to inform applicants, 
in the years prior to enrollment, of student aid 
options for individuals in similar financial situa-
tions; and 
‘‘(D) develop a means to provide a clear 
and conspicuous notice that the applicant’s ex-
pected family contribution is subject to change 
and may not reflect the final expected family 
contribution used to determine Federal student 
financial aid award amounts. 
‘‘(3) PAPER FORMAT.— 
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‘‘(A) IN
GENERAL.—The Secretary shall 
produce, distribute, and process common forms 
in paper format to meet the requirements of 
paragraph (1). The Secretary shall develop a 
common paper form for applicants who do not 
meet the requirements of subparagraph (B). 
‘‘(B) EZ FAFSA.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall develop and use a simplified paper 
application form, to be known as the EZ 
FAFSA, to be used for applicants meeting 
the requirements of subsections (b) and (c) 
of section 479. 
‘‘(ii) 
REDUCED
DATA
REQUIRE-
MENTS.—The EZ FAFSA shall permit an 
applicant to submit for financial assistance 
purposes, only the data elements required 
to make a determination of whether the 
applicant meets the requirements under 
subsections (b) and (c) of section 479. 
‘‘(iii) STATE
DATA.—The Secretary 
shall include on the EZ FAFSA such data 
items as may be necessary to award State 
financial assistance, as provided under 
paragraph (6), except that the Secretary 
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