160
rate under subsection (f), the institution may 
not receive an allocation under this paragraph. 
‘‘(2) PHASE OUT.—For each of the fiscal years 
after fiscal year 2007, paragraph (1) shall be ap-
plied by substituting for ‘100 percent’: 
‘‘(A) ‘80 percent’ for fiscal years 2008 and 
2009; 
‘‘(B) ‘60 percent’ for fiscal years 2010 and 
2011; 
‘‘(C) ‘40 percent’ for fiscal years 2012 and 
2013; 
‘‘(D) ‘20 percent’ for fiscal years 2014 and 
2015; and 
‘‘(E) ‘0 percent’ for fiscal year 2016 and 
any succeeding fiscal year. 
‘‘(3) RATABLE REDUCTIONS FOR INSUFFICIENT 
APPROPRIATIONS.—
‘‘(A) REDUCTION OF BASE GUARANTEE.—
If the amount appropriated for any fiscal year 
is less than the amount required to be allocated 
to all institutions under this subsection, then 
the amount of the allocation to each such insti-
tution shall be ratably reduced. 
‘‘(B) ADDITIONAL APPROPRIATIONS ALLO-
CATION.—If additional amounts are appro-
161
priated for any such fiscal year, such reduced 
amounts shall be increased on the same basis as 
they were reduced (until the amount allocated 
equals the amount required to be allocated 
under this subsection).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply with respect to any 
amounts appropriated under section 461(b) of the 
Higher 
Education 
Act 
of 
1965 
(20 
U.S.C. 
1087bb(b)) for fiscal year 2008 or any succeeding 
fiscal year. 
(c) 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. 462. LOAN TERMS AND CONDITIONS. 
(a) LOAN
LIMITS.—Section 464(a) (20 U.S.C. 
1087dd(a))—
(1) in paragraph (2)(A)—
(A) by striking ‘‘$4,000’’ in clause (i) and 
inserting ‘‘$5,500’’; and 
(B) by striking ‘‘$6,000’’ in clause (ii) and 
inserting ‘‘$8,000’’; and 
(2) in paragraph (2)(B)—
(A) by striking ‘‘$40,000’’ in clause (i) and 
inserting ‘‘$60,000’’;
162
(B) by striking ‘‘$20,000’’ in clause (ii) 
and inserting ‘‘$27,500’’; and 
(C) by striking ‘‘$8,000’’ in clause (iii) and 
inserting ‘‘$11,000’’. 
(b) FORBEARANCE.—Section 464(e) (20 U.S.C. 
1087dd(e)) is amended by striking ‘‘, upon written re-
quest,’’. 
(c) SPECIAL REPAYMENT RULE.—Paragraph (2) of 
section 464(f) is amended to read as follows: 
‘‘(2) No compromise repayment of a defaulted loan 
as authorized by paragraph (1) may be made unless 
agreed to by the Secretary.’’. 
(d) REHABILITATION.—Section 464(h)(1)(A) (20 
U.S.C. 1087dd(h)(1)(A)) is amended by striking ‘‘12 
ontime’’ and inserting ‘‘9 on-time’’. 
SEC. 463. LOAN CANCELLATION. 
Section 465(a)(3)(A) (20 U.S.C. 1087ee(a)(3)(A)) is 
amended—
(1) by inserting ‘‘(D),’’ after ‘‘subparagraph 
(A), (C),’’ in clause (i); 
(2) by inserting ‘‘or’’ after the semicolon at the 
end of clause (ii); 
(3) by striking clause (iii); and 
(4) by redesignating clause (iv) as clause (iii).
163
SEC. 464. TECHNICAL AMENDMENTS. 
Part E is further amended as follows: 
(1) Section 462(g)(1)(E)(i)(I) (20 U.S.C. 
1087bb(g)(1)(E)(i)(I)) is amended by inserting 
‘‘monthly’’ after ‘‘consecutive’’. 
(2) 
Section 
464(c)(1)(D) 
(20 
U.S.C. 
1087dd(c)(1)(D)) is amended by redesignating sub-
clauses (I) and (II) as clauses (i) and (ii), respec-
tively. 
(3) Section 465(a)(2) (20 U.S.C. 1087ee(a)(2)) 
is amended—
(A) in subparagraph (A), by striking ‘‘sec-
tion 
111(c)’’ 
and 
inserting 
‘‘section 
1113(a)(5)’’; and 
(B) in subparagraph (C), by striking 
‘‘With Disabilities’’ and inserting ‘‘with Disabil-
ities’’. 
(4) Section 467(b) (20 U.S.C. 1087gg(b)) is 
amended by striking ‘‘(5)(A), (5)(B)(i), or (6)’’ and 
inserting ‘‘(4)(A), (4)(B), or (5)’’. 
(5) Section 469(c) (20 U.S.C. 1087ii(c)) is 
amended—
(A) by striking ‘‘sections 602(a)(1) and 
672(1)’’ and inserting ‘‘sections 602(3) and 
632(5)’’;
164
(B) by striking ‘‘qualified professional pro-
vider of early intervention services’’ and insert-
ing ‘‘early intervention services’’; and 
(C) by striking ‘‘section 672(2)’’ and in-
serting ‘‘section 632(4)’’. 
PART F—NEED ANALYSIS 
SEC. 471. SIMPLIFIED NEEDS TEST IMPROVEMENTS. 
Section 479 (20 U.S.C. 1087ss) is amended—
(1) by striking clause (i) of subsection (b)(1)(A) 
and inserting the following: 
‘‘(i) the student’s parents file a form 
described in paragraph (3) or certify that 
they are not required to file an income tax 
return, and the student files such a form 
or certifies that the student is not required 
to file an income tax return, or the stu-
dent’s parents receive benefits under a 
means-tested Federal benefit program;’’. 
(2) by striking clause (i) of subsection 
(b)(1)(B) and inserting the following: 
‘‘(i) the student (and the student’s 
spouse, if any) files a form described in 
paragraph (3) or certifies that the student 
(and the student’s spouse, if any) is not re-
quired to file an income tax return, or the
165
student (and the student’s spouse, if any) 
receives benefits under a means-tested 
Federal benefit program;’’; 
(3) by striking subparagraph (A) of subsection 
(c)(1) and inserting the following: 
‘‘(A) the student’s parents file a form de-
scribed in subsection (b)(3) or certify that they 
are not required to file an income tax return, 
and the student files such a form or certifies 
that the student is not required to file an in-
come tax return, or the student’s parents re-
ceive benefits under a means-tested Federal 
benefit program;’’; 
(4) by striking subparagraph (A) of subsection 
(c)(2) and inserting the following: 
‘‘(A) the student (and the student’s 
spouse, if any) files a form described in sub-
section (b)(3) or certifies that the student (and 
the student’s spouse, if any) is not required to 
file an income tax return, or the student (and 
the student’s spouse, if any) receives benefits 
under a means-tested Federal benefit pro-
gram;’’; and 
(5) by adding at the end the following new sub-
section:
166
‘‘(d) DEFINITION
OF
MEANS-TESTED
FEDERAL 
BENEFIT PROGRAM.—For purposes of this section, the 
term ‘means-tested Federal benefit program’ means a 
mandatory spending program of the Federal Government, 
other than a program under this title, in which eligibility 
for the programs’ benefits, or the amount of such benefits, 
or both, are determined on the basis of income or re-
sources of the individual or family seeking the benefit, and 
may include such programs as the supplemental security 
income program under title XVI of the Social Security 
Act, the food stamp program under the Food Stamp Act 
of 1977, and the free and reduced price school lunch pro-
gram under the Richard B. Russell National School Lunch 
Act, and other programs identified by the Secretary.’’. 
SEC. 472. ADDITIONAL NEED ANALYSIS AMENDMENTS. 
(a) INCOME PROTECTION ALLOWANCE FOR DEPEND-
ENT STUDENTS.—
(1) AMENDMENT.—Section 475(g)(2)(D) (20 
U.S.C. 1087oo(g)(2)(D)) is amended by striking 
‘‘$2,200’’ and inserting ‘‘$3,000’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply with respect to deter-
minations of need for periods of enrollment begin-
ning on or after July 1, 2006.
167
(b) EMPLOYMENT EXPENSE ALLOWANCE.—Section 
478(h) (20 U.S.C. 1087rr(h)) is amended—
(1) by striking ‘‘476(b)(4)(B),’’; and 
(2) by striking ‘‘meals away from home, apparel 
and upkeep, transportation, and housekeeping serv-
ices’’ and inserting ‘‘food away from home, apparel, 
transportation, and household furnishings and oper-
ations’’. 
(c) DISCRETION OF STUDENT FINANCIAL AID AD-
MINISTRATORS.—Section 479A(a) (20 U.S.C. 1087tt(a)) 
is amended—
(1) by striking ‘‘(a) IN GENERAL.—’’ and in-
serting the following: 
‘‘(a) AUTHORITY TO MAKE ADJUSTMENTS.—
‘‘(1) 
ADJUSTMENTS
FOR
SPECIAL
CIR-
CUMSTANCES.—’’; 
(2) by inserting before ‘‘Special circumstances 
may’’ the following: 
‘‘(2) SPECIAL CIRCUMSTANCES DEFINED.—’’; 
(3) by inserting ‘‘a student’s status as a ward 
of the court at any time prior to attaining 18 years 
of age,’’ after ‘‘487,’’; 
(4) by inserting before ‘‘Adequate documenta-
tion’’ the following:
168
‘‘(3) DOCUMENTATION AND USE OF SUPPLE-
MENTARY INFORMATION.—’’; and 
(5) by inserting before ‘‘No student’’ the fol-
lowing: 
‘‘(4) FEES FOR SUPPLEMENTARY INFORMATION 
PROHIBITED.—’’. 
(d) TREATING ACTIVE DUTY MEMBERS
OF
THE 
ARMED FORCES AS INDEPENDENT STUDENTS.—Section 
480(d)(3) (20 U.S.C. 1087vv(d)(3)) is amended by insert-
ing before the semicolon at the end the following: ‘‘or is 
currently serving on active duty in the Armed Forces for 
other than training purposes’’. 
(e) EXCLUDABLE
INCOME.—Section 480(e) (20 
U.S.C. 1087vv(e)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph 
(3); 
(2) by striking the period at the end of para-
graph (4); and 
(3) by adding at the end the following new 
paragraph: 
‘‘(5) any part of any distribution from a quali-
fied tuition program established under section 529 
of the Internal Revenue Code of 1986 that is not in-
cludable in gross income under such section 529.’’. 
(f) TREATMENT OF SAVINGS PLANS.—
169
(1) AMENDMENT.—Section 480(f) (20 U.S.C. 
1087vv(f)) is amended—
(A) in paragraph (1), by inserting ‘‘quali-
fied tuition programs established under section 
529 of the Internal Revenue Code of 1986 (26 
U.S.C. 529), except as provided in subpara-
graph (2),’’ after ‘‘tax shelters,’’; 
(B) by redesignating paragraph (2) as 
paragraph (3); and 
(C) by inserting after paragraph (1) the 
following new paragraph: 
‘‘(2) A qualified tuition program shall not be consid-
ered an asset of a dependent student under section 475 
of this part. The value of a qualified tuition program for 
purposes of determining the assets of parents or inde-
pendent students shall be—
‘‘(A) the refund value of any tuition credits or 
certificates purchased under section 529 of the In-
ternal Revenue Code of 1986 (26 U.S.C. 529) on be-
half of a beneficiary; or 
‘‘(B) the current balance of any account which 
is established under such section for the purpose of 
meeting the qualified higher education expenses of 
the designated beneficiary of the account.’’.
170
(2) CONFORMING AMENDMENT.—Section 480(j) 
(20 U.S.C. 1087vv(j)) is amended—
(A) by striking ‘‘; TUITION PREPAYMENT 
PLANS’’ in the heading of such subsection; 
(B) by striking paragraph (2); 
(C) in paragraph (3), by inserting ‘‘, or a 
distribution that is not includable in gross in-
come under section 529 of such Code,’’ after 
‘‘1986’’; and 
(D) by redesignating paragraph (3) as 
paragraph (2). 
PART G—GENERAL PROVISIONS RELATING TO 
STUDENT FINANCIAL ASSISTANCE 
SEC. 481. DEFINITION OF ACADEMIC YEAR. 
Paragraph (2) of section 481(a) (20 U.S.C. 1088(a)) 
is amended to read as follows: 
‘‘(2) For the purpose of any program under this title, 
the term ‘academic year’ shall—
‘‘(A) require a minimum of 30 weeks of instruc-
tional time for a course of study that measures its 
program length in credit hours; or 
‘‘(B) require a minimum of 26 weeks of instruc-
tional time for a course of study that measures its 
program length in clock hours; and
171
‘‘(C) require an undergraduate course of study 
to contain an amount of instructional time whereby 
a full-time student is expected to complete at least 
(i) 24 semester or trimester hours or 36 quarter 
credit hours in a course of study that measures its 
program length in credit hours, or (ii) 900 clock 
hours in a course of study that measures its pro-
gram length in clock hours.’’. 
SEC. 482. DISTANCE EDUCATION. 
(a) DISTANCE EDUCATION: ELIGIBLE PROGRAM.—
Section 481(b) (20 U.S.C. 1088(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(3) DISTANCE EDUCATION.—An otherwise eli-
gible program that is offered in whole or in part 
through telecommunications is eligible for the pur-
poses of this title if the program is offered by an in-
stitution, other than a foreign institution, that has 
been evaluated and determined (before or after the 
date of enactment of this paragraph) to have the ca-
pability to effectively deliver distance education pro-
grams by an accrediting agency or association 
that—
‘‘(A) is recognized by the Secretary under 
subpart 2 of Part H; and
172
‘‘(B) has evaluation of distance education 
programs within the scope of its recognition, as 
described in section 496(n)(3).’’. 
(b) CORRESPONDENCE COURSES.—Section 484(l)(1) 
(20 U.S.C. 1091(l)(1)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘for a program of study of 
1 year or longer’’; and 
(B) by striking ‘‘unless the total’’ and all 
that follows through ‘‘courses at the institu-
tion’’; and 
(2) by amending subparagraph (B) to read as 
follows: 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
does not apply to an institution or school de-
scribed in section 3(3)(C) of the Carl D. Per-
kins Vocational and Technical Education Act of 
1998.’’. 
SEC. 483. EXPANDING INFORMATION DISSEMINATION RE-
GARDING ELIGIBILITY FOR PELL GRANTS. 
Section 483(a) (20 U.S.C. 1090(a)) is amended by 
adding at the end the following new paragraph: 
‘‘(8) EXPANDING INFORMATION DISSEMINATION 
REGARDING ELIGIBILITY FOR PELL GRANTS.—The 
Secretary shall make special efforts, in conjunction
173
with State efforts, to notify students and their par-
ents who qualify for a free lunch under the Richard 
B. Russell National School Lunch Act (42 U.S.C. 
1751 et seq.), the Food Stamps program, or such 
other programs as the Secretary shall determine, of 
their potential eligibility for a maximum Pell Grant, 
and shall disseminate such informational materials 
as the Secretary deems appropriate.’’. 
SEC. 484. STUDENT ELIGIBILITY. 
(a) SUSPENSION OF ELIGIBILITY FOR DRUG OF-
FENSES.—Section 484(r)(1) (20 U.S.C. 1091(r)(1)) is 
amended by striking everything preceding the table and 
inserting the following: 
‘‘(1) IN GENERAL.—A student who is convicted 
of any offense under any Federal or State law in-
volving the possession or sale of a controlled sub-
stance for conduct that occurred during a period of 
enrollment for which the student was receiving any 
grant, loan, or work assistance under this title shall 
not be eligible to receive any grant, loan, or work as-
sistance under this title from the date of that convic-
tion for the period of time specified in the following 
table:’’. 
(b) FREELY ASSOCIATED STATES.—Section 484(j) 
(20 U.S.C. 1091(j)) is amended by inserting ‘‘and shall
174
be eligible only for assistance under subpart 1 of part A 
thereafter,’’ after ‘‘part C,’’. 
(c) VERIFICATION
OF INCOME DATE.—Paragraph 
(1) of section 484(q) (20 U.S.C. 1091(q)) is amended to 
read as follows: 
‘‘(1) CONFIRMATION WITH IRS.—The Secretary 
of Education, in cooperation with the Secretary of 
the Treasury, is authorized to confirm with the In-
ternal Revenue Service the information specified in 
section 6103(l)(13) of the Internal Revenue Code of 
1986 reported by applicants (including parents) 
under this title on their Federal income tax returns 
for the purpose of verifying the information reported 
by applicants on student financial aid applications.’’. 
(d) TECHNICAL AMENDMENT.—Section 484(b)(5) is 
amended by inserting ‘‘or parent (on behalf of a student)’’ 
after ‘‘student’’. 
SEC. 485. INSTITUTIONAL REFUNDS. 
Section 484B (20 U.S.C. 1091b) is amended—
(1) in subsection (a)(1), by inserting ‘‘subpart 
4 of part A or’’ after ‘‘received under’’; 
(2) in subsection (a)(2), by striking ‘‘takes a 
leave’’ and by inserting ‘‘takes one or more leaves’’;
175
(3) in subsection (a)(3)(B)(ii), by inserting ‘‘(as 
determined in accordance with subsection (d))’’ after 
‘‘student has completed’’; 
(4) in subsection (a)(4), by amending subpara-
graph (A) to read as follows: 
‘‘(A) IN GENERAL.—After determining the 
eligibility of the student for a late disbursement 
or post-withdrawal disbursement (as required in 
regulations prescribed by the Secretary), the in-
stitution of higher education shall contact the 
borrower and obtain confirmation that the loan 
funds are still required by the borrower. In 
making such contact, the institution shall ex-
plain to the borrower the borrower’s obligation 
to repay the funds following any such disburse-
ment. The institution shall document in the 
borrower’s file the result of such contact and 
the final determination made concerning such 
disbursement. ’’. 
(5) in subsection (b)(1), by inserting ‘‘no later 
than 45 days from the determination of withdrawal’’ 
after ‘‘return’’; 
(6) in subsection (b)(2), by amending subpara-
graph (C) to read as follows:
176
‘‘(C) GRANT
OVERPAYMENT
REQUIRE-
MENTS.—
‘‘(i) IN
GENERAL.—Notwithstanding 
subparagraphs (A) and (B), a student 
shall only be required to return grant as-
sistance in the amount (if any) by which—
‘‘(I) the amount to be returned 
by the student (as determined under 
subparagraphs (A) and (B)), exceeds 
‘‘(II) 50 percent of the total 
grant assistance received by the stu-
dent under this title for the payment 
period or period of enrollment. 
‘‘(ii) MINIMUM.—A student shall not 
be required to return amounts of $50 or 
less.’’; and 
(7) in subsection (d), by striking ‘‘(a)(3)(B)(i)’’ 
and inserting ‘‘(a)(3)(B)’’. 
SEC. 486. INSTITUTIONAL AND FINANCIAL ASSISTANCE IN-
FORMATION FOR STUDENTS. 
(a) INFORMATION
DISSEMINATION
ACTIVITIES.—
Section 485(a)(1) (20 U.S.C. 1092(a)(1)) is amended—
(1) by amending the second sentence to read as 
follows: ‘‘The information required by this section 
shall be produced and be made publicly available to
177
an enrolled student and to any prospective student 
in a uniform and comprehensible manner, through 
appropriate publications, mailings, electronic media, 
and the reports required by the institution’s accred-
iting agency under section 496(c)(9).’’; 
(2) by amending subparagraph (G) to read as 
follows: 
‘‘(G) the academic programs of the institution, 
including—
‘‘(i) the current degree programs and other 
educational and training programs; 
‘‘(ii) the institution’s learning objectives 
for those programs; 
‘‘(iii) the instructional, laboratory, and 
other physical plant facilities which relate to the 
academic programs; and 
‘‘(iv) the faculty and other instructional 
personnel;’’; 
(3) by striking subparagraph (L) and inserting 
the following: 
‘‘(L) a summary of student outcomes for full-
time undergraduate students, including—
‘‘(i) the completion or graduation rates of 
certificate- or degree-seeking undergraduate 
students entering such institutions;
178
‘‘(ii) when readily available, information 
showing the number of undergraduate students 
that transfer out of the institution; and 
‘‘(iii) any other student outcome data, 
qualitative or quantitative, including data re-
garding distance education deemed by the insti-
tution to be appropriate to its stated edu-
cational mission and goals, and, when applica-
ble, licensing and placement rates for profes-
sional and vocational programs;’’; 
(4) by inserting before the semicolon at the end 
of subparagraph (J) the following: ‘‘, and the proc-
ess for students to register complaints with the ac-
crediting agencies or associations’’; 
(5) in subparagraph (M), by striking ‘‘guaran-
teed student loans under part B of this title or di-
rect student loans under part E of this title, or 
both,’’ and inserting ‘‘student loans under part B, 
D, or E of this title’’; 
(6) by striking ‘‘and’’ at the end of subpara-
graph (N); 
(7) by striking the period at the end of sub-
paragraph (O) and inserting a semicolon; and 
(8) by adding at the end the following new sub-
paragraphs:
179
‘‘(P) the penalties contained in subsection 
484(r) regarding suspension of eligibility for drug 
related offenses; and 
‘‘(Q) the policies of the institution for accepting 
transfer of credit, explained in a manner that clearly 
states the basis for determining the acceptability and 
applicability of transfer of credits.’’. 
(b) ADDITIONAL AMENDMENTS.—Section 485(a) is 
further amended by striking paragraph (6) and inserting 
the following: 
‘‘(6) Each institution may provide supplemental 
information to enrolled and prospective students 
showing the completion or graduation rate for stu-
dents described in paragraph (4). For the purpose of 
this paragraph, the definitions provided in the Inte-
grated Postsecondary Education Data System shall 
apply. 
‘‘(7) Each eligible institution participating in 
any program under this title may publicly report to 
currently enrolled and prospective students the vol-
untary information collected by the National Survey 
of Student Engagement (NSSE), the Community 
College Survey of Student Engagement (CCSSE), or 
other instruments that provide evidence of student 
participation in educationally purposeful activities.
180
The information shall be produced and made avail-
able in a uniform and comprehensible manner, 
through appropriate publications, mailings, and elec-
tronic media, and may be included in reports re-
quired by the institution’s accrediting agency.’’. 
(c) EXIT COUNSELING.—Section 485(b) (20 U.S.C. 
1092(b)) is amended by adding at the end the following 
new paragraph: 
‘‘(3) Each eligible institution shall, during the exit 
interview required by this subsection, provide to a bor-
rower of a loan made under part B, D, or E a clear and 
conspicuous notice describing the effect of using a consoli-
dation loan to discharge the borrower’s student loans, in-
cluding—
‘‘(A) the effects of consolidation on total inter-
est to be paid, fees to be paid, and length of repay-
ment; 
‘‘(B) the effects of consolidation on a bor-
rower’s underlying loan benefits, including loan for-
giveness, cancellation, and deferment; 
‘‘(C) the ability for the borrower to prepay the 
loan, pay on a shorter schedule, and to change re-
payment plans, and that borrower benefit programs 
may vary among different loan holders;
181
‘‘(D) the tax benefits for which the borrower 
may be eligible; and 
‘‘(E) the consequences of default.’’. 
(d) 
CAMPUS
CRIME
INFORMATION.—Section 
485(f)(1) (20 U.S.C. 1092(f)(1)) is amended by inserting 
‘‘, other than a foreign institution of higher education,’’ 
after ‘‘under this title’’. 
(e) TRANSFER OF CREDIT POLICIES.—Section 485 
is further amended by adding at the end the following new 
subsection: 
‘‘(h) TRANSFER OF CREDIT POLICIES.—
‘‘(1) DISCLOSURE.—Each eligible institution 
participating in any program under this title shall 
publicly disclose in a readable and comprehensible 
manner its transfer of credit policies which shall in-
clude: 
‘‘(A) A statement of the institution’s cur-
rent transfer of credit policies that includes at 
least—
‘‘(i) a statement that transfer of cred-
it shall not be denied solely on the basis of 
the agency or association that accredited 
such other eligible institution, if that agen-
cy or association is recognized by the Sec-
retary pursuant to section 496 to be a reli-
182
able authority as to the quality of the edu-
cation or training offered; and 
‘‘(ii) a statement that transfer of 
credit shall be decided on the basis of 
whether the courses or program are deter-
mined by the institution to be acceptable 
for credit in accordance with objective cri-
teria that the institution publicly discloses 
and the student completed such courses or 
programs at the institution’s required level 
of proficiency. 
‘‘(B) Statistics concerning the annual, as 
well as a 3-year rolling average, rate of the per-
centage of credits accepted in transfer and fully 
counted toward the degree or certificate comple-
tion requirements of undergraduate students. 
Such data shall be disaggregated to report on 
the following categories of institutions from 
which credits were accepted in transfer: 
‘‘(i) nationally accredited; 
‘‘(ii) regionally accredited in the same 
State; 
‘‘(iii) regionally accredited in the same 
region; and
183
‘‘(iv) regionally accredited in a dif-
ferent region. 
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed to—
‘‘(A) authorize an officer or employee of 
the Department to exercise any direction, su-
pervision, or control over the curriculum, pro-
gram of instruction, administration, or per-
sonnel of any institution of higher education, or 
over any accrediting agency or association; 
‘‘(B) limit the application of the General 
Education Provisions Act; or 
‘‘(C) create any legally enforceable right.’’. 
SEC. 487. COLLEGE ACCESS INITIATIVE. 
Part G is further amended by inserting after section 
485C (20 U.S.C. 1092c) the following new section: 
‘‘SEC. 485D. COLLEGE ACCESS INITIATIVE. 
‘‘(a) STATE-BY-STATE
INFORMATION.—The Sec-
retary shall direct each guaranty agency with which the 
Secretary has an agreement under section 428(c) to pro-
vide to the Secretary the information necessary for the de-
velopment of web links and access for students and fami-
lies to a comprehensive listing of the postsecondary edu-
cation opportunities programs, publications, Internet Web
184
sites, and other services available in the States for which 
such agency serves as the designated guarantor. 
‘‘(b) GUARANTY AGENCY ACTIVITIES.—
‘‘(1) PLAN
AND
ACTIVITY
REQUIRED.—Each 
guaranty agency with which the Secretary has an 
agreement under section 428(c) shall develop a plan 
and undertake the activity necessary to gather the 
information required under subsection (a) and to 
make such information available to the public and to 
the Secretary in a form and manner as prescribed 
by the Secretary. 
‘‘(2) ACTIVITIES.—Each guaranty agency shall 
undertake such activities as are necessary to pro-
mote access to postsecondary education for students 
through providing information on college planning, 
career preparation, and paying for college. The guar-
anty agency shall publicize such information and co-
ordinate such activities with other entities that ei-
ther provide or distribute such information in the 
States for which such guaranty agency serves as the 
designated guarantor. 
‘‘(3) FUNDING.—The activities required by this 
section may be funded from the guaranty agency’s 
operating account established pursuant to section 
422B and to the extent funds remain, from earnings
185
on the restricted account established pursuant to 
section 422(h)(4). 
‘‘(c) ACCESS TO INFORMATION.—
‘‘(1) SECRETARY’S RESPONSIBILITY.—The Sec-
retary shall ensure the availability of the information 
provided by the guaranty agencies in accordance 
with this section to students, parents and other in-
terested individuals, through web links or other 
methods prescribed by the Secretary. 
‘‘(2) GUARANTY
AGENCY
RESPONSIBILITY.—
The guaranty agencies shall ensure that the infor-
mation required by this section is available without 
charge in printed format for students and parents 
requesting such information. 
‘‘(3) PUBLICITY.—Within 270 days after the 
date of enactment of the College Access and Oppor-
tunity Act of 2005, the Secretary and guaranty 
agencies shall publicize the availability of the infor-
mation required by this section, with special empha-
sis on ensuring that populations that are tradition-
ally underrepresented in postsecondary education are 
made aware of the availability of such information.’’.
186
SEC. 488. DISTANCE EDUCATION DEMONSTRATION PRO-
GRAM. 
(a) ELIGIBLE APPLICANTS.—Section 486(b)(3) (20 
U.S.C. 1093(b)(3)) is amended—
(1) in subparagraph (B), by striking ‘‘section 
102(a)(1)(C)’’ and inserting ‘‘section 102’’; and 
(2) in subparagraph (C), by striking ‘‘sub-
section (a) of section 102, other than the require-
ment of paragraph (3)(A) or (3)(B) of such sub-
section,’’ and inserting ‘‘section 101, other than the 
requirements of subparagraph (A) or (B) of sub-
section (b)(4) of such section’’. 
(b) SELECTION.—Section 486(d)(1) (20 U.S.C. 
1093(d)(1)) is amended—
(1) by striking ‘‘the third year’’ and inserting 
‘‘subsequent years’’; 
(2) by striking ‘‘35 institutions’’ and inserting 
‘‘100 institutions’’; and 
(3) by adding at the end the following new sen-
tence: ‘‘Not more than 5 of such institutions, sys-
tems, or consortia may be accredited, degree-grant-
ing correspondence schools.’’. 
SEC. 489. COLLEGE AFFORDABILITY DEMONSTRATION PRO-
GRAM. 
Part G of title IV is amended by inserting after sec-
tion 486 (20 U.S.C. 1093) the following new section:
187
‘‘SEC. 486A. COLLEGE AFFORDABILITY DEMONSTRATION 
PROGRAM. 
‘‘(a) PURPOSE.—It is the purpose of this section—
‘‘(1) to provide, through a college affordability 
demonstration program, for increased innovation in 
the delivery of higher education and student finan-
cial aid in a manner resulting in reduced costs for 
students as well as the institution by accelerating 
degree or program completion, increasing availability 
of, and access to, distance components of education 
delivery, and other alternative methodologies; and 
‘‘(2) to help determine—
‘‘(A) the most effective means of delivering 
student financial aid as well as quality edu-
cation; 
‘‘(B) the specific statutory and regulatory 
requirements that should be altered to provide 
for more efficient and effective delivery of stu-
dent financial aid, as well as access to high 
quality distance education programs, resulting 
in a student more efficiently completing post-
secondary education; and 
‘‘(C) the most effective methods of obtain-
ing and managing institutional resources. 
‘‘(b) DEMONSTRATION PROGRAM AUTHORIZED.—
188
‘‘(1) IN
GENERAL.—In accordance with the 
purposes described in subsection (a) and the provi-
sions of subsection (d), the Secretary is authorized 
to select not more than 100 institutions of higher 
education or systems of such institutions for vol-
untary participation in the College Affordability 
Demonstration Program in order to enable partici-
pating institutions to carry out such purposes by 
providing programs of postsecondary education, and 
making available student financial assistance under 
this title to students enrolled in those programs, in 
a manner that would not otherwise meet the require-
ments of this title. 
‘‘(2) WAIVERS.—The Secretary is authorized to 
waive for any institutions of higher education, or 
any system or consortia of institutions of higher 
education, selected for participation in the College 
Affordability Demonstration Program, any require-
ments of this Act or the regulations thereunder as 
deemed necessary by the Secretary to meet the pur-
pose described in subsection (a)(1). 
‘‘(3) ELIGIBLE APPLICANTS.—
‘‘(A) ELIGIBLE INSTITUTIONS.—Except as 
provided in subparagraph (B), only an institu-
tion of higher education that is eligible to par-
189
ticipate in programs under this title shall be eli-
gible to participate in the demonstration pro-
gram authorized under this section. 
‘‘(B) PROHIBITION.—An institution of 
higher education described in section 102 shall 
not be eligible to participate in the demonstra-
tion program authorized under this section. 
‘‘(c) APPLICATION.—
‘‘(1) IN GENERAL.—Each institution or system 
of institutions desiring to participate in the dem-
onstration program under this section shall submit 
an application to the Secretary at such time and in 
such manner as the Secretary may require. 
‘‘(2) CONTENTS OF APPLICATIONS.—Each ap-
plication for the college affordability demonstration 
program shall include at least the following: 
‘‘(A) a description of the institution or sys-
tem of institutions and what quality assurance 
mechanisms are in place to insure the integrity 
of the Federal financial aid programs; 
‘‘(B) a description of each regulatory or 
statutory requirement for which waivers are 
sought, with a reason for each waiver; 
‘‘(C) a description of the programs being 
offered and the affected students;